Venezuela is a country of extraordinary diversity and natural beauty where the sun shines most days of the year. Nowhere else will you find such a fusion of heavenly tropical beaches, snow-capped giant mountains, steaming pristine jungle and a vast mysterious savannah.

Wednesday, February 23, 2011

Is Hugo Chavez the next Domino to Fall?

Amiel Ungar: Autocracies are under assault throughout the Middle East, but in Venezuela, Hugo Chavez remains sanguine and expects to steer his country into socialism. Venezuelan students have launched a hunger strike against his rule and have appealed to the Organization of American States and its head Jose Miguel Insulza to look into human rights abuses by the Venezuelan regime.

The US State Department urged Venezuela to allow Insulza's visit, but this approach was immediately rejected by Venezuela and its Foreign Minister Nicolas Maduro who accused Washington of trying to destabilize the Chavez government. "They're trying to create a false scenario, something like a virtual Egypt,," he said. Chavez has attributed Mubarak's downfall to the state of poverty in Egypt, something that presumably does not exist in Venezuela.

The opposition does not appear ready to emulate the demonstrations in the Middle East, but they are banking on the fact that Chavez, despite his bravado, is weakening. One sign was Chavez going on TV (he has appeared approximately 10,000 hours since taking power 12 years ago) to lecture the people on energy conservation.

A liter of high-octane gasoline costs $.02 in Venezuela, the lowest price in the world, because the government subsidizes gasoline by 90%. This amounts to $1.6 billion a year in subsidies and is part of the reason for the country's economic problem. The cheap fuel not only goes into automobile tanks, but given the country's electricity shortages, into generators as well. A rise in gasoline prices will therefore have a severe impact on the economy. Venezuela's energy minister was quick to deny that a gradual price hike was in the offing.

Venezuela's cash cow -- the oil industry -- is also being indentured to Chavez' state owned enterprises that owe the oil company $1.6 billion.

Venezuela's biggest problem is the galloping inflation of 405% in the last three years. Even on the official market, the Venezuelan Bolivar has been devalued against the dollar by 168%. Chavez tried to bottle up inflation by price controls, but as occurred in Soviet Russia, such controls merely lead to shortages and the government had to give up the idea. To shore up his standing, Chavez has promised housing to Venezuela's poor, and while he has only built 300,000 apartments in 12 years, he promises to build 2 million in the next 6 years. If he fails to supply the actual houses, he can definitely expect to supply the paper deeds to his supporters.

The opposition is coming up with credible candidates. One such candidate is Leopoldo Lopez, who was slated to run for mayor of Caracas, but was denied the opportunity when Chavez' rigged judicial system disqualified him on trumped up charges. Lopez turned the disadvantage into an asset by moving into the Venezuelan periphery and building a power base for the opposition. He is also appealing the court ruling before the Inter American Court of Human Rights.

Last Tuesday, Caracas Mayor Antonio Ledezma announced his intention to run in the 2012 presidential election against Chavez. Ledezma's victory in Caracas was a major victory for the opposition in 2008 but Chavez immediately stripped him of most of his powers.

To make sure that the proliferation of candidates does not play into Chavez' hands by splitting and tiring the opposition, opposition leaders will seek to shorten the primary election period.

Monday, February 21, 2011

Who can believe that Chavez will build 913 homes per day?

VenEconomy: "You can fool some of the people all of the time, and all of the people some of the time, but you cannot fool all of the people all of the time."

Here in Venezuela these words are all too true. Today the President is trying to fool enough people for long enough to keep him in office. This would seem to be the purpose behind of Hugo Chavez' "admirable campaign" to convince a large enough number of Venezuelans who are desperate for the home that he, after holding all the power in his hands for the past 12 years, will soon be giving them modern, clean, properly equipped homes.

This past Sunday, Chavez promised to build two million homes over the next six years, a lie that is pathetically self evident.

Chavez' promise is even more outrageous when we stop to think that during this long, 12-year period that he has sat in Miraflores, the average number of houses built per year has been only 24,300, or some 300,000 in all. This is the worst performance in the area of housing in all Venezuela's democratic history, made even worse by the fact that he is the President who has been in office for the longest period over the past 70 years.

Who, then, can believe that Chavez will be building 913 homes per day? Or that this government will be able to build 578 12-storey buildings, with four apartments per floor, every month?

To begin with, Venezuela lacks the wherewithal to achieve this housing feat. Home construction costs approximately Bs.F.5,000 per square meter, including utilities and land development. In other words this would require, at the very least, an investment of Bs.F.500 billion, the equivalent of 2.5 times the central government's annual budget.

Then there is the fact that, with his communist policies, he has also destroyed the production sector that supplied the raw materials, the inputs, and has worked to destroy the human capital and the companies working in the construction sector.

Equally serious is the fact that the few houses that the government does manage to build will be assigned, but without real property rights. This, however, will not stop Chavez and his people from handing out housing "IOUs" left and right in an effort to win over votes for the presidential election.

As Lincoln might have said, maybe he will be able to fool some of the people for long enough to be re-elected in 2012.

Sunday, February 13, 2011

Is Chavez Going Down?

Newsweek's Mac Margolis //

Unlike the theocracies and unalloyed tyrannies of the Middle East and Northern Africa, Venezuela under Chavez is an odd but effective political hybrid, a semi-democracy that keeps its grip on society through a combination of fear, favor, and a modicum of liberty. In this way, Chavez marshals his political majority to suppress not crush rivals, games elections rather than steals them outright, and instead of steamrolling the courts, stacks them instead to insure friendly rulings.

As one Middle Eastern dictator after another comes under threat, Mac Margolis asks whether Latin American despots will soon meet the same fate.

If there's a garden variety message in the political turmoil shaking Egypt, Tunisia, and a half dozen other Middle Eastern autocracies, it is that repression has an expiration date. But apparently the word hasn't reached the Western Hemisphere.

Bolivia, Cuba, Ecuador and Nicaragua, all run by authoritarian populists, appear remarkably untouched by the street protests that are rewriting the politics of the Arab world. And now we know that Venezuelan president Hugo Chavez plans to stay in power for the rest of the decade. "The battle has begun" for the 2012 elections, Chavez announced last week in a nationwide broadcast on the 12th anniversary of his Bolivarian Revolution. If he has his way, as Chavez has until now, South America's ranking caudillo will remain in office until 2019.

But such confidence might seem premature. There are striking parallels between the Middle Eastern despots and the self-styled heir of Latin American liberator Simon Bolivar, who has ruled virtually unchallenged since 1999. Like Egypt's House of Sharm El Sheik and the Ben Ali dynasty, Chavez's oligarchy has purloined the wealth it hasn't squandered. An oil powerhouse, that claims more oil reserves than Saudi Arabia, Venezuela produced close to 2.8 million barrels of crude per day in 2000. Now it produces around 2.4 million.

Today Venezuelans face chronic shortages of basic goods, forcing the country to import 85 percent of everything it eats. Prices are rising at 27 percent a year, the worst inflation in the emerging markets. And while the rest of Latin America is booming, Venezuela posted its second consecutive year of recession. Foreign Policy, in 2008, ranked Caracas as "the murder capital of the world," though no one knows for sure because the government no longer publishes crime statistics.

That sort of mayhem would be enough to topple any leader. So how does the "Comandante Presidente," as devotees call him, keep from falling? The Egypt effect, ironically, is part of the answer. With Cairo in disarray, and fears looming over political turmoil shutting down the Suez Canal, oil prices are surging again. All the better for Venezuela, which even in decline is still one of the US' top suppliers. It also helps to have a political firewall, as Chavez does in his ring of Cuban advisers, a Praetorian guard of Havana's best with half a century of practice in crowd control.

But perhaps Chavez' competitive advantage is his brand of authoritarianism. A newcomer to Venezuela expecting to see jackboots would be forgiven for wondering. How can a nation so boisterous and fearlessly irreverent be dismissed as a dictatorship? There are tyrants and there are tyrants, of course. And while the scholars' game of parsing autocracies may be lost on protesters caught on the wrong end of the nightstick, it's precisely the nuances that can topple or prop up a dictator when things get ugly.

In practice, the semi-democratic ruler may be as unyielding and arbitrary as the baldest tyrant. But its talent is to create the political escape valves -- the right to vent steam or vote one's conscience -- to engage voters and rivals even as it frustrates and finally thwarts them. And so Chavez jails and hounds critics, but keeps no gulag of political prisoners. Independent media are silenced (Radio Caracas) or harassed (Globovision), although ordinary Venezuelans may freely assemble and say just about what they want. The government does rig elections, but slants the outcome through gerrymandering as it did in September when the opposition won a majority of the popular vote but failed to gain control of the legislature. Not surprisingly, Chavez and his allies have won 14 of the 15 elections and referendums he has sponsored since coming to power.

By throwing in a dollop of asistencialismo fueled by petrodollars (selling gasoline at a few cents a liter) and putting on a bit of populist theater (expropriating a few mansions in the name of tens of thousands left homeless by rainstorms), the government has managed to prolong its public honeymoon even as the economy sinks. (He still boasts a 50% approval rate.) "Venezuela is an authoritarian but at the same time very chaotic [state] that is not tightly repressive," says Michael Shifter of the Inter-American Dialogue. "Many Venezuelans, especially the poor, continue to identify with him, even though disenchantment has grown."

Venezuela's easygoing political culture may even play a part in keeping Chavez on top. Laid back and imbued with a healthy sense of self deprecation, Venezuelans occasionally take to the streets to protest. But they would sooner laugh at the excesses of their eccentric Comandante than storm the ramparts or immolate themselves in the name of democracy. So far the only arena for "fundamentalistas" in Venezuela is the baseball stadium.

Gustavo Coronel, a Venezuelan energy expert and former founding member of the national oil company, PDVSA, has an anthropological explanation. "Most Venezuelans are descendants of the Arawaks not the Caribs," says Coronel. "The Arawaks ate mostly maize and plantains. The Caribs ate Arawaks."

Unlike the theocracies and unalloyed tyrannies of the Middle East and Northern Africa, Venezuela under Chavez is an odd but effective political hybrid

For now, Chavez is not on the menu. But if the rumblings in the Middle East hold any certainty, it is that the people's palate also changes.

A longtime correspondent for Newsweek, Mac Margolis has traveled extensively in Brazil and Latin America. He has contributed to The Economist, The Washington Post, and The Christian Science Monitor, and is the author of The Last New World: The Conquest of the Amazon Frontier.

Wednesday, February 9, 2011

Venezuela's PDVSA not to receive $20 billion in cash

The cash flow of the state-run oil industry Petroleos de Venezuela will fall until 2012 because of oil deals with Cuba, Petrocaribe and the Chinese Fund

El Universal: The cash flow of state-run oil company Petroleos de Venezuela's will plunge due to the preferential financial conditions granted by Venezuela and the exchange of crude oil and products for goods and services.

According to a report issued by Barclays Capital, PDVSA "will not receive in cash $9.4 billion in 2011 and $10.7 billion in 2012" due to the export agreement with Cuba and a 50% discount in the total invoice value of Venezuelan oil exports to the Caribbean countries (under the Petrocaribe cooperation agreement).

All of this includes preferential terms such as long-term funding, and the mandatory payments on loans granted by the bilateral Chinese Fund.

Egypt and Venezuela: Dictators, it seems, are not in fashion today!

VHeadline's Paris (France)-based commentarist Alfredo Bremont writes: While dictators, it seems, are not in fashion today, we can just say that the Middle East is in liberation mood and on its way to democracy, but as we already knew, the current dictator was democratically elected with the West blessing’s and red carpet honors.

For President Chavez this can be a blessing or a curse, as it presents the opposition with an ideal moment to label the President they dislike a common dictator.

What we must grasp from these events is the aftermath, and what we recognize is that modern Western culture has reached its end point.

However, we must clearly discern how this disintegration is taking place and where we position ourselves in respect to current world events.

Our present cultural collapse is developing in a unique manner. People can finally be free, and understand and experience what a free human being is. The first signs are that a civilized revolution is coming from Tunisia and the Middle East spreading towards the Horn of Africa and ultimately, ending in the Saudi Arabia peninsula. However, what is of most importance is that this revolution has been quite elegant, calm and in fact surprisingly, intelligent, as the Israeli lobby has acknowledged and Washington think-tanks are finally accepting.

What makes these exotic revolutions so exceptional is that the barbarians are no longer located in the Third World but are in fact further up North. Paris, Berlin, London, Washington and New York are the exact places that put the Egyptian dictator in power as they did for Saddam Hussein, Mohammad Reza Pahvlavi and the rest of well-know dictators of our world.

Nevertheless, we also know Western media and Western population call these Third World ordinary citizens terrorist, and second-class populations, uncultured and somewhat backward, sometimes considered by some as not even human but just animals.

The land of pleasure and tourism is where the sun shines, in Africa, the poor regions of Indonesia, Venezuela, Colombia, Brazil, or the Caribbean islands. It is where we Westerners dominate and dictate, buy cheap and despise. This is where the uneducated live and the wise Westerner sacrifices his life to help and save them from ignorance and diseases. These are the lands that need help from the IMF and the World Bank, FIO, UN, and advice from Washington and Paris. Economic advisers as the Chicago Boys and Goldman Sacks are sent to these far away regions. They need us, our technology, our culture, our know-how, the civilized West says repeatedly, and constantly echoes the same slogan endlessly. However, reality shows that these very uneducated folks are in fact a lot more sophisticated, that their Western counterparts. It’s the West that can do with a bit of example in humanity, social relationships, education, manners and citizenship.

The rich West, full of objects and empty of cognizance, still believes that it knows best. However, we must not blame the ignorance of Westerners but rather understand why they have adopted that position. We must as well discern a North-South realm that is right in front of our eyes and understand the meaning of it.

*

"I think therefore I am." (I think spending, I am a consumer until I die)

It can be of great help to the confused mind and brainwashed thoughts of the industrialized world when they do manage to understand the hiding meaning of the phrase. The fact is they were kept in ignorance for the simple purpose of conquest, (Plato’s cave ) shows that Parisians are nothing more than simple barbarians sent to the civilized world, "the Third World" (which they consider to be uncivilized) to conquer and dominate, subjugate, humiliate, and destroy the dignity of the peoples of those regions. A holiday in the south of Egypt is an ego trip and for the benefit of the masters. With the only purpose of corruption, they were programmed and still are now, to think, believe, act and obey.

These programmed robots do have a boss but it is not the CEO of Goldman Sacks nor the manager of Intel, or any corporation that roams the Western world. Their ruler is implanted on their brain by television ads, propaganda and the obligation of consumerism. They are servants of a system they neither understand nor accept as true. They are practically absent. All they know is to follow the ad, purchase, sob and complain, demand democracy from a system that does not practice democracy, justice from laws that are designed to be unjust, liberty from a culture that has evolved into repression, and knowledge from a system whose purpose is to keep you in ignorance.

As long as you do not know, you will obey, consume, work for less, get into debt and later, forget all you have work for, your benefits, pension social security benefits, all gone. They call this progress, growth, but it’s nothing more than corruption, from top level of the pyramid to the middle managers; corruption is all that there is. Politicians, bankers, religious leaders, theorists, philosophers, painters and preachers, and art dealers … all they know is corruption, despotism and greed.

Moreover, here this upside-down, middle-eastern realm blasts into the mind of the Western television screen. Theorists from Alex Jones to Gerald Celente claim they know the reason for the events and blame the government, the CIA, George Soros, and bankers as Naomi Klein says. Nevertheless, all they do is continue to empower the falling system. Bono and his African pledges serving propaganda do more harm than good. The so-called help brings corruption, despotism and destruction to Africa. What Africa needs is dignity and an end to Western racism, one of the keys of colonialism, exploitation and communal suicide.

*North is South. South is North. (A pole shift)

An upside-down world

What Egypt is showing western society is what they fail to perceive the cause of enslavement is in Western cities, the British parliament, in Washington DC. These Egyptians, Tunisians and Algerians are showing you the path towards your freedom, liberty, equality and fraternity.

Dignity does not depend on themselves, on their revolution or the new elected leader, it depends on you. Just as your own freedom depends on the perception of how to liberate yourself, their revolution is where the know-how is coming from. Moreover, your own liberty depends on the perception and discernment of events in the Middle East. What the Western mind is able to conclude will determine if the culture will survive its upheaval, and if eventually, its citizens will achieve at last freedom, democracy and dignity.

Technology

Means by which humans can indeed liberate themselves, take their proper place among all of us living organisms, and achieve their ends. Technology can liberate men as it can enslave him. A prosperous, artistic harmonious realm is possible, only if you want it and let your subconscious mind guide you to it … you will experience it sooner than expected.

Monday, February 7, 2011

Chavez has been lucky ... but will it allow him to win the 2012 elections?

The Miami Herald (Andres Oppenheimer): After two years of gradually losing popular support at home and political influence abroad, Venezuelan President Hugo Chavez could be one of the big winners of a major rise in world oil prices triggered by the Egyptian uprising.

But will oil prices rise enough to give Chavez' 12-year-old regime a second wind, and allow him to win the 2012 elections? Will he be able to resume his checkbook diplomacy in Latin America?

Venezuela's narcissist leader -- if you think this depiction is unfair, consider that in his January 15 speech to Congress he used the word "I" 489 times -- knows that his political future depends on oil prices.

His popularity at home is dwindling -- 52% of the vote in last year's legislative elections went to opposition candidates, despite massive government propaganda and limited press freedoms -- and Venezuela suffers from a 30% inflation rate, growing food shortages and the lowest economic growth rate in Latin America.

But Chavez is betting that the "Egypt effect" on oil prices will save him. Since late January, when the Middle Eastern turmoil started, New York-traded oil prices have gone up by about $7 a barrel, and surpassed the $92 a barrel mark earlier this week.

Venezuela says it exports about 2.3 million barrels of oil a day, and economists calculate that -- after subtracting subsidized oil sales to Cuba and other countries -- each $1 rise in world oil prices will give the Chavez regime an extra $730 million a year.

Some financial analysts say that, just by staying where they are, oil prices would give Chavez a major financial boost. "This will definitely help him," says Russ Dallen, head trader with the Caracas, Venezuela-based BBO Financial Services firm. "The government was betting that prices of oil would go back up, and it was a good bet."

According to Dallen, if Egypt manages to carry out a peaceful transition of power and oil prices stay at about $92 a barrel, Venezuela would get an additional $5.1 billion this year from oil exports.

If Egypt's transition is chaotic, and fears over the passage of oil tankers through the Suez Canal drive New York-traded oil prices to $100 a barrel, Venezuela would get an extra $10 billion this year, he said.

And if the Egyptian turmoil extended to major Middle Eastern oil producers and oil prices reached their previous record of $150 a barrel, Venezuela would get an additional $35 billion a year. But that's unlikely to happen because such an increase would immediately trigger a major world recession that would immediately drive down world oil prices, he said.

Other analysts say Chavez won't benefit from the "Egypt effect," among other things, because Venezuela has to pay massive foreign debts, and its oil production is falling dramatically.

Evanan Romero, an energy consultant and former director of Venezuela's PDVSA oil monopoly, told me that lack of investments in exploration and maintenance have driven down Venezuela's oil production by more than a third over the past 12 years, and that oil exports will keep falling. He said that Venezuela's extra oil income will be reduced by massive domestic consumption -- Venezuelans pay less than 5 cents a gallon for gasoline -- as well as by large-scale oil smuggling to neighboring countries and Chavez' subsidized oil exports.

"Chavez' financial problems won't be solved this year by the current spike in oil prices," Romero concluded. "What he wins with rising oil prices, he loses with declining oil production."

My opinion: Chavez has been a lucky guy, and record oil prices during the past twelve years have allowed him to buy loyalties at home and abroad. The current rise in world oil prices will no doubt help him, but it won't be enough to allow him to give away cash to voters like in the past.

If oil prices rise above $110 per barrel, the U.S. economic recovery will come to an end, oil prices will drop, and Venezuela's export income will fall. So we can assume Chavez will get a small respite from the "Egypt effect," but nothing that would allow him to easily win next year's elections without further tightening his grip on power, or rigging the vote.

Saturday, February 5, 2011

VenEconomy: Chavez has become expert at implementing half measures

VenEconomy: Over these past 12 years, the Hugo Chavez administration has become an expert in implementing half measures. Unfortunately, while such measures bring momentary relief from some ill in this or that sector, they generally open the doors to new and even greater problems for other sectors of the population.

One example of this is the announcement the President made at the weekend that he will issue a decree with the rank, value, and force of law whereby the debts of agricultural producers who were affected by the torrential rains in November and December last year will be written off.

It is very easy to applaud this decision if one looks at just one side of the coin: the grave situation facing the agricultural producers; a situation, it has to be pointed out, that is not solely the product of the rains brought by La Nina or the draught caused by El Nino during the early months of 2010, but, more particularly, of the government's wrongheaded policies that have led it to expropriate thousands of hectares of farmland without rhyme or reason, discouraging investment and the planting of crops.

Equally understandable is the enthusiastic welcome given the measure by Fedeagro, whose president, Pedro Rivas maintained that this "would help to alleviate our indebtedness and allow us to give a fresh boost to planting in the upcoming seasons."

But the situation is far from rosy for the other side of the coin: the private banks. According to the few details announced by the President, this decree-law, to be issued under his enabling powers and which will write off "all the debts of agricultural producers, even though those people in the private banks don't like it," will be ready in just a few days' time.

The point is not whether the banks like it or not, but that this decree could drive many of them into bankruptcy.

It so happens that, for some banks, the agricultural loans portfolio (25% of the total portfolio) that the government requires the banks to maintain could be substantially more than 100% of their net worth (in November, 25% of the banks' portfolio was equivalent to 92% of the system's net worth. Assuming that half of a typical agricultural portfolio is to be written off, this would wipe out 46% of the banks' net worth, which, in some cases, could represent more than 100%.)

The details of this proposed decree-law have not been made public so far. However, from the little that has been leaked, there is no indication that the government is thinking of compensating the banks for any possible losses that this forced pardoning of agricultural loans will cause.

A rational government would be concerned over the well-being of all sectors of the population, which involves understanding that having a strong banking system in which the general public has confidence -- something achieved by means of clear policies reached on the basis of consensus -- is essential for the healthy development of any country.