Lies, Alo Presidente and Hugo Chavez petrochemical folly

September 24, 2007

I am always amazed at both the ability of the
Chavez Government to lie, as well as its ability for hyperbole when
talking about economic projects. The first few years of Chavez
presidency, you could tell he was frustrated with economic issues, he
did not know how to manage them, did not understand them and could not
control them, in contrast with social and political issues where he
could really understand what the people wanted and used it to his
advantage, blaming the previous forty years for all the problems.
Since
then, Chavez has learned that you can lie, exaggerate and make up
numbers on just about any subject, but it is precisely in social issues
where he has to walk a very fine line, because the people are not dumb.
You cant fool people into believing there is no crime or it has not
increased, no inflation and he has stopped it, no shortages or a boom
in housing. Thus, Chavez avoids these subjects. Chavez never says we
have built so many housing units…, he knows that if he exaggerates,
some people will feel that they were left out, so it is better to say
We will build so many thousand units…. In a year, nobody will check
anyway 
Thus,
Chavez concentrates a lot of his time on economic projects which are
not easy to understand, even for himself, and for which there is little
accountability. This is in the end as effective as fighting Bush
ghost, blaming the CIA for everything or calling the opposition
terrorists. The terms are ill defined and in contrast to the detail
into which he goes for historical facts, he usually barely stops to
explain, what exactly Bush ghost did, how the CIA accomplished
something or exactly what terrorist act the opposition committed in a
country with little terrorism. \u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px;min-height:14px\”\>\u003cbr\>\u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px\”\>With time, Chavez has gained confidence on economic matters. He knows there is little accountability on them and he can just talk and talk and simply BS the population. Thus, Chavez can promise a gas pipeline through the South and if it is not built it is because the CIA or Bushs ghost want to divide Latin America. Or he can promise to pay for half of 14 refineries and not one gets built, except for the one in Cuba, which Venezuela is paying for completely. Just yesterday Chavez was blaming the difficulties in working with Petrobras on the underlings,s saying he had to bypass them by dealing with Lula directly. The truth is that the underlings are professionals who have found PDVSA an unreliable partner and they have decided to go at it alone or the refinery may never get built. \u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px;min-height:14px\”\>\u003cbr\>\u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px\”\>The worst art, is that Chavez gets away with it. He can say the most outrageous things and few reporters, pro- or against Chavez even question what he says or ask whatever happened to promises he has made in the past.\u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px;min-height:14px\”\>\u003cbr\>\u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px\”\>But yesterday, this reached \u003ca href\u003d\”http://www.businessweek.com/ap/financialnews/D8RRFPR00.htm\” target\u003d\”_blank\” onclick\u003d\”return top.js.OpenExtLink(window,event,this)\”\>\u003cfont color\u003d\”#000099\”\>absurd proportions\u003c/font\>\u003c/a\> when Chavez during his Sunday marathonic eight hour variety show Alo Presidente, kept a very straight face \u003ca href\u003d\”http://www.eluniversal.com/2007/09/23/eco_ava_chavez:-revolucion-p_23A1056477.shtml\” target\u003d\”_blank\” onclick\u003d\”return top.js.OpenExtLink(window,event,this)\”\>”,1]
);

//–>

With
time, Chavez has gained confidence on economic matters. He knows there
is little accountability on them and he can just talk and talk and
simply BS the population. Thus, Chavez can promise a gas pipeline
through the South and if it is not built it is because the CIA or
Bushs ghost want to divide Latin America. Or he can promise to pay for
half of 14 refineries and not one gets built, except for the one in
Cuba, which Venezuela is paying for completely. Just yesterday Chavez
was blaming the difficulties in working with Petrobras on the
underlings,s saying he had to bypass them by dealing with Lula
directly. The truth is that the underlings are professionals who have
found PDVSA an unreliable partner and they have decided to go at it
alone or the refinery may never get built. 
The
worst art, is that Chavez gets away with it. He can say the most
outrageous things and few reporters, pro- or against Chavez even
question what he says or ask whatever happened to promises he has made
in the past.
But yesterday, this reached absurd proportions when Chavez during his Sunday marathonic eight hour variety show Alo Presidente, kept a very straight face when he announced\u003c/font\>\u003c/a\> a petrochemical revolution, which in its first stage between now and 2013:\u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px;min-height:14px\”\>\u003cbr\>\u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px\”\>…will generate 700,000 jobs, US$ 100 billion in revenues …and require US$ 20 billion in investment\u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px;min-height:14px\”\>\u003cbr\>\u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px\”\>Now, I have yet to see any criticism besides todays Veneconomy Editorial of this statement. \u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px;min-height:14px\”\>\u003cbr\>\u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px\”\>But lets analyze it:\u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px;min-height:14px\”\>\u003cbr\>\u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px\”\>First, the numbers are simply inconsistent among themselves:\u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px;min-height:14px\”\>\u003cbr\>\u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px\”\>—No US$ 20 billion investment is capable of generating US$ 100 billion in revenues unless you have some form of unique product and certainly not with a commodity like petrochemicals, even if they have gone up in price recently\u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px;min-height:14px\”\>\u003cbr\>\u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px\”\>—700,000 jobs is also an absurd number, none of the largest corporations in the world, with revenues many times larger than US$ 100 billion have so many employees. Juts think, Venezuelas oil industry has 45,000 employees to generate less than US$ 100 billion in revenues.\u003c/div\>”,1]
);

//–>when he announced a petrochemical revolution, which in its first stage between now and 2013:

…will generate 700,000 jobs, US$ 100 billion in revenues …and require US$ 20 billion in investment
Now, I have yet to see any criticism besides todays Veneconomy Editorial of this statement. 
But lets analyze it:
First, the numbers are simply inconsistent among themselves:
—No
US$ 20 billion investment is capable of generating US$ 100 billion in
revenues unless you have some form of unique product and certainly not
with a commodity like petrochemicals, even if they have gone up in
price recently
—700,000
jobs is also an absurd number, none of the largest corporations in the
world, with revenues many times larger than US$ 100 billion have so
many employees. Juts think, Venezuelas oil industry has 45,000
employees to generate less than US$ 100 billion in revenues.

\u003cbr\>\u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px\”\>—Pequiven, Venezuelas petrochemical company had revenues in 2004 of barely US$ 3 billion under its current management, know how and expertise, how will it grow to UD$ 100 billion, a factor of 33 i growth. Where will the engineers, competitive advantages and the like come from?\u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px;min-height:14px\”\>\u003cbr\>\u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px\”\>—As an example, Dow Chemical, one of the largest petrochemical companies in the world, had sales in 2006 of about US$ 49 billion, it had 43 thousand employees and trades at a value of US$ 50 billion. \u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px;min-height:14px\”\>\u003cbr\>\u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px\”\>—Of course, the common question has become: Where is the money going to come from? The Government has yet to pay for the Orinoco Oil belt companies it nationalized. PDVSA, our main source of income is not investing what it needs to keep up production and does not have the people required. So, where is the money going to come from? To say nothing of the raw materials required to produce the various chemicals. Natural Gas is limited, oil production is going down. What gives?\u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px;min-height:14px\”\>\u003cbr\>\u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px\”\>The answer is that this announcement will be much like the dozens of others that Chavez mentions every Sunday. There will be no follow up, no project development and maybe, if we are optimistic, in 2013 Pequiven may have increased production of petrochemicals by 20-30% to US$ 4 billion.\u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px;min-height:14px\”\>”,1]
);

//–>

—Pequiven,
Venezuelas petrochemical company had revenues in 2004 of barely US$ 3
billion under its current management, know how and expertise, how will
it grow to UD$ 100 billion, a factor of 33 i  growth. Where will the
engineers, competitive advantages and the like come from?
—As
an example, Dow Chemical, one of the largest petrochemical companies in
the world, had sales in 2006 of about US$ 49 billion, it had 43
thousand employees and trades at a value of US$ 50 billion. 
—Of
course, the common question has become: Where is the money going to
come from? The Government has yet to pay for the Orinoco Oil belt
companies it nationalized. PDVSA, our main source of income is not
investing what it needs to keep up production and does not have the
people required. So, where is the money going to come from? To say
nothing of the raw materials required to produce the various chemicals.
Natural Gas is limited, oil production is going down. What gives?
The
answer is that this announcement will be much like the dozens of others
that Chavez mentions every Sunday. There will be no follow up, no
project development and maybe, if we are optimistic, in 2013 Pequiven
may have increased production of petrochemicals by 20-30% to US$ 4
billion.
\u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px\”\>At which time Chavez will announce in his Sunday variety show Alo Presidente that the second stage of the petrochemical revolution is about to begin and that it will generate two million jobs, US$ 200 billion in revenues and require inly US$ 20 billion in investment.\u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px;min-height:14px\”\>\u003cbr\>\u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px\”\>And all of the members of the then Cabinet, the same faces just rotated in their positions within the Cabinet, will nod approvingly, smile and applaud the bright future Venezuela has in the hands of Hugo Chavez. \u003c/div\>\u003cdiv style\u003d\”margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px\”\>\u003cbr\>\u003c/div\>\u003c/div\>”,0]
);
D(["ce"]);

//–>

At
which time Chavez will announce in his Sunday variety show Alo
Presidente that the second stage of the petrochemical revolution is
about to begin and that it will generate two million jobs, US$ 200
billion in revenues and require inly US$ 20 billion in investment.
And
all of the members of the then Cabinet, the same faces just rotated in
their positions within the Cabinet, will nod approvingly, smile and
applaud the bright future Venezuela has in the hands of Hugo Chavez.

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