Venezuela is living a sort of suspended animation. Only a few months ago, suggesting that there would be no devaluation by July would have seemed nuts, but here we are less than ten days from July 1st. and as I expected, the “official” rate of exchange remains at Bs. 2.15 per US$. The worst part is, that the longer it is held fixed, the bigger the explosion will be in the end.
As Chavez hopes for a recovery of oil prices, the truth is that nothing will save him by now. Oh yes, oil prices are up to US$ 70 per barrel, but the average price of the Venezuelan oil basket, so far this year, is roughly at US$ 50 per barrel, a level impossible for the Venezuelan economy to be sustainable for the remainder of the year.
What is likely to happen, is that the economy will shrink dramatically in the second half of the year and that demand will simply collapse. As importers go to the swap market (even pharmaceutical companies are not getting US$ at Bs. 2.15), prices will jump so much that people will not be able to buy stuff (and will get unhappy!) and even if Chavez does not want you to buy imported diapers, even his factory is likely to find problems to produce his much touted Bolivarian shit absorbers.
And even now, it seems like under ignorant Giordani’s tutelage, Chavez refuses to devalue, setting up the country for an even bigger devaluation later in the year.
But rather than paying attention to these problems, the Government continues on its confrontational road, worrying about survival via politics, rather than trying to patch up this almost unpatchable economy.
And reading the political end of things in the daily news is simply too much. Here is a Government trying (what for?) to look democratic, and the Supreme Court has just validated prior censorship and given the Minister of Infrastructure the power to exercize it. If he does not like and ad or an opinion, he can simply shut down the TV station, radio station or blog for that matter, even if Art. 62 of the Constitution gives everyone the right to say whatever you want. But I guess Chavez is beyond the Constitution by now. He used to show it all the time, the”best Constitution in the world” he used to call it. I guess those were the days even for those that objected his Constitution but believe it is there to be respected by all.
And then I read about the Organic Bill for National Security, which declares (Article 47) all basic industries as “security zones”. Funny, security zones have been out of fashion since 2002-2003, when the Government decided to declare security zones around any place it did not want opposition protests around. So now, all large unions in the country are simply screwed, they can’t protest where they work! It must be that unions are by now controlled by the right wing in Venezuela. Whatever that may be.
The funny thing is that if you think Chavez is left wing, how about Pablo Medina accusing Chavez today of giving the country away to foreign powers! According to this member of the opposition (Yes, somehow, he is supposed to be on my side, even if I have yet to find where I belong!), Chavez gave up our claim to part of Guyana, gave away part of the Orinoco oil belt to Brazil, the island of La Orchila to the Russians and he did not give Colombia the Gulf of Venezuela because people found out about it!
To add to this confusion, today I learn that the President of PDVSA, Mr. “I decide everything”, went to the Prosecutors office to ask that the former President of PDVSA Gustavo Roosen, be charged for giving away the Boscan field without opening up the process for bidding!!!
Jeez, Mr. Ramirez could have fooled me! Isn’t he the one that has rewritten contracts, giving them away, signed a loan guaranteed by the heavy crude in the Orinoco and gave at least a half a dozen areas in that belt to friendly countries, all without consulting with anyone?
It must be that he can’t accuse himself or something like that.
Meanwhile, Chavez keeps saying that he will continue taking away from the oligarchy what they have taken from the “people”, but he says little about what his cohorts are taking away from the people or the oligarchy and creating a new oligarchy, the “Bolibourgeois”.
Because I find it fascinating that while Chavez is nationalizing banks and creating Bolivarian insurance companies, those close to him keep buying banks and insurance companies and paying through the nose for it. Has it occurred to Chavez that these guys may have plans that do not include him? Maybe when he says someone wants to kill him, he is looking in the wrong direction.
Thus, it gets harder and harder to understand Venezuela, so I better follow Iran much closer than I am, after all, it is much simpler to understand what is going on there.
Let me make it a simple analogy to Venezuela. If Iran were Venezuela, what is happening there would be that a Chavista candidate beat a dissident Chavista candidate (while the opposition was not allowed to run) and the dissident candidate does not want to accept the results of the Electoral Board. Almost the same, except there is no opposition, no?