Hugo Chavez Issues Illegal Decree To Increase Discretionary Funds

April 22, 2011

Taking advantage that the whole country was on vacation on Thursday, Hugo Chavez piled one illegality over the other to issue a decree to increase the availability of discretionary funds for his spending. The illegal decree creates a special contribution by PDVSA which will go directly to the development fund, whenever oil prices are very high like they are now.

According to the decree,when oil prices are above US$ 70 per barrel, but less than US$ 90, 80% of that difference will go directly to the fund. If prices are between US$ 90 and US$ 100, this will be 90% and if prices are, like they are today, above US$ 100, 95% of the excess will go directly to the Development Fund. This fund is a discretionary fund which is managed with little or no transparency according to the President’s whims and wishes.

The decree is doubly illegal, since it is based on the illegal Enabling Bill granted Chavez in the dying hours of the old National Assembly, which gave the President the power to legislate beyond the term of the Deputies that approved and in violation of the legal mandate the people had given the new Deputies of the National Assembly in September. Chavez would not have had the required 2/3 majority in the new Assembly to obtain these powers.

But to add one illegality on top of the other, the Enabling Powers were given to Chavez to deal with the housing emergency, thus, creating this special contribution to a general fund which is managed with little transparency can not be legal even if the Enabling Bill were legal. But Hugo never cared for such details before.The only way the decree would be legal would be if the funds went directly to deal with the housing crisis, which will not be the case under its structure.

According to Chavez this decree insures that more of the money goes “directly to the people”, but in reality they go more directly to him and his ability to use funds without control, supervision and under his total discretion. Chavez called oil prices exorbitant, which is somewhat ironic given that he has always said that US$ 100 was the fair price for a barrel of oil,

The decree will add to the lack of transparency in the country’s numbers. The current mystery is why international reserves have dropped in 2011 with oil prices increasing significantly when compared to last year. Outflows via the foreign exchange control office CADIVI have increased only marginally, suggesting that PDVSA is either paying supliers, not handing over as much foreign currency to the Venezuelan Central Bank or giving it directly to the development fund Fonden. Such lack of transparency is a partial explanation for the country and PDVSA’s bonds enjoying such a risk premium, as Hugo Chavez continues to manage the country’s finances at will and without much control from other institutions.

Venezuela and Venezuelans lose in the end, as this misdirects funds and keeps straining PDVSA’s cash flow. If you believe oil exports are at 1.6 million barrels a day and assume oil prices will average from here till the end of the year $105 per barrel, this will give the development fund some US$ 11.5 billion for Hugo to spend at will.

26 Responses to “Hugo Chavez Issues Illegal Decree To Increase Discretionary Funds”

  1. Gene Says:

    What can we say other than “Power corrupts and absolute power corrupts absolutely:” It seems to me that this observation makes no dent in Venezuelans, who love power and less in venezuelan MUD politicians, who are themselves obsessed with power. Nobody except the people leaving Venezuela and relocating elsewhere seems to give a dent about achievement, which of course is the basis of the standard of living we can enjoy today beyond that of being slaves. And just to clue us all in, the power hungry had little to do with anybody’s achievements.

  2. m_astera Says:

    And what will be done with this money that rightly should belong to the people of Venezuela? It will be used to buy elections, bribe voters, buy personal publicity, and spent on useless war toys that will rust away.

    The banality of evil.

  3. Egland Calling Says:

    But will the poor chavistas in the barrios , any of the chavezs militia understand or even take any notice of any of this…….I doubt it :-(

  4. HalfEmpty Says:

    US$ 11.5 billion for Hugo to spend at will.
    With proper allocation this should be adequate to fool the necessary number of voters one more time. After than? Who knows, perhaps oil will continue to rise, perhaps we can pay for dinner by finding a pearl in our order of oysters. Optimism should be the first general order of the day.

  5. Kepler Says:

    Miguel,

    I am going to be…not the Devil’s advocate but try to see if we can use this or this is just going to be another sand grain in the beach.

    Is it possible to initiate a demand to request the exhaustive accounting and proof for spending every cent of those billions? Can we ask that now?

    Imagine: in principle that should be possible unless there is a fund for “security/intelligence things”, which are, to some extent, secret in most countries I am aware of. But even that should be a fraction of the whole.
    One thing is “at the government’s sole discretion” (I know, this does not justifies it) and quite another one transparency…I would say.

    Or perhaps nobody knows how you can demand that in Venezuela and that all these demands are either expressed as a one-time media declaration OR a demand to the Corte Suprema de Injusticia Bolivariana.
    There must be other ways, ways that are different than hunger strikes.

  6. Miguel Octavio Says:

    Deputies in the Assembly asked the Supreme Court to declare the Enabling Bill illegal, they havent responded. People have asked the Comptroller Russian (who btw is in intensive care) about the fact that nobody knows how Fonden is spent, he replied that he ovrsees Fonden. It isall very tight.

  7. Deanna Says:

    At this point, all we can hope for is that all the Chavista leaders die off or become mentally incapacitated one by one==maybe a massive heart attack for the leade!!!

  8. Old Time Says:

    I read President Martinelli of Panama plans to visit Caracas soon. I hope he can talk Chavez into doing a Kennedy style heating oil program for the citizens of Panama who deserve it more than the citizens of Venezuela. The USA ought to send a Thank You Card to Chavez for the billions he has sent to Ortega to keep Nicaragua afloat. It has meant less foreign aid the USA had to send to Nicaragua. (It has also meant Ortega’s sons and cronies are living the high life in San Jose, Costa Rica.)

    Seriously, when are the people of Venezuela going to say enough is enough?

  9. Kepler Says:

    Miguel,
    I think this cannot just go on. The deputies need to keep neat track of all the petitions and put them somewhere online in a very visible place and disseminate, disseminate, provoke, use that with simple figures – in Bolivares- to show to Pedro Perez how this money is wasted and taken away from them

  10. concerned Says:

    At a time when PDVSA needs to pay bills, perform repairs to old facilities, and invest in new projects, Chavez finds a way to continue to siphon every cent out of his cash cow until it is nothing more than a broken, bankrupt empty sack.

  11. Lemmy Caution Says:

    I am reading this for some years now. Like Egland from what I’ve read, I get the impression that this will make no effect on the popularity of Chávez.
    In Chile the popularity of the Piñera Government has come down, when the public got notice that the influential UDI intendant Jaquelin van Rysselberghe misused some of the post earthquake reconstruction funds. In Venezuela there won’t be any such reaction by the voters. And its paramount for a democracy that the public questions missuse of public funds. The events that lead to the creation of the first american republic started with Boston Tea Party and that was all about questioning missuse of public funds. This is really fundamental.

  12. albionoldboy Says:

    The real topic is not Chavez adding to his slush-fund, and breaking the law, (been there done that) but the timing.
    Elections are not till next year, Chavez can’t guarantee what oil prices will be next year, grabbing more money now will do him no good if they crash next year, its just taking money from one pocket to pay the other.
    But if he calls early elections, then it makes sense, an added bonus is it preempts the opposition elections, and most likely the demise of the MUD

  13. m_astera Says:

    Sociopaths and narcissists think that they are smarter than other people. Why? Because they believe that if other people were as intelligent as they are they would be doing the same things the sociopaths do.

  14. Roy Says:

    M_astera,

    Actually, sociopaths usually recognize how they are different from others. They recognize that other people have a restraint on their actions that the sociopath does not have. They see this restraint as a weakness to be exploited. They learn how to lie without “tells”. They learn how to exploit the predictable behavior of those encumbered with a social conscience.

    And they keep right on exploiting and using people right up until they are discovered and finally exposed for what they are. At that point, the combined numbers of the normal population join forces against the “outsider” and defeat him.


  15. […] why? As Devils Excrement says, the decree will give the president an extra $11 billion to play with in his discretionary funds, […]

  16. m_astera Says:

    Here’s the spin:

    Venezuela to spend oil income on social programmes
    Irish Sun
    Saturday 23rd April, 2011
    (IANS)

    Venezuelan President Hugo Chavez has announced that extra income from the country’s oil exports will be used for social spending.

    Venezuela, South America’s biggest oil producer, has been receiving sharply higher income from its oil exports in recent months. Global prices on Venezuelan oil averaged $107 per barrel last week, while the 2011 state budget was balanced with the $40 per barrel benchmark, RIA Novosti reported.

    ‘I have signed a decree that authorises spending additional revenues from oil sales on the implementation of various social programmes for the country’s population,’ Chavez, who will seek re-election next year, said on national television Friday.

    The decree primarily hikes the so-called oil windfall tax, introduced by Chavez in 2008, from 60 percent to 95 percent on revenues from oil prices higher than $100 per barrel, giving Venezuela’s socialist leader enough room to conduct populist policies.

    Chavez said the new law would allow the government to allocate additional $100 million on public housing projects and raise salaries nationwide.

    He also predicted that war in Libya would drive oil prices up in the near future.

    Venezuela produces about 3 million barrels of oil per day and sells almost half of it to the US.

    http://story.irishsun.com/index.php/ct/9/cid/2411cd3571b4f088/id/773148/cs/1

  17. m_astera Says:

    Roy-

    I’ve been studying the emerging info on psycho-sociopaths since 2007. I’ve also taken the time to read a lot of the older work going back to Hervey Cleckley in the 1940s. You may have missed the quote from Lobaczewski’s Political Ponerology that I’ve posted here and at Daniel’s blog about a dozen times.

    The source for my comment above was this recent article in the Sydney Morning Herald:
    *******************

    Beware the workplace psychopath
    April 8, 2011

    Bullies to face 10-year jail terms

    Following the suicide of teenage waitress Brodie Panlock, the state government will this week introduce tougher laws against workplace bullying.

    The Victorian government announced plans this week to introduce a jail term of up to 10 years for workplace bullying. But until it becomes law – and probably afterwards, too – terror at the hands of the workplace psychopath will continue for many victims. Apparently, they can’t be stopped. Or cured.

    John Clarke is the author of Working with Monsters, which provides readers with information on how to protect themselves. I asked him whether workplace psychopaths are aware they’re psychopathic.

    “They wouldn’t recognise themselves as a psychopath but the behaviour is always conscious and intentional,” he says. “Some of the ones I’ve spoken to don’t really see why it’s such a big issue because they see it more as a strategy they need to use to survive. It’s survival of the fittest.”

    What makes this condition even more twisted is that workplace psychopaths consider themselves to be smarter than everyone else precisely because of their crafty techniques. As Dr Clarke implies, their mentality goes something like this: ‘If other people were as smart as me, they’d be doing the same thing’.

    And that ‘same thing’ is psychological harm inflicted upon colleagues deliberately. When the victim publicly suffers, the psychopath derives enjoyment from seeing evidence they’re able to hurt and conquer another person.

    Dr Clarke adds: “There’s an absolute lack of conscience, lack of remorse, and lack of guilt. They’re manipulative, superficially charming, and pathological liars. They like conning people and there’s a grandiose sense of self-importance.”

    The office is the perfect breeding ground for workplace psychopaths to prosper, and their key tactic is this: win the important people over first.

    “People actually like them,” he says. “They use their excellent verbal abilities to create this false persona and people find them exciting, dynamic and engaging, and they use that to camouflage the torture they’re inflicting on their co-workers.”

    http://www.smh.com.au/small-business/blogs/work-in-progress/beware-the-workplace-psychopath-20110407-1d687.html#ixzz1KOqzz5pF
    **************
    “And they keep right on exploiting and using people right up until they are discovered and finally exposed for what they are. At that point, the combined numbers of the normal population join forces against the “outsider” and defeat him.”

    My observation is that the vast majority of “world leaders” are and have been psychopaths for about as far back as history goes. It doesn’t appear the the normal population has been too effective against them so far.

    Meet the new boss, same as the old boss.

  18. Kepler Says:

    Interesting thoughts, Astera.

  19. bobthebuilder Says:

    Well done for spotting it – I haven’t seen it reported any where else.

    These extra funds will be a nice little bit of insurance for Hugo who can now use this money for a spot of patronage. The only question is now will there be anyone left to turn out the lights when the last Venezuelan leaves, or will the lights have failed long before?

  20. An Interested Observer Says:

    Lemmy, this won’t have an effect, and let me tell you why. Sometimes a company will announce some bad news, and yet the stock price doesn’t budge. Why? Because people already knew about the bad news, and the news was just official comfirmation of common knowledge. The bad news was already factored into the stock price, so it didn’t change.

    The parallel is this: in Chile, the voters expect clean government, so finding out otherwise is a blow. In Venezuela, they know things are corrupt, so that expectation is already factored into political support. Ergo, no response.

    Kepler, your ideas would work in a country with independent, functioning institutions. So there’s two reasons why there will be no accountablity for this.

    albionoldboy, I’m afraid you’re exactly right. Chavez and Ms. Kirchner are playing from the same playbook right now, just with different cash cows. Of course, it’s a vicious circle, which means the more they take now the more problems there will be later. But perversely, the less the government can do in the near future, the more (some) people will think they need Hugo to rescue them from misery. Because maybe he’ll give them a house.


  21. […] Este año, Chávez no se puso creativo: más bien, se acogió a un clásico, aprovechando que nadie estaba leyendo el periódico para agarrarse un bojote de plata. […]


  22. […] Hugo Chavez Issues Illegal Decree To Increase Discretionary Funds […]

  23. megaescualidus Says:

    He definitely feels emboldened by this new high oil price cycle.

    And, now he has more $$$ to spend on his behalf towards the 2012 election. With these high oil prices chances of getting rid of him on the 2012 election are even slimmer.

  24. pol47 Says:

    So what the people of Venezuela will do nothing to stop the thug Chavez and his buddies.

    Until such time as the people of Venezuela gets the balls to stand up for themselves; as the people in other parts of the world have; they will just keep on bending over and letting Chavez rape both the people and the country of Venezuela.

  25. djbravo Says:

    Miguel,

    Great article. Readers might find this article of interest as well.

    http://shadow.foreignpolicy.com/posts/2011/04/25/understanding_the_success_of_chavismo_in_venezuela

  26. Speed Gibson Says:

    heres a thought….instead of pissing money away on 2nd rate Russki weapons…why doesnt Hugo buy or building something like this? oh duh thats right…its Latin America…. never mind

    http://latino.foxnews.com/latino/health/2011/04/25/naval-ships-floating-hospital-latin-america/?test=latestnews


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