The Collective Responsibility Of Venezuelans

August 3, 2014
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I was amazed by how timeless this article is.  I do not necessarily agree with all it says, but most of it. The answer of when it was published is at the end, but there are hints in the text.

By Aníbal Romero

Some former parliamentary members of the official sector have announced that the upcoming Constituent Assembly shall initiate “popular trials” against the alleged perpetrators of our national misfortunes. Is is worth noting, once again, the lack of understanding that our novel rulers have about what it means to have the rule of law. It should also be noted that those who ask for such trials, are self-proclaimed ‘human rights defenders’. Undoubtedly, Venezuela today lives under the sign of Orwell: here the truth is a lie and the lies are he truth; white is black and black is white; demagoguery is government and government is demagoguery.

Now, who will judge who? I would not be balanced to deny the failures of the misnamed ‘elites’ of the puntofijismo as they have a fundamental responsibility for what happened, good and bad, over these past decades. But: what about the people, does the community generally lack any responsibility, any blame? Ask yourself, for example, if it is perhaps  that someone forced them to vote for Pérez in 1988, or Caldera in 1993? If I remember correctly, on both occasions many voices were raised to warn Venezuelans about what would surely mean the renewed choice of these characters as presidents. Many warnings were made, not that we lacked alternatives. However, the majority of people supported them. Does not this imply a degree of responsibility of the people in general of the national destiny? Do they not remember what we did? Or is it perhaps that we do not want to remember?

The idea that there is a collective responsibility for the fate of a community or country is not original. In our century, the reality of shared responsibility has been tested in specific cases, and the reason is simple, most especially if we are talking about a democracy: Citizens do not have the right to wash their hands of the sociopolitical processes that move history. At a minimum, life forces us to provide a balance of the outcome due to government we choose.

It is  especially absurd to not attribute part of the responsibility to a community like ours, which for more than forty years has lived with a massively overvalued currency, subsidized all over the place, undergoing massive investments in health and education (and which we were not able to take care of in both quality and efficiency). A community that, when the time to face the harsh reality of the end of the populist-rentist model arrived, chose to take to the streets (27-F 1989), behead a President who had been democratically elected, support two violent coups and bring to power in 1993 the person who sent them the pathetic ‘Letter of Intent for the people’. And to round it off, the same people ended up exalting to the leadership of our destiny, the main character in one of those military coups, the crucial negation of all democratic value. What can we expect, then?

Not understanding that collective responsibility is equivalent to conceive the ‘people’ as an entity composed of mentally, legally and morally disabled individuals. Because that is not my idea of ​​the Venezuelan people, I think that is composed of normal human beings, which is why I believe that we can not skirt the part that corresponds to us in the drama of the country. The sweet and complacent attitude towards the ‘people’ adopting an attitude which imagines them as pristine and the source of all virtue and wisdom, is nothing but a mask behind which they hide a deep contempt towards the people, which is seen as manipulable and even stupid, as people who you have to distribute cheat sheets to vote, which they aimed to deliver to electoral ballots decorated with berets, hats, caps and other playful symbols, so that they could  ‘get it right’, because they are too stupid, and may not vote for the currents saviours.

I insist: Who forced those who voted for Pérez and Caldera to do it? Who forced those who voted for Hugo Chavez to do it? Also in 98 many  warning voices rose, and nevertheless they again came back to take the easy road, that of the scapegoats, the messianic solutions, constituent illusions and other tricks of our incorrigible and systematic collective delusion. Now we claim to want to change everything, but really do not want to change anything. What we want is to go back, to that populism works, to that of a ‘strong man’ that makes decisions and leads us by the nose. Productivity? Competitiveness?? Long-term vision?? These are not the issues that beset us. Here are Danton and Robespierre emulating, retreating to the eighteenth century, minding if the Constituent Assembly will be ‘original’ or ‘derived’, happy to discharge our responsibility over any mirage that comes to mind. But it can not hide the truth forever: the Venezuelan people have given themselves the governments who they believed deserved. Nothing is left but to bear the consequences. Popular Trials? And who will judge the people?

This was Romero’s farewell article in El Universal on June 6th. 1999.

 


And One More Thing…On The Carvajal Affair

July 29, 2014

So, The Netherlands invoked an article nobody had referred to in the whole affair, to release Hugo Carvajal on Sunday evening. Basically what the Netherlands said was that Art. 13 of the Vienna Convention allows for a Consul named but not accepted to temporarily assume his or her duties. Thus, according to this, Carvajal’s arrest was valid and his release was valid.

However…

It was somewhat sneaky of the Dutch to release Carvajal on a Sunday, without going to the Judge that originally said Carvajal did not have immunity. You would have thought that in a country with Law and Order, the proper procedure and place would have been to go to Court on Monday and request Carvajal’s release.

Most likely, the Dutch Government did not want the US to show up in Court on Monday with the extradition papers, creating a conflict. The Prosecutor in Aruba had said that the extradition was now just a formality and the US just had to provide the required documentation for it to take place.

Clearly, everyone applied pressure, but the weak link did not turn out to be Aruba as I suggested on my first post, but rather The Netherlands, as reportedly even Russia played a role, exchanging concessions on the Ucraine plane for helping release Carvajal. No matter what anyone says or how this is interpreted, it was a severe blow to the US, who would have loved to get Carvajal onshore. The indictments are a doozy, they are sealed indictments in Miami and New York, accusing Carvajal in Miami of helping drug dealers and in the Carvajal Indictment Southern District of NY of :

cavnyThis is not aiding or helping, this is coordinating the transportation of “only” 5.6 Tons of cocaine to the US, quite a strong accusation, charged by the Grand Jury, no?

Meanwhile, Carvajal is welcomed in Venezuela as a hero and there are few mentions of the fact that The Netherlands declared him persona non grata. What is true according to reports is that Carvajal had been going to Aruba for months and unlikely that he was going to act as a Consul. We will never know what he was doing there, but one can suspect.

The most likely threat by Maduro on the Dutch? That Venezuela would withdraw from the Isla refinery in Aruba. The Netherlands already spends more money that it wants on the ABC islands to have to spend even more.

This story likely ends here for now. Carvajal and his buddies will likely stay away from jurisdictions with a US extradition treaty for quite a long time.

And, of course, no more Disney for you, high ranking Chavistas!


Some Questions And Inconsistencies On The Carvajal Affair

July 27, 2014

pollo

There are too many  unanswered questions about the Carvajal affair. Too many inconsistencies. I have been wondering about them, some I have seen asked elsewhere, others not. So, here is my list of mysteries surrounding this affair:

-Knowing that General Carvajal was in the US Drug kingpin list since 2008, why did the Maduro Government name him as Consul to Aruba?

-Did the Venezuelan Government ever notify The Netherlands of Carvajal’s nomination as Consul to Aruba? El Universal says it never happened.

-Why did Carvajal, knowing about the extradition treaty between The Netherlands and the US travel to Aruba before he had been given the placet or approval by The Netherlands?

-Why did Maduro want to name Carvajal as Consul to Aruba specifically? Is it related to the island being an offshore financial center?

-Why would a legal resident of the US, lend or lease his US company’s jet to someone in the US drug kingpin list in the Patriot’s Act era?

-Why hasn’t Venezuelan Foreign Minister Jaua said a “pio” (beep) about the Carvajal detention, given that it was his underling that was jailed and a diplomatic immunity issue raised?

-People keep discussing the legalese of whether Carvajal had or not immunity, citing the Vienna Convention to argue both for and against. Doesn’t this article from that convention perfectly clear that he did not have immunity, since Carvajal could not take up his post until approved by The Netherlands?:

Article 39

  1. Every person entitled to privileges and immunities shall enjoy them from the moment he enters the territory of the receiving State on proceeding to take up his post

-Who ordered the ban on flights between Venezuela and Aruba? Who rescinded the order? Why on both?

-Was the cancellation of Rafael Ramirez’ trip to New York to meet with investors related to the Carvajal affair?

-Did Carvajal really try to cut a deal with the US in 2012, as reported,more here?

-Was it Chávez that stopped any investigation of Carvajal by the Prosecutor when drug dealer Makled made very explicit and specific accusations against the General?

-The US Government only requested Carvajal’s extradition on July 4th. 2014, 20 days before Carvajal’s detention.Was this coincidence, a change in US policy or they learned Carvajal was already going back and forth between Aruba and Venezuela?

-How does Carvajal explain the multiple passports, the $20K and the private jet he arrived in? Was one of the passports fake as suggested by a Miami newspaper?

-Is there really a connection between Carvajal’s removal as Head of Military intelligence and the fact that a number of Colombian drug dealers were captured in Venezuela following his retirement?

-Is it true that Carvajal was really disliked if not hated by the “ideological” wing of Chavismo?

-Can you be a serious General and be nicknamed ” El Pollo” at the same time?

There, if any of you have others, add them in the comments and if can clarify any, please do. Something does not make sense in this story.


US Initiates A New Stage In Its Relations With Venezuela

July 24, 2014

396772_112525_1Image from Semana magazine

One of the puzzles over the last decade, has been the timid attitude of the US Government towards corrupt Venezuelan officials, who roam around the US enjoying their ill-gotten gains. In fact, it is known that some of them, have turned evidence in exchange for being allowed to stay in the US or not prosecuted. Despite this, it just seems as if over the years, it was all an intelligence gathering operation with no follow up.

That may have changed this week.

After an effort was apparently rebuffed by the Obama administration to impose sanctions on Venezuelan Government officials, the US Government has clearly and quietly gone on the offensive this week.

First, it was former Judge Benni Palmeri Bacchi, who arrived in Miami in a private plane (like so many current and former Chavista officials like to fly) with his family to enjoy two weeks of supposedly a pre-paid vacation in Disney World, Orlando. Instead, Palmeri was charged with protecting Colombian drug traffickers by allowing them to fly cocaine shipments to the US.

But the big fish, not to say the big chicken, was General Hugo “Pollo” Carvajal, who was detained in Aruba when he arrived, also in a private plane, purportedly owned by a relative, and tried to use one of at least two, if not four Venezuelans passports he was carrying (As well as US$ 20,000 in cash, that he obtained via no official source in Venezuela). You see Carvajal was nominated to be the Venezuelan Consul in that Caribbean island, but the Government of The Netherlands had yet to approve it, making his diplomatic  immunity non-existent. And adding to his problems the US started including Carvajal in its drugpin list in 2008, as you can read here.

And if Carvajal is ever extradited to the US, he is in serious trouble. While the news concentrates on his relations to drug groups, Carvajal was involved with drug/terrorist organization FARC and in the infamous Reyes computers Carvajal is said to have offered the FARC terrorist weapons, as well as lists of prominent Venezuelans to kidnap.

And if Carvajal is ever extradited, that is where his problems begin. Once he is in US soil, the charges could quickly shift from the drug angle to the terrorism one and Carvajal could be taken away from the DEA’s hand and Guantanamoed for the rest of his life. He could be jailed in a maximum security prison for more years than his life expectancy will allow.

And I say “if”, because many things  could happen to Carvajal. Maduro has already say that he fully backs Carvajal, who was “kidnapped” by Aruba’s authorities, threatening the tiny island with economic, energetic and commercial sanctions.

So, you can bet that right now there is a many front effort by Venezuela to get Carvajal freed, just the same way there is a full court press by the US and the Dutch Government to get him extradited ASAP.

The only question is who gets to or finds the weakest link first. The weakest link could be an official that can be bought, a Judge that can be influenced and voilà Carvajal could show up in La Carlota, Miami International or Schipol.

The US is likely to be applying lots of pressure to get Carvajal off Aruba as fast as possible. The island likely has the weakest links in the process, the question is whether it can pull the required strings fast enough.

It will be a very entertaining movie to watch the next few days. But no matter what happens, it is clear that the US has initiated a new era in its relations with Chavista Venezuela and that many a Chavista official or beneficiary of Chavista corruption must be trembling today facing the impossibility of enjoying their ill-gotten gains in Disney World. Their impunity in traveling around and moving funds around is over. From now on, each step has to be watched and considered.

Or else..


Maduro’s Empty And Bizarre “Sacudón”

July 15, 2014

When I first began this blog, I overused hyperlinks. My reasoning was simple: Some of the things going on were so bizarre and difficult to believe, that my credibility was at stake if I did not indicate the source of what I was saying was happening.

This is no longer the case.

The way Venezuela is run, the things the country’s leaders say or implement, from the Ozone tax, to President’s that talk to birds to 20 billion dollars rip-offs (twice), by now people have become accustomed to the bizarreness of the revolution.

But somehow, the Bolivarians never cease in amazing and surprising us. It would be entertaining, if were not so painful. Which it is.

I mean, when a President announces that he will make important announcements the next day, which involve the Sacudón (Big shake up?) of the structure of the State, the “misiones” and the economic and social offensive, you expect something. You expect even more, given the current state of the economy, with inflation running at 60-plus percent per year, 5,5% per month, shortages, airlines leaving, international reserves depleted, daily protests, Government losing popularity and fiscal and monetary distortions killing economy activity.

I did have my expectations down. I know the various factions in Government differ on how to solve problems. I know there are no economists in or near the Cabinet. I know the Government worries more about losing popularity (and power) that about making things better. But I expected at least some form of vaporous announcements, half defined measures, watered down policies.

But I really did not expect a rambling Maduro announcing essentially nothing. Zip. Zilch. Nada. Niente.

First we had the nth. eulogy to our Comandante (“Our biggest difficulty is to have lost Him”), followed by a love fest. Love for all, but more particularly and more importantly, love for and to the military. Particularly, loveless Gen. Lopez Padrino, who apparently did not receive much love after his July 5th. speech, where he pledged allegiance to Chavismo above all. Lopez Padrino, according to Maduro, is supposed to represent the “new” Venezuelan military “thinking”. It does not get more oxymoronic than that.

Subconsciously Maduro also said how much the country misses Hugo, because he has no clue, I guess, he really wishes Hugo was here. Or there.

We then got the usual blast on the capitalists, opposition, speculators, who are responsible for inflation, shortages and all of the ills of the economy. Next sentence: But the Venezuelan economy is healthy (Never mind we have the highest credit risk in the world)

So, is there a problem or not Nico?

He seems to be in no rush to fix anything.

Next, the only “announcement”, we are ready for the fiscal revolution. Except the way it sounds is that they will control fiscal spending. Except that “fiscal” in Spanish, also refers to taxes. Thus, what it means is that they after impoverishing the productive sector, they will now try to tax it to death, so that “they” can keep spending.

Get it?

At this point it was important for Maduro to clarify: “We will make announcements”. No idea of the timeline at this point.

Then we saw the clueless Maduro: We now have to check what imports we can substitute. How Cepalese can he get? Does he understand any of it? (I don’t miss Chávez, how could he leave us with Maduro in charge?)

Again: we will make some announcements…

In between he had a guy who has been Chavista like three times and opposition twice in the last fifteen years, tell us how wonderful agriculture is doing and the VP, Chávez’ son in law, tell us how the Government will be turned inside out or outside in, don’t recall the order.

We were also told at some point and at length how wonderful and “democratic” the World Soccer Cup was. (Democratic my foot, the best team won, the rest suck!)

We then heard a blast against those that stole the US$ 20 billion via Cadivi/Cencoex.  Except that those that asked for $3,000 have been asked to prove their spending in the thousands, while not a single one of those that got the US$ 20 billion for imports has yet to be called. The Prosecutor says she does not want to interfere with the investigations, I say, she does not know who she will find behind each rip off, so she wants to be careful.

Then we come to the highlight of the day:

Maduro: “We worked really hard yesterday…like four or five hours”

He thus insulted , 95% of the working population of Venezuela, which I don’t want to guess how many Maduristas/Chavistas/Bolivarianos it includes, but it can’t be many.

By then, it was clear, there would not even be vaporous announcements like I predicted:

vaporososright after betting there would be no announcements relating to gas prices:

gasolinaBut I was very wrong. There no announcements, other than:

“We will make the announcements on August 11th.”

Yes, in the end, that was the only announcement of the “announcements”

And the we were shown a video of the one year anniversary of Nicolas’ marriage to Cilia. In another Fruedian slip, he said she was the real boss. As if we did not know…

It does not get more bizarre than that…but I will not listen on August 11th, I will be on vacation in September, when he will likely make some announcement.

Or maybe not…

 


How Chavismo Has Ripped Off The Private Sector For Years

July 9, 2014

ripoff

There is an article today in the New York Times, which while factually correct, seems to me to be a little late to the game in explaining to its readers how Chavismo has “vanished” the profits (And equity too) of private companies, whether they are Venezuelan or not.

Chavismo has never played by the rules, whether international or national. It has ripped off the Venezuelan people by claiming to care for them, while allowing inflation to soar and wasting the oil windfall of the last decade on propaganda, incurring in new debt and  simply doing whatever was necessary to preserve Chavismo in power. And it continues to do so.

But to pretend this is a new phenomenon, or that it only has to do with the most recent devaluation in Venezuela, is to ignore fifteen years of Chavismo as well as eleven years of exchange controls. Not to mention the total lack of scruples by Chavismo to steal, lie, bully, ripoff and deceive multinational and national companies, accustomed to people being honest and respecting the laws and customs of business and trade.

When Chavismo imposed foreign exchange controls in February 2003, the Bs. 1.59 per US$ rate was established as a way of protecting international reserves and the Government promised to make that rate available to bona fide companies in import and manufacturing, as well as allowing people to buy at the controlled rate for some of their needs. The system and the controls allowed companies to repatriate profits and even capital, if required, you just had to follow certain procedures to make sure your needs and requests were real.

Since the Government imposed certain limitations, a parallel “swap” market developed immediately, as people realized that the Government had not banned exchanging two properties, such as a security denominated in Bs. for one denominated in US$. This market took a while to develop, as people discussed its legality, some companies were afraid to use it and the Government and the Government kept talking about issuing a Bill that would make it a crime to exchange money outside of the official controls.

But about two years after imposing exchange controls, the Venezuelan National Assembly approved the so called “Foreign Exchange Illicits Bill” which did penalize buying or selling dollars, but actually exempted “securities” from the Bill, essentially saying that it was healthy for a parallel market to exist.

This was a critical step in the development of the swap market (mid-2005 or so), as most companies started trading in the swap market to solve temporary foreign currency (or Bolivar!) needs and even to speculate with the currency.

But few companies used the swap mechanism to repatriate dividends. The argument was that why bother doing this, when the Government, via Cadivi, was going to give them the foreign currency for repatriation at the official rate of exchange.

By the time the law was approved, the official exchange rate was around Bs. 2.1 per US$, while the swap rate was maybe 20-30% higher.

But then things got complicated. Just as Chávez began using reserves for parallel funds, squeezed PDVSA for social spending and issued debt to cover shortfalls, the international financial crisis of 2007-2009 hit and oil prices went down. Since Chavez needed more and more funding for his exploits, Cadivi became stingy, giving less and less for dividend repatriation which mostly (90%?) ended by 2007.

The Government kept promising that it would pay and companies actually believed it. But multinationals home offices began pressing for some form of repatriation. There was one problem though. if you bought at the swap rate, you had to take a loss in earnings. Some companies started doing it, others not, they were worried about their reputation, I mean, what would happen if Chavez accused them publicly of using the swap market, whether it was legal or not. Their reputation was at stake.

Meanwhile, the swap exchange rate closed at Bs. 3.3 in 2006, 5.6 in 2007, 5.6 in 2008, 5.9 in 2009, as the Government began actually intervening in the swap market, while refusing to devalue until January 2009 from Bs. 2.1 to Bs. 4.3 per US$.

By now, Chávez realized that he could rip off foreign investors without much trouble. In January 2007, he “nationalized” telecom company CANTV offering to pay US$ 16.85 per share, despite Carlos Slim offering US$ 21 per share a few months earlier. Slim’s offer was never processed by the Government and the Government kept the fiction that it would pay a dividend before the tender expired, which never happened. It also took over Electricidad de Caracas, the partners that did not agree to be a minority in the heavy oil fields and even Chavez’ Argentinean buddies in Sidor. The first two got paid fast. The oil fields are still in arbitration and the latter got paid because of the close relationship with the Kirtchners.

Nobody has gotten paid since.

And while today’s NYT article would make you believe that it was the recent devaluation that screwed multinationals, nothing is further from the truth. Each time the Government has devalued, it has reduced its revenues in US$ and its earnings and since 2007, it has all been vapor profits, monopoly money, as almost no dividend repatriation has been approved by CADIVI, now Cencoex. Only companies that repatriated via the swap market before it was shut down in 2010, managed to salvage, yes, salvage, some of their profits.

Thus, companies took a 50% cut on both revenues and profits when the Government devalued in Jan 2009, a 46% hit when it devalued in February 2013 and a 63% hit when Sicad 2 was created.

And counting…

And counting, because it is all still vapor earnings, revenues and profits. The Government is not going to pay them at the Sicad 1 rate either. Thus, some companies mentioned in the NYT article have decided to take the loss. Because they can. You see, before Sicad 2 existed, accounting rules say they had to follow the Government foreign exchange rates, even if they knew they would never get the money. Once Sicad 2 was created, serious companies, like Brink’s, decided to take the worst case and take a hit of 80% on their earnings using the Bs. 50 per US$ exchange rate, versus the Bs. 10 or whatever Sicad 1 rate is.

Think about it, wiping out 80% of your revenues and profits…

They actually could have said 100%, we will never get paid…

The things is, Brink’s is a minority and most companies are still “wishing” and lying to their home offices or simply hoping they will get paid at a rate below Sicad 2, so that it does not look so bad and their bonuses don’t suffer as much.

But if I had to guess, most of them, if and when they get paid, will get paid closer (above even) to the current Sicad 2 rate than the Sicad 1 rate they are booking their profits at today.

And note this includes earnings for 2007, 2008, 2009, 2019, 2011, 2012, 2013 and 2014 and counting. We are talking eight years of Monopoly money, virtual profits for all.

Not exactly a recent event.

Nothing has changed, I wrote an article on this last December, entitled “Virtual Profits in Venezuela” in which I warned companies that they will get screwed yet again.

Companies seem to be getting the message, but many rely on “hope springs eternal”, particularly airlines.

Airlines are a very particular animals. They are not trying to repatriate profits, but revenues. This is worse. They sell tickets in US$ at the official rate of exchange and are supposed to received the foreign currency immediately or fast, as per IATA agreements. Except they started seeing delays in payment and they decided to increase prices as a hedge. But they still have not been paid, nor do I think they will be paid at Bs. 4.3, 6.3 or even 10, look north friendly airlines, you may get part of the debt paid above Bs. 25 per US$, but not all of it. You have been ripped off. Period.

Why do companies behave like this?

It depends. If you are a multinational you really believed that BS that you are in Venezuela for the long haul. Except you never thought the long haul would last so long.

If you are local, you want to survive. And you do, until you can’t, like the many companies that the Government has not repaid for their CADIVI imports at Bs. 6.3. In January 2014, the Government said, we don’t have enough money to pay you. So, they still hope. Another ripoff.

Or the oil service companies that accept PDVSA paying them in bonds, which implies a discount. At least they get something.

But the locals are the ones most screwed by the revolution. If they are not paid, they are dead. Most that have yet to be paid, will never be. The revolution has no scruples. They already screwed them with the devaluation in 2012, what´s another one? Chavistas thinks all private entrepreneurs are wealthy.

There are other cases, but you get the point. The point is, this is nothing new, the revolution has been ripping off the private sector for eight years and counting and there are those that still think they will get paid. And the international press is starting to notice. To say nothing of the regulators that have allowed financial reporting based on these virtual profits and fake exchange rates.

Clueless.

As for the long haul, sure, it will be a long haul, but only to take what is left of your stuff back home.

If any.


Lying As A Revolutionary Way Of Life In Venezuela

July 5, 2014

Bg7LcSOIgAEXCa8

Lying has long been a way of life for Venezuela’s Bolivarian revolution. The country is still unsure of when and where Hugo Chávez died, let alone what ailed him or what complications eventually killed him. He was reelected knowing his days were counted, but it did not matter, lying, cheating and ripping off the people and the country has been institutionalized as a way of perpetuating the leadership in power. Not the revolution, because the revolution has been dead for quite a while. Only the leadership matters.

By now, the lying is so blatant, that the Government and its representatives don’t even attempt to cover it up. They just simply don’t address those issues in which they are flagantrly caught cheating, deceiving and lying. They hope that their total control of traditional media will impede the exposure of the lies reaching their supporters. And they do get away with it.

The lying and deceiving seems to be accelerating with the total impunity that reigns in the country. Comptrollers don’t control, Prosecutors don’t prosecute, People’s Defenders don’t defend, Highest Courts are lowly beings, the Supreme Command of the revolution forges and presents evidence against its enemies.

As it accelerates we see more and more cases, where the lack of scruples and deception prevail. This week as I was in Caracas was no different, with too many cases which dramatize the decrepit morality of the failed Bolivarian revolution. To wit:

–The faking of emails and evidence presented by the supreme command of the revolution.

The top members of the revolution, including the President’s wife who happens to be a lawyer, appear on TV, acting as accusers and judges, presenting “evidence” of a conspiracy to get rid of Maduro. The evidence is quite flimsy in that the texts themselves are not as explicit as suggested. The Prosecutor accuses a few days later, despite the accused suggesting the emails are fake. Then, one of those accused gets an order for Google to turn over the content of his emails in the company’s servers. Google complies. The text of the email is not what was presented by the Supreme command, others are not even present in the servers. The Venezuelan Government, all the way to the very top, has fabricated evidence as well as violating due process, the right to defense and all that.

The Government does not even bother to deny any of it.

–Ozone corruption

The Governor of Vargas State sets up a company to buy some equipment to purify air at Maiquetia airport with ozone. In order to pay for the equipment, a new tax of Bs. 127 has to be paid by each passenger. Never mind that this should be the domain of the Airport’s Administration and Institute. Never mind that Ozone has been shown to be harmful in air purification. Never mind that passengers are paying for a service that is not even in place yet. The system is implemented badly. The first day, the cash collected by the State is robbed after passengers have to wait in line a couple of hours.

Nobody explains, nobody apologizes, nobody answers the criticism.

–The Phantom buyers of El Universal

Imagine a country where there is basically no foreign investment. Where you can’t repatriate profits. There is no newsprint. Despite this, a phantom Spanish group owned by a phantom company, whose board is unknown, whose website was created recently and still is mostly empty links, decides to pay 90 million euros for Caracas daily El Universal. Never mind that owning a newspaper has become a terrible business. Never mind that the Washing Post was sold for about double this amount. We are supposed to believe that this invisible “investment” group looked at Venezuela and decided it was a good place to lose some money by investing in this newspaper. And despite the restrictive laws of Venezuela for media purchases, including a ban on foreign ownership of media, El Universal is the third media outlet, after Globovision and Cadena Capriles, to be sold with not even a Tweet by the Government.

Nor should you expect one.

–Suspected murderers go free, democratic protesters stay in jail

A student watching a demonstration is shot in the face by two National Guardsmen armed with pellet guns, similar to those banned in many places in the world to control demonstrations. The two suspects have been identified out of the group of twenty three controlling that demonstration. Yesterday, the two Guardsmen are released on their own recognizance, with the requirement that they have to show up at the Court every week. This is the same requirement that Teodoro Petkoff has because someone wrote an article in the newspaper he directs, purportedly saying that the Head of the National Assembly said something he did not. Meanwhile, according to human rights organization Foro Penal, there are still 113 students in jail for protesting since February 14th. of this year.

No one in Government will even try to explain this. It is called Bolivarian justice.


Dear Hugo (An Imaginary Letter)

June 27, 2014

carta

Dear Hugo:

You know I don’t like writing very much, I prefer to talk, but since everyone seems to be writing letters all around me and you have not appeared again in the form of a bird since I got rid of your friend The Monk, I have decided to write this open letter which I hope you are the only that ever reads it. If my wife finds out about it, she will get really mad, because she keeps telling me to forget about you and start my own dynasty. But while I watched that TV  series when I was a bodyguard for the Venezuelan rich and famous in the 80’s,  I really don’t want to replace you and start a new anything.

In any case, you know I never wanted to be sitting here in this chair, but you insisted and look at the mess I am in now (Not to mention the country). I knew when you came back from Cuba for that last time, that you were really sick and not functioning well, when you told me that you had decided to name me your successor. While you dismissed my objections, I should have known your illness was getting to your brain. And for once in these fifteen years I was right, and you were wrong: The military does not like me because I am not one of them, the communists hate me, Godgiven thinks you should have picked him, the Garibaldis hate my guts because I am uneducated, the Francesitos look down on me and only the civilian jalabolas seem to like me. But they have little power and may not even like me.

So here I am.

But it is really hard to understand why you liked this guy The Monk so much. I still don’t get it. I know, I know, he was your thesis adviser, but like my wife says, you never finished your thesis, so why does it matter at all? While people think I got rid of him because he was disagreeing a lot with the rest of the Cabinet on what to do, the truth is that I don’t hold many Cabinet meetings anyway, they are long, boring and Rafael and your son in law want to talk all the time. I only like them when they are live on TV and  they end fast when Jorge’s (the other Jorge) sister says people are turning their TV’s off.

In any case, I got rid of him because he was really boring. He would come to Miraflores unannounced and sit outside my office waiting for me. Most of the time I would sneak out, but he would sit out there for hours waiting to talk with me. Even other Ministers began complaining that they would come see me and while waiting for me, The Monk would bore them to death. And the days I did receive him, he would just blabber and blabber about stuff I don’t understand, like social metabolism and the dimensionality of capitalism. And he would talk for hours. So much so, that I installed a switch so that when I pushed it, the Minister of the Interior would call me and tell me we had a national emergency, like another magnicide attempt. That is why we have had so many press conferences to announce them. I just needed to get away from The Monk.

The problem is that I am not sure what to do now. Everyone gives me advice, I am supposed to make the economic decisions, but what do I know? Rafa says we need to devalue, Jorge (number 3) says no way, inflation will hit 100% and I would be given #lasalida, Meanwhile the Monk’s buddy in Washington seems to agree with Rafa, but says we should keep the price of gas where it is.

The wife says we should do nothing. It has worked for a year, she claims, why not push our luck. But I really don’t know Hugo. I like being President. I can be very funny, talk for hours, just like you, but I don’t seem to scare anyone. And some of those Generals are really scary. I don’t like going to the interior like you. I am a Caracas kid, as you know. So, I stay put, Teresa Carreño is as far as I go.

And the World Soccer Cup has been a bummer. Everyone wants to watch the games with me, but they all go for crummy teams, like Algiers or Bosnia-Streptomagma, the one I can’t even pronounce. I like soccer, I wanted Spain to win, now I want Gremany, but apparently this is not politically correct, I am supposed to go for Brazil or Argentina. But I am mad at Dilma, and you know Cristina was never very friendly with me. You never minded that she wore too much make up, but I told her she did. She said that is something a Foreign Minister does not say to a Lady. Go figure, I was only talking to her. I was just trying to be constructive. The make-up never seemed to stop you though.

So Hugo, things are tough. I need some guidance. The first thing I am going to do is like what you used to do when things were tough: announce the restructuring of something. I think that if I say of the whole Government will be restructured, it will sound really Presidential, don’t you? I can do it while the World Soccer Cup is going on, so that people will not follow it in detail and in the end I will leave everything the same. Nobody will remember by then.

But I really need a hand. You really screwed up leaving this revolution in my hands, so you better help. I propose the following: Tomorrow at noon (ok, ok, 11:30 AM because of that fool Navarro convinced you to change the time half an hour, which totally confuses me), while everyone is watching Brazil-Chile, I will go out to the small garden in Miraflores with my Ouija board. You show up in your bird form and I will ask simple questions, like devalue, increase gas, fire someone and you just push the Ouija in the right direction. OK? It’s the least you can do for me, now that you got me into this mess.

Hope you are fine, wherever you are. If you see Sai B., please say hi and ask him to given me a hand if he can too. I need all the help I can get.

Venceremos!

Nico

P.S. I am still curious why you picked me, maybe when we are at the Ouija board, can you try to tell me? Thanks buddy, Patria and all that!.

P.S. #2: BTW, all these years we admired The Monk because he was born in San Pedro de Macoriz, where all great Dominican baseball players come from. It turns out he is from San Francisco de Macoriz not San Pedro (Did you read the letter?), different towns, no Pedro Martinez from there! What a fake! I bet he is not even a monk.


Jorge Giordani Leaves Cabinet: So Long, Farewell…, But…

June 24, 2014

giordani

Jorge Giordani (also known as The Monk) has been such a fixture in Chavez’ Cabinet and now under Maduro, that the last time he was removed from the Cabinet, this blog had yet to be born. And this blog is now almost twelve years old. And even if there is no written record of that departure in May 2002, I do recall a feeling of relief that Mr. Giordani had finally departed. Except his absence did not last much and Chavez brought him back to the Cabinet, more powerful than ever. At the time, Chavez’ intelligence police must have been subpar, as Mr. Giordani held meetings on Saturday at his home with his buddies, where he mostly blasted Chavez, his collaborators and their policies. Then last week, as I was on vacation, Mr. Giordani was fired once again, which gave me an immense satisfaction and almost pushed me into writing something on the fly, but I decided this deserved some thought, as Giordani’s now infamous document “Testimony and Responsibility in Front of History“, not only gives us an unusual glimpse at some of the dynamics of the last few years, but deserves careful reading. Careful not only to achieve accuracy, but also in order to interpret the true meaning of the impact , if any, of Giordani’s departure from the Government.

Simply, there are too many inaccuracies in both the contents of the document, as well as in some of its interpretations.

If anyone has read Giordani’s document, it is fairly dense and obtuse. His writing is not the most organized and clear in the world and sometimes thoughts and ideas are not properly structured. Thus, one has to read it carefully in order to understand what the former Minister is saying. I have tried to do that in detail. Punishing work.

To begin with, Giordani clearly admits that the Government and him personally, repeatedly violated the law, when he says “that in order to consolidate political power as an essential objective to strengthen the revolution..we managed with a huge sacrifice and with a financial and economic  effort which took us to have access and use resources at extreme levels…”

Nothing new there, Giordani has never been one to follow the laws of the Constitution. In fact, when he came to power he ignored the law of the Macroeconomic Stabilization Fund, first not contributing to the fund what the law stated, which was followed up with the use of the resources in that fund for objectives different than those established by law. But in that simple sentence, Giordani states that he and his buddies broke many Venezuelan laws. Because you can’t use public funds to finance electoral campaigns and you can’t use funds for a purpose different that what they were budgeted for, both of which are punished with jail. The anti-corruption law would say that Giordani and other Government officials committed fraud, misuse, embezzlement, corruption, abuse of the position for political purpose and influence peddling.

Giordani and those Government officials responsible for this would get at least 5 years in jail. Of course, the “new” left, the modern, populist, socialist left, non-democratic left only applies the laws to its enemies. So, the revolution forgives him.

But the “principled” Jorge Giordani goes even further, because he talks about corruption in Cadivi (later Cencoex) and his suggestion to President Maduro that he become Head of Cadivi to stop corruption. Well, by law, Giordani as Minister was supposed to denounce this corruption to the Prosecutor and he is directly accusing President Maduro of covering it up, when he says that Maduro did not accept his proposal on corruption, implying Maduro also failed to denounce it.

And I use the term “principled” Jorge Giordani on purpose, because I have seen the term used referring to him both in Chavista and opposition circles since he was fired. Suggesting Mr. Giordani has principles, when he is confessing to violating the laws, diverting public funds and using public funds for political purposes is like saying any criminal that sticks to his methods somehow has principles of any sort.

And this lack of ethics extends to Giordani somehow avoiding to note that many of the irresponsible policies implemented were his responsibility. That the same funds that he suggests are being managed in a corrupt way, were set up by Giordani in such a way as to avoid controls and that the excess expenditures and that loans to PDVSA and the growth in monetary liquidity approved by himself as Minister of Finance, member of the Boards of PDVSA and the Venezuelan Central Bank.

And I can not forget the Fonden funds that are still unaccounted for and took so much space in this blog and others as some US$ 30 billion are still missing from the ledgers.

And despite using the word responsibility in the title of his document, Mr, Giordani is absolutely irresponsible all over the place. For example, he says that President Maduro gave him “new” responsibilities when he was named Minister of Planning, but Mr. Giordani never ceased being Minister of Planning since 2002, he just somehow convinced President Chávez to merge Planning and Finance into a single Ministry. There was nothing new in 2013 for Giordani, he was simply removed from the control of the purse strings in Finance and moved to the less important Planning Ministry to think long term.

But his selective memory is amazing in not recognizing how the same system of exchange controls he helped implement, generated the corruption that he now wants to fight so badly. And by starting the timeline at the time of Chávez last days, Giordani evades talking about the secretive way in which bonds were allocated in the numerous Venezuela and PDVSA issues, or how the Argentinean bonds were used to feed in a very non-transparent and corrupt manner the swap system. To say nothing of the infamous structured notes or the buddies and even brothers of the revolution buying banks under Giordani’s not so watchful eyes.

And his testimony conveniently starts right after Giordani single handedly killed Venezuela’s capital markets when he tried to pass the blame of not being able to hold the parallel exchange rate in 2010, jailing innocent people and destroying some 5,000 jobs in a process which was controlled by Giordani’s trusted men, many of which made fortunes in the process.

To say nothing of the money spent trying to replace that capital markets system starting the foolish Bolsa Bolivariana (still around?) and now, four years later after getting mad at the brokers for a 30% devaluation of the currency, the all mighty Giordani-managed-controlled system has yielded a 1,000% devaluation in that parallel rate, now called the black market rate.

Way to go Monk!

But if there is one puzzle to me, is the excitement by the investment community over the departure of the Monk. Somehow, it would seem as if he was replaced by a Venezuelan that just won the John Bates Clark medal for Economics, instead of a talibanic Geographer responsible for the only default (Sidetur) of a Venezuelan bond in the last 20 years. Somehow we are expected to believe that Giordani’s departure opens the way for the magic adjustment that the Venezualn economy requires.

But wait! Haven’t you read the letter? Giordani says he has been out of the loop essentially since Chávez’ health deteriorated and certainly since Maduro became President. So, if I may ask, how has he been an obstacle to the implementation of this so called magic adjustment program?

I can go even further, read the letter again. The style is obtuse, but Giordani says that six things will require to be “revised” going forward,  including the price of gas and other subsidies, reduce debt issuance, devalue and reduce subsidies to public companies. (This has been also noted by Victor Salmeron) In fact, Giordani says he asked for a reduction of public expenditures, PDVSA’s increasing debt should be revised and so should internal indebtedness.

Sounds to me like Giordani was the pragmatist and not the other way around like markets seem to be suggesting.

In fact, what this all suggests is that the various factions within Chavismo can’t agree on policy going forward. The much needed adjustment, including raising the price of gas and at least removing the Bs. 6.3 per US$ rate is something that Giordani also wanted, and economic Czar Ramirez wants, but the military may not want at this time. What is clear is that the current Cabinet is as trapped in its own past and contradictions as Giordani is and was. The longer they wait the deeper in trouble they will be. The window to adjust, if you think politically, its short if you want inflation to go down way ahead of the 2015 Parliamentary election. But apparently they can’t agree on policy and Giordani’s departure may create more passionate stances, for and against.

Yes, it is good that Giordani is out because his thinking, as evidenced in his article, is retrograde and perverse. Giordani fails to recognize any of his errors. His radical pedigree going back to the Garibaldi unit is all he is proud about. He considers himself Caribeño, but seems to have more loyalty to his communist beliefs than to the idea of his own country, his Patria.

I am really not sure Giordani throws such an important monkey wrench into Chavismo. Unless he continues to speak up, his departure will quickly be forgotten, as those in control, many of which are in charge of the same corruption he denounces, will make sure his allies are silenced or else. Ironically, while he never publicly denounced corruption frontally, he was one of the few voices internally to speak up against corruption. However, in his mind the end justified the means. The survival of Chavez and the revolution was above all and thus he never spoke up publicly like he should have.

I continue to be very skeptical that a full adjustment is on the way. Giordani will not be missed, as the kids song goes: So Long, Farewell, Aufiderzein, Goodbye…Mr Giordani, you will not be missed, but your legacy of destruction and ideology will be really hard to erase.

 


Venezuelan Government Tightens Noose Around Its Citizens

June 12, 2014

photo(33)Somewhere where I have been recently. Any guesses?

I know I have been absent for a while. First, I went to Caracas and did not leave in a very positive note after all of the events of the last few weeks, but more importantly, I am on my yearly biking junket somewhere in the world, but before it starts I have been stuffing myself with the required protein for the task ahead.

As for Venezuela, things are getting worse. Not only worse in the sense of current events, but also in the sense that the Maduro Government has decided to do away with all semblance of democracy and in one swipe, it has extended the tenure of the members of the Electoral Board indefinitely. Recall that their terms expired a year ago, but now the Supreme Cort, using the same lack of judicial basis that allowed Maduro to become President, while Chávez was still alive, has decided they can stay there forever. Thus, Maduro and Chavismo have wiped their you know what with the 2000 Constitution, as we now have a Comptroller with an expired term by some three years, Supreme Cort Justices by one to two years and the all important Electoral Board by a year and counting. They could be there forever, as far as Chavismo is concerned.

Meanwhile, the Prosecutor (another one whose term will be extended forever?) not only continues to jail Leopoldo Lopez, goes after Maria Corina Machado and now, with her trumped up evidence, pretends that Interpol capture fellow blogger Pedro Mario Burelli, Diego Arria and Koesling. At the same time, the Prosecutor is asking student leader Gabriela Arellano to testify, together with human right lawyer Tamara Suju, all of which are suspected of conspiring against this dictatorial regime. Yeah, sure!

The case against Burelli, Arria and Koesling is laughable, as it is based on faked emails, Burelli has asked the Prosecutor to produce the headers for these emails, but of course, she can’t. Neither can she ask Interpol to capture people who have been cited only once, don’t know what they are charged with, have not been given the right to defend themselves and are obviously being persecuted politically. But more importantly, in the case of Burelli, he has not been in Venezuela in a while and last I knew, the Constitution only applies within the physical boundaries of the country.

But the strategy is clear, the Government is trying to intimidate everyone. And it does intimidate to think there is no law that can save you even if you are innocent and that you can be persecuted and prosecuted just because you fall on the wrong side of the authorities just because you have visibility or they feel like it.

And it plays well for the gallery, whether those in PSUV or those inside the Government that want to see Maduro being tough with the opposition.

Meanwhile, the Venezuelan media is being sold wholesale to the buddies of the regime with El Universal and Televen reportedly the latest casualties. And what this means is that most people will not hear about Burelli, Arria or Arellano or have an idea what it is all about as they swim in the sea of Chavista misinformation. Somehow, even if one can envision the end of this Government, it is harder to envision the dismantling of the media power built by the pro Government forces. The noose is working today, getting tighter and will be hard to loosen if this nightmare is ever over.

And in the corner of the world in which I work, I find it fascinating, if not perverse, that people actually find it positive that Minister of Planning Giordani was removed from the PDVSA and Central Bank boards. This is seen as a sign that the “pragmatists” are gaining power, as Minister of Finance Torre replaces him in the Central Bank.

Well, I find little encouraging in that for the first time ever, a member of the Board of the Venezuelan Central Bank is a former military with no economics and/or financial background. It is another step towards the military control of the country. But more importantly, Giordani remains, so far, as Minsiter of Planning, where his voice will continue to be heard. Until he leaves this position, I find it hard to be positive about the other moves. Giordani has always had an amazing ability to survive and resurface.

And in the end, this “pragmatism” that so encourages everyone consists of the creation of an exchange market, Sicad 2, which even President Maduro called a failure, or a  lack of success, this week. Given that Giordani opposed Sicad 2 and that it was the “pragmatists” that created it, I don’t see why next week Maduro may not decide to get rid of them too. In the end, Giordani was not in favor of the massive creation of money and his parallel funds are still around and the fight against inflation is no fight at all. In the end what is needed is new faces to come in. New people with some knowledge of economics and/or finance, as the “pragmatists” have never read more than a pamphlet on the matter in their lifetimes.

In the meantime I ponder on the high level of organization achieved by the societies that I am visiting, The infrastructure is awesome, most things function smoothly and there is respect for everyone, even if they think they have real problems.

They should read this post…


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