As Protests Become Widespread, So Does Repression in Venezuela

February 20, 2014

After the Government showed some restraint all day yesterday in Caracas, mobilizing National Guard troops but not having them act, despite the widespread  blocking of the highways and major street in Caracas, things changed last night.

First, in Valencia and San Cristobal, repression increased, tear gas was used and many were injured. In Valencia alone, there were seven people who were shot. One a former beauty queen was shot and died today, further incensing students.

Then today, as protests became widespread when opposition leader Leopoldo Lopez was supposed to be arraigned in Caracas, but was instead moved to a military facility in Los Teques where the arraignment was supposed to take place. This is not only illegal, but shows the political character of Lopez’ detention. While he has been jailed, none of those seen in pictures and videos killing the students on February 12th. have been detained. And the Head of the intelligence police was removed, but given another position,which could be considered a promotion.

By this afternoon, protests were blocking highways and major intersections all over Caracas, from Catia to Petare. The biggest concentration was in Plaza Altamira from where the Government mounted a huge attack with National Guards, police and “colectivos” in motorcycles. There were barricades all over the area but with time the Government thugs moved up to Altamira square. First they used tear gas, but by the end they were using cops and colectivos in motorcycles, shooting weapons, not only tear gas.

This is a video about a block from Plaza Altamira tonight:

this is another:

This was happening as Maduro gave a rambling speech in which he was aggressive and calling for peace at the same time and defending the “colectivos” as groups that work for the fatherland.

At this time, people have been shot in La Candelaria at this time of day, while protest have begun in Catia in Western Caracas. At least two people are reported to be shot dead in the west of Caracas.

Repression in San Cristobal, Tachira State, where the protests begun seems to be the worst. The Government shut off electricity and communications to the city as National Guard tanks went into it.

I stay very close to one of the hottest spots of repression. While I tried to watch parts of the action, it became dangerous. Students came into our parking lot seeking refuge from the guards who wanted to detain them. Fortunately they did not come in into our building, which they did all over the place. This is absolutely illegal.

I saw either police or guardsman go on the sidewalk on a motorcycle following students that were trying to escape from their attacks on the streets. They had some sort of rifle in their hand, either tear gas or a real gun. As repressive a scene as you could ever imagine.

This is not going to stop here. Students are becoming more radical, as the Government turns the repression an the human rights violations to an incredibly new level, without any shame. Maduro praising the colectivos tonight was simply a declaration that this Government is more than a dictatorship. It has now become one in which repressive violence will be openly used against the population that disagrees with or protests against the Government. This can only lead to further violence.

I find it hard to believe that there is no dissent within the Government about this new tack.  Internationally, the repression together with the arbitrary detention of opposition figures has shown the world the true face of the Maduro Government, where appearances are no longer important.

And that is an image, the Government can not erase.

(This post was supposed to go on last night, but computer problems did not allow me to upload it, sorry).


In Venezuela Opposition Leader Leopoldo Lopez Turns Himself In

February 18, 2014

It was certainly a day to remember. Despite the Government banning the opposition march and prohibiting marches, Leopoldo Lopez turned himself in in a demonstration which was simply massive. His handover was perfectly choreographed, leaving images that have a highly emotional content and guaranteeing that this day, whatever may happen was a victory for the Voluntad Popular leader.

I mean, there are very few things missing from a picture like this one:

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Lopez being pushed into the National Guard tank, white flowers in one hand, flag in the other and screaming at his supporters. Really, can it get any more dramatic than this?

And this was after Lopez had given a fiery speech to his supporters hanging on the statue of Jose Marti in Plaza Brion of Chacaito at the end of which his wife was lifted up by the crowd to say goodbye to him right before he turned himself in. How can anyone not be moved by this image?:

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And it was Lopez who, from the inside of the military vehicle, used a megaphone to ask people to move aside to let the vehicle through. Lopez was calma calm and at times it seemed as if the guardsman taking him looked more scared than he did.

And the show of support was nationwide, as students organized protests in all major cities, all of them with huge crowds, all ending at the Palaces of Justice of each State with the students handing in their demands.

I went to the march, leaving somewhat late, but was surprised when a couple of Kilometers away from the march, the street was still full of people walking towards Chacaito. And when I got to Chacaito it became difficult to get through because it was so crowded. Once in the intersection with the main Country Club Avenue, I was surprised by the sea of people coming down from that direction. It turns out it was the people from the West of Caracas, who, because the march was not allowed beyond Chacaito, had to come via Libertador Avenue to where Lopez turned himself in. From there, we turned South towards Las Mercedes, went under the Autopista and then climbed back on it, only to find that the students had not only blocked it, but occupied it all the way to the Cienpies Distributor. There were people everywhere, in front, below, above. And there was lots of police and guardsman, but they they were clearly given the order to do nothing, despite our fears that we could be gassed any minute.

This is an overall picture from above, two blocks away from where Leopoldo Lopez turned himself in:

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Here are some of my pictures as I walked along:

photo(12)Towards Chacaito

photo(13)Going down Las Mercedes, Autopista in front

photo(14)Trying to get through in ChacaitoIMG_1654Students sitting on the Autopista

IMG_6793Autopista towards the East, full of people

And I don’t want you to think this was a Caracas phenomenon, this was Valencia (where seven students have been shot)

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And at this time, 7:37 PM , students are still out in the streets blocking the way

I am still surprised the Government went ahead and jailed Lopez. To accuse him of being a terrorist, when there are pictures showing that it was the Government’s intelligence police who shot the students on Feb. 12th. is somewhat dumb. By jailing him, not only does he become a martyr, elevating his stature within the opposition, but also creating another political prisoner and another reason for the students to fight.

Maduro also loses credibility, when it was him that suggested Lopez was responsible for the deaths of the students, not the Prosecutor, raising doubts, once again, abut the separation of powers in Venezuela. To make matters even worse, it was the Head of the National Assembly, Diodado Cabello, who took Lopez to his arraignment. What is Cabello doing there? He does not belong to any of the braches of Government that should be involved. The Government later said it was to protect Lopez’ life from the “right wing”, a silly excuse, more so, given that Lopez is also labelled as “right wing”.

Because while all this was going one, Maduro was holding his own march, despite his ban on demonstrations, where he said Lopez was being taken directly to jail (Ughh?) by helicopter, showing the President does not even understand legal procedures. In his speech, Maduro rambled, attaching President Piñera of Chile and Santos of Colombia, for involving themselves in Venezuelan affairs.

But more importantly, you just don’t go jail an opposition leader like Lopez on trumped up charges, without raising suspicions that this is simply autocracy at work. Lopez now becomes a hot potato for Maduro: Keep him in jail he becomes a symbol, release him, you look weak (and somewhat dumb!). He will actually be charged with murder, a silly charge if there ever was one.

Lopez seems to have scored a victory sooner than he thought when he started going out to try to gather the protests under his wing. Even Capriles went to the demonstration, as all opposition politicians showed up at the demonstration to show their support.

For now, the students remain on their own, a random band of disorganized protesters that have kept the Government in check for ten days. They will not go easily away and now they have one more prisoner to defend.

Here is an overview of the protest via a video:


While Government Tries To Blame Lopez For Deaths, Paper Shows Otherwise

February 16, 2014

Ever since last Wednesday’s student March which left two dead, the Government has tried to say that former Presidential candidate Leopoldo Lopez and Congresswoman Maria Corina Machado, who led the protest, were responsible for the the deaths right after the demonstration ended. But, usually pro-Government paper Ultimas Noticias, has done an extraordinary investigation of videos and pictures and what it has found is a carefully orchestrated withdrawal of the police, which were replaced by Intelligence police officers and plainclothesmen, who were wearing and used guns against running students.Having guns near a demonstration is illegal, Government officers murdering people at a demonstration is a crime against humanity by them and their superiors.

What this investigation shows is the power of the smartphone, as the evidence came mostly from amateur tapings (note that one of them, the person making the video is hiding under a car)

Here is the text and the video

and here is a summary of the text for those that do not speak Spanish. I recommend watching the video (at the end) after reading the text:

“It was at 3:13 PM when Bassil Alejandro Dacosta fell. The line of fire was in the hands of individuals identified with unirforms, plates and vehicles of the Bolivarain Intelligence Service (Sebin) accompanied by others dressed as civilians. They had taken over between the Tracabordo and the Ferrenquin corners of La Candelaria, after the Bolivarain National Police withdrew its troops

Here is the reconstruction: A group of students tries to go up from Monroy to Tracabordo. The march was over. Those left were screaming at police. They advanced towards a Sebin motorcycle, knocking it to the ground. The Sebin and civilians move forward and start shooting pistols rifles. The students withdraw. Others, among which was Bassil Dacosta, cross to a lateral street. It is not clear why they decide to trun around 12 seconds later, they cross the line of fire. Dacosta falls. At no point does the shooting stop.

Dacosta is the next to last of  a line of students that crosses trying to escape the bullets. His buddies pick him up and carry him away”

Witneeses say the corner ahd been taken over by men and women in motorcycles, like “those you see in TV”. All dressed as civilains. Some with helmets and t-shirts. Some with their faces covered. They were shooting at the protesters in the Monroy corner. “They would shoot with their arms out and then hide”. In the wall of a City office there are at least 10 tarces of bullet impacts.

The civilians talked to the Sebin officers and withdrew. Sebin officers occupied their places.

At the head of the group came a  Kawasaki Versys 1000 motorcycle with another large guy with kaki shirt and jeans with a short wave radio in his hand. He seems to be the leader. After Dacosta falls, he gestures towards a man in gray camouflage clothes.

At the instant of Dacosta’s death a photographic sequence shows at least seven men wielding their weapons. Five are shooting standing up, one is shooting in the air and four are shooting at the protesters. Two wear uniforms.

One of them wears a white shirt, green military pants, helmet and blck lenses, He moves in a motorcycle with official palate 2-177. The other wears a long sleeved black shirt, jeans and black shows. No helmet or glasses. The civialisn were acting in coordination with those in uniform.

One of the shooters picks up the motorcycle overthrown by the students. Two pick up the shells from the bullets, they get on their motorcycles and leave.

Questions: Maduro said those responsible had been identified, a day later the scientific police was still studying the scene?

Why did the National withdraw from the scene?

Why were weapons used to repress the protest?

Why were there civilians with uniformed Sebin officers repressing the march?

From the video: Why did the motorcycles easily cross between the students and the police?

Why did the guy jump over the police only to be seen shooting later?”

Here is the video:

Here are a few pictures of the guy in white from three different angles, one of them while shooting:

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Meanwhile the investigative police last night went to Leopoldo Lopez’ parents’ home and his home reportedly to arrest him, in part for being responsible for the death of Dacosta. . He was not there. Maduro called him a coward for not turning himself in.

Tonight Lopez distributes this video, upping the ante in these protests calling for a march to the Prosecutors office to demand a number of things and to turn himself in for crimes he has not committed. He is asking everyone to wear white, as a sign that this is a peaceful movement.

For the Government this represents a quandary. Jailing Lopez will only ignite things even more, but it was Maduro who accused him of crimes, nobody knows specifically which ones. Will the Prosecutor obey Maduro and jail Lopez? Will a Judge sign the order to capture him?

Can the Prosecutor accuse Lopez while Ultimas Noticias has shown clear evidence that it was police and civilians in official motorcyles who were shooting at that instant at the students. Will they go after those responsible for Dacostas’s death?

It is certainly an interesting week to be here.

Note added at 9:21 PM Sunday Feb. 16th. : This work is having an effect, President Maduro said tonight on nationwide TV that he had order all Sebin officers to stay at their barracks!!!


Venezuelan Protest and Violence As Seen From Afar

February 14, 2014

soldado

When you are not in situ, it is not easy to report on events like those that have been taking place in Venezuela. Even if your read every thing, there is no substitute for being there.  On the ground, watching TV, talking to people and getting a feel for what is going on. That is why I yielded to Daniel yesterday, I could do no better than him.

But as a blog concerned with Venezuela, how can I not write about the events of the last two days if that is all I am thinking about?

So, here is my take:

Venezuelans are fed up. The shortages, crime and inflation are taking their toll. People are arrechos, which in English has a very straight translation: People are really pissed.

While you or I may not agree on a strategy of protests, I believe Leopoldo Lopez and Maria Corina Machado, in the knowledge that people were about to start protesting, decided to get ahead of the protests and start calling people to go out and protest in the name of #LaSalida. Somehow, when the protest began, they would be the receptors of the frustration that most Venezuelans have when they line up for purchasing basic staples, almost every day.

The students, the young frustrated people of Venezuela, were going to protest on February 12th. anyway, the day when Venezuelans celebrate La Batalla de La Victoria, a battle won by Jose Felix Rivas who was accompanied by students, regular ones and those from the seminary. They stopped the royalists led by Boves, thus February 12th celebrates the victory of youth at that battle.

And they went to the Prosectors office, where they met with not only resistance from police, but with violent groups belonging to either the so called “collectivos” or to the “Sebin” intelligence police. There are videos of Police and Sebin (intelligence police)  officers shooting real bullets against the protesters.

But even before violence erupted, the Government was already threatening the media, saying that they could be shut down for showing protests. Most of the media applied self-restraint and it was difficult to determine exactly what was going on.

By the time February 12th. came around, there were few media outlets covering the events, and one, Colombia’s NTN24, was not only blocked from the Internet after covering events live all day. But NTN24 was removed from the programming of all cable TV stations, simply disappearing from the scene, while protests were taking place. Maduro called this a “decision of State”

I call it stupid censorship…

And while there is evidence in video and picture form, that both SEBIN officers and “colectivos” shot at the student protesters, the Government issues and arrest warrant against Leopoldo Lopez and a Chavista Deputy calls for removing parliamentary from Deputy Machado, in order to be able to investigate her and prosecute her. But remarkably, after this diffuse charges against the “leaders” of the protests, there is no call to investigate or prosecute those that were taped and seen shooting and killing at the protesters. (The arrest warrant against Lopez has yet to be executed)

Which is quite revealing, no?

Moving towards today, it is clear that there will be no investigation of what happened. According to the Maduro Government (?) it is all a conspiracy to overthrow him, as if a bunch of students with stones and guts can actually expect to fight with the organized criminal system Chavismo has established.

Going forward things could get complicated. The students are unlikely to leave the streets now that there have been deaths and the way the Government has reacted. Maduro and his cronies like the confrontational style and are unlikely to back down from their stance. If each sides pushes forward, things could get violent and tricky very fast. Many students are still in jail.

The events are also affecting the dynamics of politics within both the Government and the opposition. Within the Government, because the colectivos remain a problem for the military and they have played a significant role in igniting the protests. And despite Maduro’s ban on protests, they continued on Thursday despite the streets being full of National Guardsman and their anti-riot equipment. Clearly, someone was holding off the troops for the time being.

Within the opposition, the gamble by Maria Corina Machado and Lopez to ask people to take to the streets, has paid off. Their role in Venezuelan politics will become more prominent if the Government decides to go after them. On the other side of this is former Presidential candidate Henrique Capriles, who has tried to distance himself from the protests and if the protests gather steam, he may lose his position as leader of the opposition.

Maduro has been careful not to attack the students, but has focused on the leadership of the protests at the political level, which implies he is being careful. But any mistake on either side could escalate this conflict to unknown levels and places.

Some question the strategy of protests. I believe protests will be daily events in Venezuela going forward, as shortages and inflation accelerate due to the inaction of the Government. I don’t believe taking to the streets is a strategy, but a reality of daily life in Venezuela, which some may take advantage of politically. Where it leads is as unclear as any other strategy, as the results of last years Presidential election showed. The opposition was well behaved and in the end got ripped off by the Government which never performed the promised audits. It is no surprise that many believe a different strategy is needed now.

But in the end, this is not or should not be about removing the Government, but about pressuring the Government to change course. Scarcity, inflation and crime affect Venezuelans equally, anyone that thinks that Chavistas are happy should read polls more carefully. Yes, there is a hard core militancy that will never say things are bad, but more and more Venezuelans are fed up with the whole economic situation. Absent Chavez, they are not as willing to put up with problems as they used to. Students protesting belong to homes on both side of the political divide. Just because Chavismo shows little dissent publicly, it does not mean that there are no disagreements within the many sides of Chavismo in Government, including the military. The tougher things get, the wider the protests, the wider the dissent. And the more pressure there will be on Maduro to change course…


Follow Daniel For Today’s Tragic Events

February 13, 2014

I can not follow events closely from afar, but Daniel can and has been doing a great job, click here to see his reports on this very sad day.


Sicad 2: The Sequel, by Nicolas Maduro

February 11, 2014

caballitomaduro

Tonight, continuing their streak of ever more amazing announcements, Venezuelan President Nicolas Maduro announced with pride that Sicad 2 will be launched soon at a theater or financial institution near you. Now, in Hollywood, people know that you don’t make a sequel of a bad first movie. Your need the first movie to be quite good in fact.

But what can you really say about Sicad, the original movie? Not much really. It has been intermittent, ineffective, irrelevant, unfair, ever-changing and frustrating. There have been many promises around it. Remember, was it in October? President Maduro said Minister Merentes would hold weekly auctions of Sicad (Sicad is not an auction, but that is a different story), they just like to call it that) of US$ 900 million. Then three weeks ago, on January 21st, Minister Ramirez (Merentes is no longer Minister) announced weekly auctions of US$ 220 million for the remainder of the year.

The result?

So far, not much. The first auction which was to take place two weeks later, giving new meaning to the word weekly, was cancelled and now this week we are supposed to have an auction for US$ 440 million to compensate for the cancelled one.

So, what does Nicolas do? Announce a new Sicad 2 mechanism, so that (his words) “There will be dollar offers beyond those of the State”

It would appear as if Sicad 2 would be the permutas (swaps) announced by Minister Ramirez, which are also not swaps, but that, again, is another story.

And I have to apologize. The previous post was somewhat rushed in saying the Government was a self-parody. This really is beyond parody. It is simply incomprehensible.

Maduro acts, as if everything is peachy in Venezuela. I don’t want to abuse the word clueless, but I need to use it again: Maduro is simply clueless.

By now, it appears as if the radicals-radicals have taken over from the radicals. By now, Ramirez is the only member of the radicals (also called pragmatists) left and you can see his increasing frustration. The leader of the radicals Nelson Merentes was removed and to add insult to injury, he was moved to the Central Bank and within a month, the responsibility of the Sicad auctions was taken away from the monetary authority. Again the radical-radicals win.

But he can still preside over the Central Bank, which today released January’s inflation data under the headline: “The trend of inflation has been broken”.

Which is certainly good news. Except this is the graph:

Inflacion

Does anyone see inflation´s trend broken in this graph? I certainly don’t. There is a brief dip in December, but the next data point, this month’s, goes right back into the  trend. And Merentes may not know anything about economics and finance (he doesn’t), but he is a Mathematician and knows no trend has been broken in the graph above. But I guess he needs the job, so he goes along with it.

But much like Maduro and Sicad 2, the promise is in the report, in the future. Chavismo is very good about the future, not so good about the present. It says clearly that by the end of the first quarter of 2014 the “measures taken will positively impact the stability of prices and shortages.

Oh yeah! I forgot about those pesky shortages. According to the same Central Bank report, shortages, as measured by the scarcity index, were actually up, not down, just like inflation in January 2014. No trend broken there either. In December, the scarcity index was ta 22.2% and despite the “war on the economic war”, Central Bank dixit, it jumped to 28% in January. Yeap! As Daniel clearly explains it: “Think about that, 3 common household items out of 10 in your shopping list are going to be missing on any day. And maybe having to fight for the other 7″

But don’t be so concerned about this, because as the monetary authority explains, this was the result of scarcity in non-essential items, like motorcycles and autos, while “the population continues to receive, with the same or superior intensity, the benefits the State brings them, in the whole country, through the public commercialization system in which they can acquire (sic) the basic foodstuffs at supportive prices”

They certainly drink the right Kool Aid at the Central Bank.

The whole thing is so bizarre, so “Cantinflerico” which makes me think of Cantinflas’ history lesson. Maybe some of the readers do not even know who Cantinflas was, but this clip is a good example of how Cantinflas (for those that understand Spanish) would explain something, in this case history. Just imagine Cantinflas telling us why the trend in inflation has been broken. It would sound exactly like this:

That seems to be their inspiration, just picture Merentes saying it.

Soon, Sicad XIII at a theater near you…


The Maduro Government Is A Self-Parody

February 9, 2014

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Sometimes one is simply incredulous of the things these Bolivarian revolutionaries can come up with. The country is not functioning properly and rather than devote their time to solving the problems, they seem to have some sort of anti-think-tank, where creative/naive/ignorant/revolutionaries seem to have a contest of funny proposals and ideas. It seems as if a bunch of guys and gals sit around a table shooting the bull, until they find something that they think is good, but which has no precedent anywhere in the world, nor does it seem to make much sense, nor any basis other than it seems like a good idea, independent of costs and difficulties.. Decrees are issued, laws are passed and soon the absurd, what appears a parody of reality, becomes a fact in rojo-rojito Venezuela. Add to that Maduro’s statements and you have a Government which seems to be trying to parody what a Government is supposed to be doing it. And they are extremely successful at that. So much so, that Chigüire Bipolar reads like Globovision in its titles. They have become a self-Parody

Here are the latest examples of these parodies:

Traveling Insurance: Minister of Tourism Izarra, as improvised a Minister as there can be, has issue a decree which makes it obligatory to have travel insurance, whether you leave Venezuela or come to Venezuela. Anyone traveling from Venezuela abroad, or vice-versa will have to be “informed” by the transport provider that he or she requires insurance for health and luggage.

Now, just to make life more difficult, it is the airlines that will have to provide you with this. And the decree explicitly forbids travel agents from selling it to you.

There are a number of strange things about this insurance. One, luggage is already insured by the airlines. If the airline loses your luggage, they have to compensate you, so I imagine that it also include theft of the luggage when you are no longer being transported.

But the weirdest thing about this idea, is that at the time that the airlines are owed over three billion dollars by the Venezuelan Government, they create this obligatory insurance abroad and in Venezuela that will be provided by some company or companies, but who the hell will pay them for dollars expenses abroad? Given the experience of the airlines, who will be interested in providing this insurance, when the Government is saying it has no foreign currency for the airlines or to pay private debt?

Who will pay for foreign currency expenses of these insurance companies? If the Government does not have enough dollars, why create a new need for new dollars? Is this in the budget for foreign currency now? Or is this Izarrita acting on his own and having no clue as to how this will be (ever?) be paid? I mean, according to official records, 1.2 million Venezuelans traveled abroad in 2102, at Bs. 800 to Bs. 1,000 per pop, we are talking about a cool US$ 100 per traveler at the Sicad exchange rate, or US$ 100 million a year.

Or is this another “guiso” and the Government already knows which insurance companies will be the “provider” of this service? Will those that travel and have incidents ever get paid?

Just asking…

Full Compliance Contract: As part of the new regulations for importing using Cadivi or Sicad rules, importers will have to sign a contract that they complied with the use of the foreign currency. The contract obliges them to obtain a bond from a bank or insurance company that guarantees the amount given to the importer plus the possible fine. Since the possible fine is up to 100% of the amount approved by the Government, then we are talking about banks and insurance companies issuing bonds or guarantees of up to 200% of the amount. (In US DOLLARS!)

Let’s run some numbers. Since the Government is taking three to six months to pay Cadivi imports, let’s use six months as the average time to “free” the bond to the bank or insurance company.

Let’s say imports this year (Cadivi+Sicad+pseudo-Permuta) reach US$ 48 billion, half of that is US$ 24 billion, an thus the amount amount outstanding in these contracts for six months of imports would be “only” US$ 48 billions.

There is simply no capacity in all of the Venezuelan banking system and insurance system to issue this amount in bonds, guarantees or whatever you may want to call them. This guarantees would have to be in dollars, not in equivalent Boívars.

Moreover, how many of these “importers” are worthy of a bank or an insurance company issuing them a bond or guarantee in US$ dollars for any amount?

Have these brilliant Bolivarian bureaucrats ever heard of the words “credit risk”. They clearly haven’t.

Just saying…

Maduro asks Toyota for the impossible: The last example comes from the top: Maduro and his VP for the Economy. Toyota this week announced that it would be stopping production in Venezuela indefinitely due to a lack of foreign currency. The announcement was made by Shino Yamada, who is a Toyota spokeswoman at the company’s New York headquarters.

So here comes a bully, arrogant Maduro, asking his Minister to have Toyota a heavyweight, either the President for Latin America or in his own words “someone from Japan”. Hey! Maybe Shino Yamada herself will be sent from the “imperio”. According to Maduro, maybe some lowly manger made the decision, which shows that he made no homework in finding out who made the statement. Years lost as Foreign Minister if you ask me. He learned very little.

But then, he shows how clueless he is when he says “It seems as if the only plan of some little managers is dollars, dollars, dollars..Where is the capacity to create the products here, we have it all: Aluminum, Petrochemicals, Iron, Steel…”

Well, how clueless can he be? To begin with, very few parts of a Toyota are made in Venezuela, which Maduro appears not to know. But more importantly, of the four industries that “we have it all”, only one can be said to be functioning more or less, petrochemicals, basically because the Government decided to take all them over. Or should I say Hugo Chávez?. The other three: Aluminum, Iron and Steel are producing very little under revolutionary management and can’t even supply other industries that do use these products in their manufacturing.

But this is the same Government who has brought fly by night operations from Iran and China to manufacture (assemble) cars here without any steady production or infrastructure, just a big arbitrage of the rate of exchange. Some, or many of these companies are actually not producing anything, they just don’t say anything. Toyota, in contrast, is a publicly trading company which is by law forced to disclose events that impact its bottom line. Venezuela shutting down is important. And Maduro is likely to react with his characteristic bully style, threatening to “nationalize” the Toyota plant, which will simply become another empty white elephant under Bolivarian management. But hey! We have homeland!

But what can you expect from President’s right? That is why you have “experts” right below him, like Vice-President for the Economy Ramirez. His accusation against Toyota?: Toyota Venezuela has debt with its Home Office.

Really Rafael? What do you expect these companies do, when Cadivi does not provide the US dollars for parts? The “Home Office” sends the parts on “credit” to the local company to keep the plant running until the line of credit with that subsidiary reaches its maximum. It’s called “risk management”, because as you know Rafael, a certain Minister said two weeks ago that Venezuela can not afford to pay its Cadivi debt, that includes Toyota’s.

And yes, Toyota Venezuela now has a debt with Toyota Japan. That is as evident as saying Venezuela owes bondholders (And right now, they are scared s…less)

In some sense, the Maduro Government has become a self-parody. They speak as if they were trying to outdo each other. Who can be crazier? Who can sound nuttier? Who can make the most outrageous comment? Who can be so creative, that he will promise the impossible?

And its becoming a daily competition. pero tenemos Patria…


The Paradox Of Chavista “Planning”: Even Simple Things Are Hard For Them

February 4, 2014

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There is a paradox in Chavismo. On the one hand they plan on extremely complex and absurd laws, like the “Bill for Just Prices”, but on the other, they can not even hold the first of the “weekly” Sicad auctions for US$ 220 million.

And indeed, fourteen days ago Minister of Energy and Oil and Vice-President for Economic Affars Rafael Ramirez held a press conference (above) and with a straight face told us about a “planned” foreign exchange budget and “new and improved” and weekly Sicad auctions in the amount of US$ 220 million.

And a paralyzed country was eagerly awaiting for this auction for many reasons. For one, everyone was wondering whether the Sicad rate would slide down or not and by how much. But more importantly, after fourteen days (really all of 2014), people just wanted the “weekly” Sicad auctions to become regular, because only certain economic groups were included in the first auction. The sooner we could get over the first one, the sooner we could find out who would be included in the second or third auction.

But it was not to be. Today, the Venezuelan Central Bank suspended Sicad auction number 16, due to “anomalies” and “lack of compliance with norms”.

Thus, a simple “auction” (it is not an auction, it is an even much simpler sale of dollars) is cancelled by the same Government that just created a Superintendency to calculate and establish the “just” price for every goddamn  single good and service in the whole country.

But somehow, the same Government can not even organize the SIXTEENTH Sicad auction, where the only “novelty” is that the amount to be sold is twice as much as the previous fifteen ones.

It is the Paradox of Chavismo, they have not been able to run anything properly in fifteen years (twenty for that matter, their coup failed) but they keep coming up with ever complex bills and structures to regulate the economy.

But they can not even run the simplest things. Go figure!


Random Thoughts About Blogs, Venezuela and a Government Caught in Political Asymptotic Slavery

February 2, 2014

It has been one of those weeks in Venezuela where nothing happens and that is what worries you: How long can the Government continue without making decisions or making half-assed ones, expecting that nothing will happen? But at the same time, Government officials and supporters say the darndest things and you wonder what type of thought process goes through their minds.

And in a country with little significant news to talk about, Quico of Caracas Chronicles, all of a sudden decides to call it quits, sailing into the sunset and deciding that he no longer has the intensity to continue writing about Venezuela. And in some sense, I envy him, because the idea of not writing the blog any longer, comes back frequently into my mind like a boomerang, but while I am writing less, I somehow can not cut that cord off. I am not ready yet. Kudos to him that could write for eleven years and give up. But somehow I can’t.

I wish good luck to him and those that will carry the torch for him now.

When I originally started writing these pages in the summer of 2002, my goal was to tell the world how absurd Venezuela was becoming and how the Chavez Government was using gray areas to subvert democracy and law and order. A few months later, if my memory is correct, Quico began his chronicles, a welcomed relief in my mind, as the intensity at the time was hard to keep up with. More sources, more coverage. Soon afterwards, Daniel showed up with his views and a bit later Alek Boyd started vcrisis. I did not know any of them, but over time, I met all personally and we became a sort of loose conglomerate of telling the world what was happening in Venezuela in English. Alek later looked for other horizons within the Venezuela theme, but Quico, with more coauthors, Daniel and I, kept going and I believe we did achieve a level of originality and credibility not found in the regular media, each in its own style and focus

Quico will be missed, with his sarcastic and provocative style which promotes thought and discussion. He leaves Juan and Gustavo, who will reveal a new look and collaborators, but as good as they are and can be, it will be a different era. We are all getting old, I guess. Time to move on…

For some…

But not for me. When I began this blog, I always envisioned the day when Chávez would disappear from the scene and I would write The End and that would be it for the Devil and the night job I never searched for when I started. Well, Chávez went away and THE END can not be written yet, because the absurd revolution is thriving in its inconsistencies and irresponsibilities, which are still around and amplified. And somehow, it is hard to see the end to all the insanity and absurdities, but I hope one day I can write something like a final chapter.

Physicists like to give name to theories. When I was a Physics student, asymptotic freedom was in vogue, later the name asymptotic slavery was also coined for the property of some superconductors.  Somehow, I have felt for a while that Chavismo is trapped in something we could call political asymptotic slavery.

Because Chavismo made a number of decisions years ago, that it thought it could one day change, but the longer it waits, it becomes asymptotically impossible to change things. As time goes by, Chavismo has become a slave to this decisions long ago. It can no longer backtrack. It is trapped, a slave to its own inconsistencies.

Let me give you an example: Gas prices. Even before Hugo Chávez became President, he asked then President Caldera not to continue increasing the price of gas as planned. So, let’s look at the price of a large tank of gasoline in US $ in Venezuela from 1998 to today at the non-official rate of exchange at the close of the year. I use a tank of gas, assuming it is 80 liters or 21 gallons, because if I used a gallon, it would be hard to show the price in US$:

GAS

In 1998, right before Chávez came to power a tank of 80 liters of gasoline, or about 21 gallons, cost about 13.5 US$ in Bolivars. Chávez decided to freeze the price of gas to preserve his popularity. By now, that same tank of gas costs 11 cents of a US$. (NOT A TYPO) Asymptotically, this is simply zero, gas is free in Venezuela, and is one of the many ways in which Chavismo is trapped. Raising it to two dollars, that is bringing it back to the equivalent of seven years ago, represents a factor of twenty increase. It would be political suicide to do so. But raising it to what it was when Chavez got to power would be a factor of 122, 12,000% give or take a percent here or there. Madness. Hard to get out of this trap. Slaves of their own ignorance.

Or take the money supply in Bolívars, the so called M2, the monetary liquidity in circulation:

M2

When Chávez got to power, M2 was Bs. 10 billion in today’s “Bolivares Fuertes”. This is practically zero in the scale of the above graph. Today, it is 121 times larger, there are 121 times more Bolívars in circulation than when Chávez got to power . It is growing paraboliccaly, exponentially. Given that reserves are barely more than that fateful day, it is any wonder that the Bolívar has depreciated so much. (Curiously, it is another factor of about 120, scaling perfectly with the growth in M2. When Chávez got to power the exchange rate was Bs. 0.563, today the unmentionable rate is slightly above 120 times that. And Merentes in his aberrant ignorance says he has seen no evidence that increasing M2 affects inflation!)

We could call this inflationary slavery, another physics name. By now, they can’t slow down, they are trapped in their inflationary economy and fear getting out of it. There is no way to absorb that much money to stop inflation, there is no way for them to live without creating more and more money

The problem is that Chavismo thought they could ride their luck up. And luck they had and they seem to forget it whenever they talk about the bad old days. This is the yearly average price of the Venezuelan oil basket since Chavez came to power:

OIL

When Chávez came to power. the average price of oil the previous year was 8.08 dollars per barrel. Between that time and 2006, that average grew by a factor of ten, something somehow lost when Chavismo looks at its lack of accomplishments. Last year it was US$ 97 per barrel, but that was down like two dollars from 2012.

Chavismo thought this would go on forever, until it did not. Thus, Venezuela which had debt of US$ 35 billion (combined PDVSA and the Republic) when Chávez came to power, began borrowing by issuing bonds.

Today, the debt in bonds is about US$ 35 billion for the Republic and another US$ 43 billion for PDVSA.

But the Government realized that appetite for Venezuelan bonds was not infinite, so they borrowed about US$ 20 billion from the Chinese, to be paid in oil, so that the cash flow from that oil went to pay those loans.

Then one day, the Chinese said Wú (No) to any more loans. Thus PDVSA started not paying its suppliers. Later, it was its partners in oil projects that did not get paid. When that was not enough, Cadivi stopped paying for imports already in the country. And when that was not enough, PDVSA started borrowing from the Central Bank and the Treasury.

It all adds up and these are all of the country´s debts today:

PDVSA bonds US$43 billion

Republic bonds US$ 35 billion

China US$ 20 billion

Debt with private sector US$ 42 billion

Debt with Central Bank and Treasury US$ 105 billion (in Bolivars)

A cool US$ 245 billion, a factor of seven increase since when Chávez got to power.

And despite all of these policies, the Minister in charge of the Economy says today that there are shortages in “only” forty of the basic products. Well, in 1998, there could be shortages of one product, maybe two, but not chronic shortages of forty products. After all that debt, a factor of 12 increase in the price of oil, 120 in the number of Bolívars in circulation, you would think things would be at least as bad (or as good?) as in 1998, before this funky “revolution” came to power.

But they are not and they will survive one more year by taking money away from anybody left standing. (Banks?)

Everything Chavismo does now is talk about a future they will somehow build. They could not do it with money and they now will attempt to do with without money.

Yeah, sure…

And that is THE END that I want to be able to write about. I am not sure how this ends. I am not sure about the end of this tragedy (tragicomedy?). But after all this effort, I do want to be able to write about how asymptotic slavery was resolved, how the whole thing unraveled.

And unravel it will someday.

And I will not miss a beat of it.

Note added: I have received a number of private questions about the debt above. First of all, not all of its is dollar denominated, thus, it can be devalued. That would be the case of the debt of PDVSA with the Treasury and the Central Bank. Also, with the dividends included in the private sector debt , about US$ 14.3 billion. But additionally, there is debt in Bs. issued by the Government. The last number I have is US$ 66 billion, it is probably higher today.


Prison Sentences In Venezuela’s New “Just Prices” Bill

January 27, 2014

 price_controls-work-e1389636862818

Daniel has given you a neat angle on the new ¨Bill for Just Prices¨, which implies that if Jeff Bezos ever set foot in Venezuela he would have to go to jail. But Mr. Bezos is very unlikely to set foot on this country. But I want you to give you a slight different angle, the consequences for those that live in Venezuela. What they will face under the new Law. Now, I am not a lawyer, nor do I want to bore you with the details of the new Bill. I just want to point out how absurd, even medieval and fascist the whole Bill is.

Thus, I will concentrate on the prison sentences that local people will supposedly get for violating the Bill and the reasons for it:

–Take for example Article 51, which says more or less: “Those who sell goods or services at prices above those fixed or determined by the SUNDDE (The Superintendency created in the Bill to supervise everyone) will be sanctioned with prison terms of between eight and ten years.

The Bill is actually quite ambiguous, it is one thing for the price to be “determined” than for it to be “fixed”. The SUNDDE can “determine” at any time that your price was excessive. This will create a legion of of SUNDDE employees looking to determine prices so they can ask for a bribe.

Now, just to make sure, the Bill details what it means to say “Those who sell”. It is not only the owners, but also the administrators of companies that would be responsible under this new regime of threats and terror that is about to begin in Venezuela. In fact, I expect many owners to say “Forget it!” and just close shop, the same way I expect many Managers to say “Forget it!” and resign to their positions once they figure out what it entails under the new Bill.

But contrast Art. 51 above with Article 57, for example, which says: “Those who buy basic products in order to make money, to resell them at prices higher than those established by SUNDDE will be sanctioned with between 200 and 10,000 tributary units. Note the difference? If you make or sell something and violate the regulations, you get eight to ten years of jail, but if you are just a reseller (Mostly street vendors, I presume) you will have to pay between Bs. 21,400 and Bs. 1,070,000 (US$ 1,893 and US$ 94,690 at the new newfangled Sicad rate. Thus, you can extortion everyone, the penalty is just different, oligarchs get eight to ten, aspiring capitalists who are part of the “people” get to pay a fine (or a bribe!)

–It gets better. Article 55 says “Those that carry out actions or incur in omission that directly or indirectly affect the production, imports, gathering, transportation, distribution or commercialization of goods will be sanctioned with ten to twelve years of jail.

Subtle, no? Imagine you engage in a protest, block traffic: Ten to twelve years because you affected distribution or transportation. Or suppose you supported that protest, then you indirectly helped those guys. See it? This gives the Government carte blanche for jailing people. And they will!

– Article 58. Those that “condition” the sale of regulated goods or services by SUNDEE will be sanctioned with prison between two and six years.

Of course, it will be up to this new super bureaucracy, the SUNDEE, to determine what this conditioning means. You rent a store to someone and put in that they have to paint the store, not you, well, tough, you go to jail. Think about it, contracts will not be able to have any condition whatsoever or else! No soup for you! And jail too!

–Finally, there is an article that says that those that get involved with contraband (out f the country, of course) will be punished with jail sentences between 10 and 14 years.

Jeez! I wonder where they will be able to find new personnel for the National Guard. Unless, of course, the military s exempt from this. Which could happen, this is, after all, a revolution.

There you have it, It will be so easy to go to jail, so easy to charge you and convict you, that I ask: Would you work for a company or start a company that would be subject to this Bill?

No way Jose, as The Village Voice used to say.

The Bill, of course, has dozens of other nuances and penalties, I just thought I would highlight the worst ones. If you find comparable ones, please note in the comments.

And inflation? Will surely be higher in 2014 than in 2013, new Bill or not.


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