Caracas Gringo

'When the tree falls, the monkeys scatter'

Archive for June 2010

Norman in Andorra

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CICPC director Wilmer Flores Trosels said today that Interpol hasn’t officially notified him yet of the arrest in Andorra of former CICPC anti-drug director Norman Puerta on charges of laundering $1 million in alleged drug money through a bank account there. But as soon as the notification arrives the CICPC will “start investigations to seize the assets this citizen has acquired” in Venezuela, he added.

Flores Trosels has served as director general of CICPC since December 2008 when he replaced Marcos Chavez (no relation to the president). Flores Trosels is a Bolivarian police chief. His top priority is complete loyalty to the revolution (i.e. President Hugo Chavez). Being a real cop is a very distant second.

Whenever a major scandal erupts, Flores Trosels usually doesn’t know anything, at least not publicly. But he was clear today about Norman’s fate. As soon as the Interpol communique lands on Flores Trocels’ desk in Caracas, the CICPC will begin the process of locating and confiscating Norman’s assets in Venezuela. It appears the CICPC general director’s focus right now is on closing the case of Norman Puerta quickly.

The authorities in Andorra, an offshore financial haven which FYI cooperates quietly with US federal counterdrug authorities, have been on Norman’s trail for at least a year.

This would have coincided roughly with the collapse of Stanford Financial group, followed a couple of months later by news reports that between $2.5 billion and $5 billion deposited in a bunch of Andorra-jurisdiction accounts owned by prominent Bolivarian figures had been frozen as part of an investigation into money laundering associated with international drug trafficking and Islamic terrorism.

Norman Puerta isn’t just another rogue anti-narcotics cop. He served in the CICPC for 28 years, rising through the ranks until he wound up in the CICPC’s narcotics division. If Norman pleads his case intelligently, he knows where the skeletons are buried inside the CICPC and other agencies like the National Guard.

Caracas Gringo occasionally comes into contact with CICPC cops, usually in the anti-kidnapping division, but also in the agency’s forensics division (yes, CICPC has a forensics division). CICPC cops are paid s*** wages, don’t have tactical/communications resources to really battle crime, and they’re grossly overworked. For example, CICPC officially investigates every homicide in Venezuela, every vehicle robbery, every bank robbery, and every kidnapping for ransom.

The CICPC’s anti-drug division runs its own investigations and cases, and also works in tandem with the National Guard. The big dogs in counter-drugs in Venezuela always have been CICPC and the National Guard. Also, the CICPC’s anti-kidnapping division works in tandem with the National Guard’s anti-kidnapping and extortion group, which is based in the Andes region.

CICPC’s anti-drugs and anti-kidnapping divisions are where the most skeletons are buried, because that’s where fortunes are made overnight. With prior apologies to the good cops – because, surprisingly, there are a lot of good cops in CICPC – the rogue “crews” with badges run thickest in the anti-drug and anti-kidnapping divisions.

Despite periodic public “operativos” to burn some illegal drugs in furnaces, events which then are duly reported by the local news media, some of narcotics seized by CICPC always trickle back into the drug markets of Caracas and other cities. It’s been that way for decades, since long before Chavez led his failed coup in 1992.

How did Norman Puerta amass $1 million in secret cash? Perhaps he kept a few kilos of cocaine here and there over the years, or provided protection and/or information services to drug traffickers, or supplied “private” security services on the side for politicos or impresarios. It’s also possible he scrimped and saved every centavo he ever earned, honestly.

But Flores Trosels’ statement that CICPC will investigate and seize Norman’s assets as soon as Interpol’s official report arrives suggests that it’s already been decided higher-up that every legal trace of Norman Puerta in Venezuela must be buried. No paper trails, and no loose ends, including the identities of the people Norman did business with all these years.

However, burrowing deeply into Puerta’s history at CICPC might expose some surprising links between drug trafficking and kidnapping, two major criminal activities in Venezuela in which the FARC and ELN very frequently appear in partnerships with bad cops. The CICPC cops who pursue drug traffickers, kidnappers and extortionists know those criminal trades inside-out. And the line between good and rogue cop is so thin as to be, often, non-existent, especially in the CICPC’s anti-drug and anti-kidnapping divisions.

Puerta was a close associate of former CICPC director general Marcos Chavez, who we know for a fact has some major skeletons in his “lechoza” patch.

For example, there’s the still unresolved case of a nephew of Chavez that was murdered in Maracaibo last year in an apparent “ajuste de cuentas” between associates in a kidnapping and car theft ring. The murdered nephew reportesdly was associated with his uncle in some of these activities.

In the grey world of private Venezuelan security specialists who search for people who have been kidnapped, Marcos Chavez also is reputed in some quarters to be the head of a rogue crew of former (and current) CICPC cops involved in organized crime.

Written by Caracas Gringo

10/06/2010 at 19:37

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Venezuela: Run Away

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Venezuela: Run Away is the headline of veteran Venezuela analyst Walter Molano’s latest report on Venezuela, posted at Nouriel Roubini’s site. Very emotional, for a financial analyst; some excerpts, condensed by this blogger:

“…the situation in Venezuela is…quickly spiraling out of control…President Chavez is starting to show signs of desperation… fear of nationalization and confiscation is forcing more Venezuelans immigrate and send their assets abroad…this is pushing the country towards the brink of collapse….there is only one recommendation—liquidate all Venezuelan positions before it is too late… the notion that PDVSA bond holders can gain access to the company’s international assets, such as the CITGO refineries, is pure fiction… the risks in Venezuela are huge, but they are getting worse…. social tensions are on the rise. Although (Chavez) continues to enjoy the support of 50% of the population, he is creating an environment of class warfare—which could end up destroying the country… it’s time to sell everything in Venezuela and get out.”

Written by Caracas Gringo

09/06/2010 at 19:25

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State’s new vision for the Americas

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It doesn’t seem to matter if the US administration is Republican or Democrat. Either way, Latin America gets the shaft.

Republican administrations war against drug traffickers, terrorists and communists in the region. They pay lip service to trade expansion, but since all politics is local they are prone to heed constituents who warn against letting more “musius” into the US market. Many Republicans also want to kick all the “frijoleros” out of Gringolandia, as long as it doesn’t disrupt business.

Many of this blogger’s Venezuelan friends cheered the election of a Democratic president, although many believed that Hillary Clinton was the better candidate. But no matter, they were certain that relations between the US and Latin America just had to get much better with a Democrat president.

But now some of these Venezuelan friends are having a “what the f***!” moment as they evaluate the Latin America policy which US Secretary of State Hillary Clinton has quietly rolled out in recent weeks.

There’s no denying that US foreign policy towards Latin America has been in desperate need of new ideas and proposals in recent years.

Since the Cold War’s end, successive US administrations (Bush, Clinton, Bush) have laid out Latin America policies that included these elements:

*Expanding hemispheric trade (NAFTA, FTAA, FTA’s with Chile, Central America, etc).

*The war on drugs (Colombia and Mexico, tens of thousands of corpses have piled up and billions of dolalrs have been spent, but one can still score rock cocaine outside Union Station in DC, just across Massachussetts Avenue from Congress).

*Bringing democracy to Cuba. Possibly the only US foreign policy goal enacted into Law (Helms-Burton Act).

*Strengthening democracy and human rights in the region. Bla-bla-bla…Of course, Chavez and gang (Bolivia, Nicaragua, Ecuador, and the enduring Cuban regime) represent mainly a democratically elected trend towards hard anti-American Marxist populism.

Since 1990, successive US presidents, secretaries of state, assistant secretaries of state, trade officials have made thousands of speeches laying out US strategic and economic goals in the Americas.

As a reporter and analyst, we’ve read hundreds of speech transcripts posted at various US government websites. At their core, they all sound very much alike, which may signal a reassuring consistency of policy but at same time could reflect the absence of original thinking and innovative policymaking, both of which are vigorously discouraged at State by tradition.

But the Obama administration has made some important adjustments. Visit the State Department’s interactive multi-media website.

Welcome, Bienvenidos, Bienvenue…

Listen carefully to Assistant Secretary of State for Western Hemisphere Affairs Arturo Valenzuela as he lists the “key priorities” that the current US administration views as being the most important in Latin America:

“…citizen safety, strengthening democratic institutions and the rule of law, economic and social inclusion, energy, climate change and things like that…”

…and things like that.

Whatever happened to trade expansion and immigration, or combating drug traffickers and terrorists, or Cuba, or undercutting efforts by the Chavez/Castro alliance to spread revolution and instability regionally, and things like that?

Instead, says Valenzuela, “We find ourselves at a very promising moment in the Americas…welcome to our web site.”

There’s a lot more detail about the Obama administration’s “new vision for Latin America” in the speech Madame Clinton gave in Quito this week.

Quoting Secretary Clinton, there are “four pillars of our vision for the Americas” (unclear if “our” refers to her personally, to President Obama or something else):

One: “Effective and accountable institutions of democratic governance.”

Two: “Physical security for our citizens.”

Three: “Move toward that future of clean, renewable energy, be better stewards of the earth as we continue to extract the fossil fuels that we still need, and tackle the climate change and environmental threats we face.”

Four: “As Simon Bolivar said, the fundamental basis of our political system hinges directly and exclusively upon the establishment and practice of equality.”

One way to foster equality is to tax the rich at higher rates, adds Clinton in her speech.

No point in ranting about the speech. But it appears to this blogger that the Obama administration thinks that Latin America is the “progressive” (i.e. a Gringo buzzword meaning, roughly, Enlightened Lite Socialist) equivalent of a laboratory where tests are run on rats and monkeys. How else to explain the emptiness and inadequacy of this new US “vision” for the Americas?

But try telling that to a Gringo, especially if you are a Latinoamericano.

“It’s impossible to discuss anything rationally with you Gringos,” says a Venezuelan friend who served as an Ambassador in the US (not Diego).

Really? Por que?

“Because all you Gringos think you’re perfect and know more than everyone else,” our friend snapped back.

Yeah, it’s a bummer for sure, my Venezuelan friends have been telling me that for years.

Written by Caracas Gringo

09/06/2010 at 17:20

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BCV’s FX System: Fumando una Lumpia

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With apologies to righteous stoners everywhere

It’s a bit mindboggling to see such insane stupidity up close and in action.

The Central Bank’s new band system made its debut with lower/upper bands of BsF. 4.2-5.4 per dollar.

Brokerage companies are history, but banks will be allowed to sell $40 million per day, collectively.

Individuals will be allowed to buy a maximum of $5,000 per year, and companies will be limited to $300,000 per month, or $3.6 million per year.

Now consider that it takes between $60 million and $80 million per day, or roughly $15 billion to $20 billion per year, to ensure that Venezuela’s economy runs more or less smoothly.

Keep in mind also that Venezuela has imported more of everything since Chavez has been in power (see BCV’s data series), and simultaneously producing less locally.

Venezuela is immensely dependent on imports, especially for its food supply and medicines. Businessmen we know say that depending on the category of product, the country’s import dependency ranges from over 50% to over 80%. That much dependency costs beaucoup dollars. But the revolution has been running low on cash lately because Pdvsa’s production capacity has collapsed, and the regime’s policies have laid waste to the non-oil economy.

Venezuela now has three official FX rates – 2.60, 4.30 and 4.2/5.4 at BCV’s FX window. However, a fourth black market FX rate already operates at places like Simon Bolivar international airport in Maiquetia.

Cadivi is still chugging along, and some dollars are flowing from the Bolivarian FX pipeline. But it’s not enough.

The old “permuta” market was financing between 30% and 40% of Venezuela’s imports needs. But that market is kaput, and the new BCV FX window imposes very tight quotas on individuals and companies.

What’s next?

*It’s unsustainable. In a few weeks or months, the BCV’s FX window will go bust.

*The available supply of hard FX will be very restricted, and the black market FX rate will climb. It’s inevitable, like gravity.

*Shortages of everything will increase. Think it’s bad now when out shopping for groceries in Caracas or the interior? It’s going to get worse very quickly.

*More scarcity of everything = higher inflation. Don’t be surprised if inflation climbs to 45-50% in 2010. Keep an eye particularly on food prices, and on inflation in the lowest socioeconomic segments of the population. Poor Venezuelans will be hammered ferociously.

*Based on what we’re all seeing daily, the Chavez regime probably will respond to Venezuela’s expanding crisis with more expropriations, class warfare rhetoric/actions, intimidation, threats of violence, arbitrary arrests, illegal decrees and legislation, etc. ahead of the September 26 legislative elections.

Written by Caracas Gringo

09/06/2010 at 14:25

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Random Thoughts on Bolivarian Chaos

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As a practical matter, the National Assembly elections on 26 September 2010 are irrelevant. Even if the political opposition manages to break President Hugo Chavez’s majority in the legislature, the new National Assembly will suffer the fate of Greater Caracas Mayor Antonio Ledezma. Chavez in recent times has issued a slew of decrees, and the current assembly has approved many new laws, creating new revolutionary governance structures that will operate independently of the country’s constitutional and elected local/regional/national authorities. The Federal Council of Government chaired by Chavez, and the new militarized regional powers and local communal councils created in recent months will supplant the traditional elected local and state governments. The new Bolivarian structures will be funded by the central government, but the traditional local/state governments that are not controlled by Chavez will not receive any fiscal transfers from the central government.

Structurally, the near/medium-term outlook is alarming. Venezuela’s economic situation is unsustainable: steep economic contraction, the world’s highest inflation surging even higher, the currency transformed into colorful toilet paper, and shortages growing everywhere because the regime is strangling imports in a failing effort to slow the hard currency burn rate. But the new foreign exchange market about to launch at Central Bank will crash quickly because the bank doesn’t have the hard currency reserves to supply demand, which normally runs at $60 million to $80 million per day, or roughly $15 billion to $20 billion per year. Morgan Stanley forecast recently that Venezuela will confront a hard currency deficit of about $20 billion, overall, during 2010 and 2011. Chavez is desperately looking for dollars under every rock. Last week he warned local banks to place into the Central Bank’s new currency market some $5.5 billion worth of government and Pdvsa bonds which Chavez says the banks are “holding” – although the alleged bonds allegedly in the hands of the banks do not appear in any officially kept data banks (CNV, Sudeban, Central Bank, etc.). Chavez also threatened to seize the private banks if they did not start financing his regime’s social programs, because the assets held by the banks (their checking and savings deposits) belong to the “pueblo.” Chavez also is trying to replicate the Venezuela-China financing mechanisms with other countries: the regime gets cash it pledges to repay with shipments of crude oil still underground in Venezuela.

Chavez declared last week that the revolution will topple the “three pillars” of capitalism: land ownership (tenencia de la tierra), banks and imports. He is going after everything that anyone owns, literally. Energy Minister Rafael Ramirez confirmed on 4 June that the revolution’s ultimate goal is total state control of the food sector. Listen to what Chavez, Ramirez, Jaua and other senior regime officials have been saying publicly: The revolution aims to assert total control over the national food supply. If Chavez succeeds, Venezuela becomes his “Hacienda.”

Chavez has compromised Venezuela’s future socioeconomic development. Some of Caracas Gringo’s Venezuelan and expatriate friends who remember what Venezuela was like before the Chavez era occasionally lapse into idealistic musings about rebuilding Venezuela quickly after Chavez departs. Three years, five years, no more than ten years and Venezuela will have recovered completely. And “if pigs had wings, away they’d soar, through heaven’s golden door…” (Heywood Banks). The pillars of the economy have been wrecked. Pdvsa, the “spine” of the economy, is broken. Some independent observers put Pdvsa’s real crude oil production levels at under 2.1 million b/d, at least 20,000 production wells are shut in, its refineries are turning into junk, and Bolivarian Pdvsa since 2004 has not completed even a single major new project that we can recall. Maybe the Corocoro offshore crude production program qualifies as a new project, but the FUTPV warned recently that the three offshore rigs operating in Corocoro (including the stolen Ensco 69) are not maintained properly and are at growing risk of accidents. Guayana’s basic steel, iron and aluminum/bauxite industries also have been ruined. The state-owned power sector is falling apart. Chavez brags tiresomely about Venezuela’s vast energy resources while the interior of Venezuela suffers daily forced and programmed power outages. But Hugo “It’s not my fault” Chavez blames the revolution’s “squalid bourgeois” predecessors, the “obreros,” the Gringo Empire and capitalism generally for the destruction his policies have wrought. Chavez also vows to fight back with more expropriations and regime interference in all spheres of private economic activity and opinion.

Chavez boasts that the pueblo supports him, the pueblo including the poor in the barrios and the 7 million-plus registered members of his PSUV party and his civilian Bolivarian militia that recently marched 35,000-strong in downtown Caracas in a propaganda show of force. But sentiment against Chavez is running strong among the poor of Petare and El Valle, the two largest mega-slums of Caracas. We’re less acquainted with the bloques/barrios of Caricuao and Catia and El Junquito in western Caracas – Chavezland – but anecdotal intelligence suggests that a lot of poor Venezuelans in those areas also are fed up with the Chavez regime. “It’s the economy, stupid” applies equally to all societies, rich, poor and the ones unfortunate to be ruled by gangsters like Chavez and crew. If Chavez gets struck by a meteorite inside Miraflores or drowns in a Tsunami in Apure it’s likely that most poor Venezuelans will stay close to home instead of flooding the streets to exact revenge against an act of nature. However, the heavily armed irregular groups in 23 de Enero are hardcore chavistas to the bitter end. If Hugo goes down, 23 de Enero will erupt for sure and Caracas will be chaotic until gangster crews like La Piedrita and the Tupamaros are suppressed.

But Chavez doesn’t care what the poor think. His goal is to perpetuate himself in power indefinitely, and there are many new external actors who wish to keep Chavez in power for decades to come, if possible. For example, Havana, which thanks to Chavez holds the keys to Venezuela so completely that Cubazuela has become reality within the government. But Chavez also gave a set of keys to Beijing, which has its own separate strategic alliance with Havana. Chavez says that asserting Venezuelan sovereignty mandates booting out the Gringos, but he has rolled out the red carpet for Havana’s corporatist military/politico establishment and China’s Communist rulers. The oil is China’s for 200 years, says Chavez, adding that Beijing has agreed to come in and rebuild the basic industries. Does anyone think that the Chavez regime, which is packed with incompetent and corrupt “pendejos,” stands a chance against the sharks from Havana and Beijing?

The Cubans officially are everywhere in Venezuela. The recent AP article pointing attention to the unusually large and diversified Cuban presence inside the Chavez government was published at least six years too late. On 11 April 2002 there already were over 7,500 Cuban nationals in Venezuela on official deployments. Today the Cuban presence could total up to 50,000, with Cuban officials actively involved in almost every facet of the Venezuelan government including the armed forces, intelligence and national police services, the national registries, Onidex and Seniat, the seaports and Pdvsa, Corpoelec, agriculture, education, labor. Chavez says that Venezuela and Cuba are one, but many Venezuelans disagree, especially in the armed forces.

The Cubans may have the largest physical presence in Venezuela, but Chavez has carved up Venezuela’s sovereignty and resources among several strategic partners to advance his aims, including Iran, Russia, Belarus, Syria, Vietnam, Brazil, India and others. These Bolivarian strategic partners have leveraged their alliances with Caracas to advance their respective economic interests in Venezuela. There’s a whole lot of crude oil, natural gas, gold, bauxite, iron and more in Venezuela, and naturally they want these natural resources for their own economic development. Foreign powers extracting non-renewable natural resources from a Latin American country to fuel their own development. Reminds one of the Biblical rant of revolutionary idiocy in Latin America, “Las Venas Abiertas de America Latina” raging against Imperialist Gringos stealing Latin America’s resources and giving back nothing.

Chavez also has opened the door to a slew of non-state actors including the FARC, ELN, ETA, IRA, and reportedly Hezbollah and Hamas. There are also mafiosi from Mexico, Brazil and West Africa. Various Sicilian and Russian organized crime groups also have seen their fortunes in Venezuela revive under Chavez. With Colombia next door and the Chavez regime “entrepiernado” with groups like the FARC and ETA, it makes good business sense for international crime groups to establish subsidiaries in Venezuela. If Zeus hammers Chavez with a bolt of lightning, these groups already are deeply entrenched and likely will adapt without difficulty to a post-Chavez era which – at least for the first several years – is bound to be chaotic and volatile.

But Chavez has confirmed that he will seek re-election again in 2012 and expects to win. We suspect that if Chavez makes it to the elections in 2012 he will, indeed, win re-election, assuming that between now and then he retains control of the electoral, judicial and legislative branches of government. Meanwhile, Chavez’s class warfare rhetoric has intensified. He is speeding up a regime effort to take control of the country’s economic pillars, including land ownership, banking, food production and commerce. Chavez also has warned repeatedly that he plans to stay in power until at least 2021, and that he will transform Venezuela completely into a centralized socialist political and economic model. He has declared that his followers will never accept electoral defeat or his ouster from the presidency, and has threatened that any effort to dislodge him from power and stop the advance of the Bolivarian revolution will trigger the massive slaughter of his enemies, like the “squalids” of eastern Caracas. Chavez isn’t bluffing. Despite Venezuela’s worsening crisis, Chavez appears confident that his hardcore followers and Cuban forces in-country have his back covered.

Many of our Venezuelan friends ask when will the Gringos in Washington finally wake up and do something about Chavez before he completely destroys Venezuela and destabilizes the Americas. Our response, invariably, is never. It’s up to the Venezuelan people to do something about Chavez. Since the Clinton years, US policy towards Venezuela has been a “move the goalposts” policy – remember ‘watch what he does, not what he says,” the incredibly imbecilic “policy” crafted in the late 1990’s by Ambassador John Maisto? George W. Bush foolishly embraced the Clinton/Maisto policy towards Venezuela, which of course was underpinned by the interests in Venezuela of US oil companies (all of which have been kicked out except Chevron). Then came 911 in the US in 2001 and 411 in Caracas in 2002, and Washington completely lost its way in Venezuela.

Now the US policy reins in Latin America are held by President Barack “Yes, we can change” Obama and his grudging sidekick, US Secretary of State Hillary “I’ve been vetted” Clinton. If Bush tended to ignore Latin America, this new US administration sides openly with the bad guys (i.e. Honduras) and talks up new policy initiatives that probably befuddle the region’s leaders and people. For instance, yesterday Madame Clinton gave a policy speech in Quito urging wealthy Latin Americans to pay more taxes. If everyone pays their fair share, the rising tide of fiscal prosperity will raise every family’s pirogue on a river of social progress and wellbeing. More if pigs had wings stuff. The rest of the world isn’t like the US, but the Gringos still don’t get it: if only the world would create the institutions and followed the rules of the game that made Gringolandia the greatest nation on earth. Douglass North long ago confirmed that cultures influence the creation of the political and economic institutions in which cultures (individual societies) flourish. But the diamond-hard rules of political correctness prevent critical examinations of how some societies are fucked by their culture (i.e. Haiti or, dare we say it, the United States). The bottom line, though, is that when it finally hits the fan in Venezuela, the US administration inevitably will scratch its head in surprise and then will do and say the wrong things.

Lately Chavez and his senior gangsters have been saying that capitalism and 21st century socialism in Venezuela are incompatible. They cannot possibly coexist in the same dimension. Balance these remarks against the Chavez regime’s deliberate policies of trying to assert total state control over everything in Venezuela. Consider how small the private sector has become after 11-plus years of Chavez in power. Over 50% of the manufacturing sector is gone, agriculture has been pulverized with expropriations, commerce in Venezuela has prospered as the country’s import dependency has soared (thanks to Chavez), but now the regime has run out of cash and is trying desperately to close the dollar spigot. Now Chavez is threatening to take down the pillars of capitalism in Venezuela – banks, imports, land ownership.

If Chavez completely precludes any possibility of peaceful democratic change of government, this presents Venezuelans collectively, and individually, with three options: submission, flight or confrontation. Moreover, the current “coyuntura” is such that many Venezuelans may be concluding that the time has come to fish or cut bait. But “who” and “how” and “then what” appear to be intractable obstacles in this Venezuelan “Sociedad de Complices.”

Written by Caracas Gringo

09/06/2010 at 10:56

Posted in Uncategorized

Food Wars

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Weigh these words by Energy Minister/Pdvsa President Rafael Ramirez on 4 June at the official opening of a new Pdval food store.

“The essence of the revolution is to satisfy the needs of the people. The issue of feeding (the people) attends to the essence of the revolution, and we are moving in that direction. We have found a deviation, a problem that must be attended, and we are attending it…the revolution is deepening the construction of (the state’s) hegemony in the food sector, with the intention of minimizing the private sector’s participation in the production of food… until the moment comes when the State has (total) control of processing and transportation in that (food) sector. With Chavez everything; (but) without Chavez (there is) nothing.”

Ramirez’s words must be taken literally, particularly since he received a public endorsement from the president amid the growing scandal over the loss of over 70,000 tons of food imported mainly by Pdval, a subsidiary of Pdvsa. The regime is actively “investigating” how so much food was lost. Three interim scapegoats already have been jailed, including former Pdval president Luis Enrique Pulido, former general manager Ronald Flores, and former executive director of operations Vilyeska Betancourt. When Pulido served as Pdval’s president, he reported directly to Energy Minister Ramirez.

However, it’s possible that these scapegoats will become accusers as the “investigation” unfolds. In the past 48 hours, the official version of how the food was lost is that the state-owned importer (Pdval) contracted out the transportation/storage to private companies; meaning: “it’s the private sector’s fault.”

Ultimas Noticias, a pro-government daily aimed squarely at “el pueblo,” reports that Sebin is investigating the existence of a mafia within Pdval that was working with corrupt private sector companies to deliberately declare imported food unfit for human consumption, and then sell that food illegally to private vendors who would place it in local markets.

This alleged mafia inside Pdval has an ongoing criminal enterprise with private companies, all unnamed except Grupo Sahect (sic) in Cojedes, which is reported to have 47 warehouses that it leases to Pdval to store dry and refrigerated food. The operations of the Pdval mafia were brought to the regime’s attention by two former Pdval officials who have not been identified.

Message to the pueblo: The Pdval scandal is the private sector’s fault, but the revolution will apply correctives quickly.

Chavez’s expanding assault against the privately owned food sector is not a recent development in his plans to transform Venezuela into a Cuban-style regime and perpetuate his rule indefinitely. The regime’s offensive has been under way since 2005, when Chavez started to expropriate millions of hectares of privately owned agriculture and livestock assets. He also seized silos, warehouses and transportation companies, and took over downstream processing companies. The regime’s expropriation spree accelerated in November 2009 when disgraced Bolibourgeois “entrepreneur” Ricardo Fernandez Barrueco was jailed indefinitely at Sebin’s Helicoide HQ and his numerous agricultural enterprises – all tightly connected to the regime – were nationalized.

Corporación Venezolana de Alimentos, S.A. (CVAL), created by Presidential Decree No. 7,236 published in Official Gazette No. 39,376 of 1 March 2010, is the new Bolivarian entity responsible for directing the consolidation of the regime’s total control over food production, processing and distribution. CVAL’s authority and powers are very broad, covering every aspect of food production, processing, transportation, distribution, importation and exportation. CVAL will be controlled by the agriculture minister aka Vice President Elias Jaua, the president’s chief attack dog in the food wars.

Meanwhile, the regime is dismissing as a non-issue the discovery in recent days of 3,597 containers (as of 5 June) in Puerto Cabello, Tinaquillo and Valencia. Sure, the Attorney General has jailed three former Pdval officials. But moving forward, current Pdval head Virginia Mares says that an electorally-motivated dirty war has been launched against Pdval and Pdvsa because the revolution “now provides 33% of the basic basket to the pueblo and that makes the opposition tremble.”

But the 70,000 tons of spoiled food can be traced directly to regime incompetence and corruption. It’s not surprising that there’s corruption in Pdval, a Pdvsa subsidiary. Pdval and Bariven, the other Pdvsa subsidiary that buys food internationally, are exempted from compliance with any of the many rigid rules that the regime has imposed on private food importers. The National Guard does not inspect containers imported by Pdval, Bariven, and Mercal. Seniat tax authorities do not inspect the import manifests and other shipping documentation. No one confirms if the food that is purchased/imported by these government entities is in compliance with international sanitation and safety standards.

Infrastructure breakdowns and presidential tantrums have been aggravating factors.

Chavez nationalized Venezuela’s ports to protect Venezuelan sovereignty, and then created Bolipuertos with the Cuban regime as a partner. Since Bolipuertos has been in charge, maintenance of essential equipment like cranes and refrigeration facilities has practically stopped, and management is more focused on ideology and political issues than the actual nuts and bolts of running commercial seaports. Puerto Cabello sources claim that practically all of the port’s cargo cranes are broken down, and its refrigerated storage/transportation infrastructure cannot handle the large volumes of food arriving at the port. These sources also say that the National Guard and Seniat are always grinding down private importers with endless layers of “burrocracy” compounded with “bajadas de mula.” However, the big regime importers like Pdval and Mercal, which account for over half of the food imports handled at Puerto Cabello, are never inspected and are not accountable to anyone. This situation repeats at the country’s other major ports, including La Guaira and Maracaibo.

Chavez’s decision to suspend trade with Colombia, also roiled the country’s ports and disrupted important component of the food supply chain. Two-way trade with Colombia was almost $6 billion a year when Chavez closed the border, with about $5 billion of that favoring Colombia. A big piece of that was processed and fresh food. Food imported from Colombia could be placed in Venezuela overland in 48 hours tops, but now it takes up to two months to complete import transactions with new suppliers in Brazil, Argentina and New Zealand.

The president’s land theft policies also have inflicted lasting damage on the country’s food sector. Production has fallen dramatically in the millions of hectares of land that Chavez has stolen since 2005. Chavez babbles about food sovereignty, but Venezuela’s dependency on food imports has grown substantially during the Bolivarian era. Imports now account for over 70% of the food supply, by some estimates.

But Chavez doesn’t care about the failure of his revolutionary “policies” or his regime’s incompetence or corruption as he pursues the core goal of asserting total state control over the country’s food production, transportation and distribution. This was confirmed on 4 June by the president’s trusted henchman, Ramirez. In fact, the regime’s incompetence and corruption arguably serves a grater revolutionary purpose, by strengthening official arguments that the revolution must accelerate its efforts to take total control of the food sector. Any food lost because of incompetence or corruption during the process is simply explained away as inevitable speed bumps on the road to true “freedom” (serfdom) for the pueblo.

Written by Caracas Gringo

08/06/2010 at 12:35

Posted in Uncategorized

Here we go again…

with 4 comments

President Hugo Chavez ordered an investigation of Noticiero Digital after one of its regular columnists, Roberto Carlo Olivares (RCO), published a piece headlined: Los patriotas de las FAN en busca de Lucio Quincio Cincinato.

RCO has been posting at ND’s portal for a while now. He has a take-no-prisoners style of sharing his opinions about issues that interest him, whether it’s Bud Selig’s refusal to change the bad call by a first-base umpire that robbed Venezuelan pitcher Armando Galarraga of a perfect game last week, or Maria Corina Machado’s decision to – as RCO puts it – sell out to the revolution.

RCO has been pitching hardballs at Chavez regularly without generating any significant blowback against himself or ND. But the column that really pissed off the president says that senior retired and active duty military officers are in talks with civilian leaders to prepare an “inevitable civic-military transition which, by the winds that are blowing, will happen in 2010 or the start of 2011.”

RCO also says that “many” of these military “patriots” have had “high-level meetings at the US State Department and with the ‘gringo’ ambassador to Venezuela….and there’s nothing the dictator can do about it.”

RCO adds says that 70% of the officer corps in the Armed Forces is definitely anti-Chavez. He breaks down the factions within the FAN as including 10% hard-core chavistas, 20% self-interested (corruption) chavistas, 50% institutional (meaning professional), and 20% radical anti-communists.

But this civic-military group has a problem: No consensus has been reached on who will run the country after Chavez is ousted. RCO writes: “Some propose the names of emblematic figures of civil society and others propose the names of retired military officers with unimpeachable service records. Another current proposes an “outsider…surrounded by brilliant minds and high-caliber advisers.”

The other big question, he adds, relates to the timing of when, precisely, Chavez is going down. But RCO says it’s certain that Chavez will be toppled even if the “pueblo” doesn’t take the streets to support his removal from the presidency.

Before continuing, a clarification: Caracas Gringo has worked with retired and active Venezuelan Army officers since about mid-2004. No conspiratorial stuff, just due diligence investigations, geopolitical consulting and private security services. It’s unclear if RCO has explicit sources or is picking up the memes floating around groups of increasingly enraged Venezuelans. Those memes are everywhere nowadays as the regime’s cash crisis increases and the economy continues to sink.

However, if RCO has what he believes is proof of the activities he writes about, then it is certain that the conspiratorial activities listed by RCO (1) have been infiltrated/compromised almost from the first day by the regime’s intelligence services, or else (2) are being instigated and stage-managed deliberately by the Chavez regime to trigger an apparent rebellion against the president. If so, in some respects it’s 2001 and 2002 all over again.

*The “senior retired officers” that RCO claims have been meeting recently with civilian political figures consist mainly of the same generals and admirals that have actively opposed the Chavez regime for years. They’re a noisy bunch with more intelligence leaks than a sieve, and many think their former ranks entitle them automatically to prominent positions in the government and FAN in a post-Chavez era…”pero no van p’al baile mas nunca.” They encourage lower ranking officers to conspire and rebel, but they always refuse to lead anything. “You do it, then we’ll come in and restore order,” one of these broken-bat generals said back in 2003 to a close friend of ours in the Army. Moreover, it’s been a longstanding rule in the FAN that when generals and admirals have gone into retirement, there’s no returning to active service. Sure, Chavez broke tradition by reinstating hundreds of officers and lower ranks that were tossed out of the FAN for participating in the twin failed coup attempts of February and November 1992. But the rule is, once out, never back.

*If any “senior active officers” – meaning generals and admirals – are involved in the meetings with civilian political figures that RCO alleges are taking place, it’s 100% certain that at least one of these officers is being controlled by the Chavez regime’s intelligence services. The military-civic group that RCO refers to already has been infiltrated by the regime and its leaders will be neutralized when Chavez wishes. Chavez has made sure after 11 years in power that his generals and admirals are (a) loyal to him, (b) bought off with corruption, (c) have no traction among the FAN’s lower-ranking officers, and (d) do not exert direct command over infantry and armored units that could threaten Chavez. Any generals and admirals that do not meet these criteria have been relieved of command and sent home, mostly. They do not command any troops. If any generals and admirals are, indeed, conspiring with civilian leaders, it’s a real-life case of dumb and dumber.

*The many retired and active Army officers that Caracas Gringo has interacted with continually for the past six years never meet to discuss politics, the economy or anything else with any civilian figures in Venezuela. Without exception, all of them – and we’re talking upwards of 100 officers, perhaps, none of them generals or admirals – hold the country’s civilian political sectors in contempt, perceiving the opposition figures who claim to be national political leaders today as a bunch of incompetent opportunists. These officers also tend to distrust and dislike the retired generals and admirals that position themselves in the news media as legitimate representatives/spokespersons of Venezuela’s democratic and institutional armed forces. Bitter experience taught these officers that any contacts with generals, admirals or civilian “leaders” will be exposed almost immediately to the regime.

*The four factions in the FAN listed by RCO (hard pro-Chavez, opportunist pro-Chavez, institutional and hard anti-communist), and their corresponding percentages, are virtually unchanged from 2001-2002, when some folks in and out of the regime were making public statements about violent confrontations and civil-military movements to put a stop to Chavez. These factions/percentages may have been true nine years ago, but realities today within the FAN are more complicated. Cuban military and intelligence officials are deeply involved in the FAN today, which wasn’t the case in 2001-2002. A very small element of today’s FAN also is engaged in criminal enterprises including drug trafficking, gold and diamond smuggling.

But within the FAN, the Cuban presence is very widely perceived as a much bigger threat to the Army of Simon Bolivar than the criminal enterprises that some officers have engaged in. Venezuelan military sources have assured Caracas Gringo on many occasions that if Chavez and his foes ever clash violently and the Cubans attempt to intervene, the Cubans will be neutralized quickly. “We know precisely where they are,” says one officer.

The Venezuelan officers nominally in command of the president’s Bolivarian civilian militia also will be neutralized if violence erupts because the traditional army establishment, including many who identify themselves as supporters of socialist revolution, see the militia as a political scheme to dismantle the FAN and replace it with an army of local and foreign volunteers that is loyal to Chavez and completely outside the control of the FAN’s chain of command.

But RCO is right about one thing: A reckoning is coming between Chavez and his many, many opponents inside and outside the revolution. Chavez has made it abundantly clear that he plans to be re-elected at end-2012, but long before that day arrives he will complete transforming Venezuela into a “21st Century Socialist State.” The president also has made it clear that he will resort to bloody violence to stay in power, if that’s what it takes. If Chavez won’t stand down democratically, what’s left but submission, flight or confrontation?

Written by Caracas Gringo

07/06/2010 at 14:17

Posted in Uncategorized


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