The Hugo Chavez Follies

President Hugo Chavez is still warning of an armed conflict between Venezuela and Colombia. But his anti-Colombian warmongering rhetoric is a red herring.

The threats to Chavez, and to Venezuela’s security and stability, are internal. On the shortlist:

*Lights Out: The state-owned power sector has collapsed. Tellingly, the power sector’s collapse intensified after Chavez nationalized the industry and created Corpoelec. Venezuela faces at least five years of continued daily power outages due to infrastructure breakdowns and rationing – and this is a best-case forecast which assumes the regime has the capacity to add over 8,000MW of new generation capacity within five-years, plus essential related transmission/distribution infrastructure. But the Chavez regime’s ten-year track record in the power sector is horrifically poor, and the sector’s prospects are very poor. Something most Caracas residents are not aware of is that Tacoa, the 1,200MW thermal power plant operated by Electricidad de Caracas, needs urgently to be upgraded/modernized – or better yet, replaced completely.

*Mortgaged Oil: Venezuela’s crude oil production capacity has collapsed by over 1.6 million b/d during the Chavez era. The “new” Bolivarian Pdvsa has not completed a single major crude oil production and refining project since 2003. Its gas development initiatives are also stalled. The “Siembra Petrolera” plan announced at end 2005 is running over two years behind the original schedule. Chavez went on a three-year nationalization binge which resulted in the accelerated operational deterioration of all of the nationalized assets, and left Pdvsa (i.e. all Venezuelans) facing international lawsuits seeking potential combined damages in excess of $30 billion, of which about $20 billion are being sought by ExxonMobil and ConocoPhillips.

*Homicidal Crime: At least 19,400 people will be murdered in Venezuela in 2009, compared with over 14,600 in 2008. In 1998, the year before Chavez took power almost 11 years ago, only 4,560 homicides were reported. Since Chavez has been president, at least 110,932 homicides have occurred nationally, of which roughly 30% or almost 33,280 happened in the greater Caracas area. Practically all of these homicides are poor young men between the ages of 14 and 29. While Chavez farcically threatens a war with Colombia, the reality is that Venezuela already is at war with itself.

*Food deficit in 2010: Chronic widespread food shortages probably will materialize in 2010. Food prices also will climb sharply next year. The government will increase food imports, but shortages will persist and wholesale/retail food inflation will rise despite price controls. Like the power crisis, the coming food crisis has been building up for years and was created by the Chavez regime. The revolution has expropriated over 2.5 million hectares of productive cattle and farm land, and today directly controls/operates over 10% of the national food sector in terms of total tonnage sold monthly.** But agricultural production is falling across the board. At the close of 2009, Venezuela faces confirmed deficits in 2010 of sugar, rice, coffee, black beans, sorghum, beef, powdered milk, eggs, poultry, cooking oil, and much more.

*Broken Military, Marxist Militia: Chavez has purchased or placed orders for over $6 billion of mostly Russian weapons since 2005; over 100,000 AK-103/104 assault rifles, dozens of transport helicopters and gunships, two squadrons of Sukhoi-30 fighter/bombers, Spanish-made missile-capable patrol frigates, Chinese radar systems, and much more. In recent months Chavez also has placed orders for up to 90 T-72 battle tanks, three types of air defense missile systems, and ground combat missile systems. But the Bolivarian armed force has been broken, politicized and corrupted, and has become increasingly unprofessional under Chavez’s command. Separately, Chavez has created a civilian militia which reports directly to him. The goal was to deploy a militia of 2 million, which of course will never occur. But even a motivated militia of a few thousand persons trained in urban combat and guerrilla tactics could wreak havoc and chaos, and hold its own in clashes with the country’s structurally weakened conventional military forces.

*Militarized Gangsterism: Previous posts have discussed the organized crime groups controlled at very senior levels of the Chavez regime. Some of these groups have political/business links to several of the president’s closest family members. But a point we have not examined in detail is the heavily militarized character/structure of the most powerful organized crime groups within the regime. One example: the corrupt “machine” at Cadivi whereby importers apply for dollars at the BsF 2.15 exchange rate, but wind up obtaining approved foreign exchange at a real effective exchange rate of BsF 3.50 per dollar – is controlled by military personnel and is Current Public Works and Housing Minister Diosdado Cabello laid the groundwork for the Cadivi corruption machine when he was vice president of Venezuela. Interestingly, it appears that the Cadivi military mafia is still coordinated from within the office of the vice presidency.

*Compromised Sovereignty: Iranian President Mahmoud Ahmadinejad said this week that the strategic alliance between Iran and Venezuela is “necessary.” And he is right. Venezuela’s state-owned Conviasa flies to Tehran and Damascus, and reportedly helps the Iranian regime circumvent UN controls on exports of prohibited missile components and other weapons technologies. Hezbollah has a known presence in Venezuela, particularly on Margarita Island. And it’s no coincidence that Iran’s political/intelligence presence is expanding in ALBA countries like Bolivia, Ecuador and Nicaragua.

Of course, the biggest foreign presence in Venezuela is Cuba. Chavez has imported Cuban advisers and experts to practically all of Venezuela’s most important governance and security institutions. There were over 7,000 Cubans “in-country” back in April 2002 when Chavez had his troubles, but today it’s estimated that there are over 60,000 Cubans in Venezuela on official missions from Barrio Adentro alleged medical services to political intelligence operations and military indoctrination/training. Venezuela’s military officially adopted Cuba’s national security doctrine in mid-2005. Cuba’s intelligence service (DGI) now has over 600 agents stationed in Venezuela. The “situation room” operated by the DGI includes veteran Marxist operatives from Spain and other countries, by some accounts. Cuban “advisers” are helping to create and organize the new National Police. Cubans are also “advising” on the reorganization/modernization of the national identity and passport service (Onidex), the national system of civil/mercantile registries and notaries, the Seniat tax and customs administration, the country’s commercial ports, and the ministries of health, education, labor, commerce and small industries, finance, planning, and agriculture, among others.

Chavez created the dragon he rides today, 11 years into a “revolution” which has left Venezuela in ruins in every way imaginable – social, institutional, structural, economic, even moral. His popularity is falling below 50% a year before the National Assembly elections, which Chavez recently predicted he probably will lose. But then Chavez declared with certainty that he will be Venezuela’s president again from 2013 to 2018. However, assuming discussion that Chavez is defeated in the 2012 elections, whoever takes the helm in Miraflores will have little or nothing in terms of resources for a national reconstruction of a country in the throes of acute social and political instability. Some political opponents this week criticized the Chavez regime as “a lost decade,” but it’s more accurate to speak of a lost generation or even longer. In fact, Venezuela may not recover from the wreckage of the Chavez regime for decades to come.

** While 10% may seem like too small a slice of the sector to talk of state control, the Chavez regime also has created a complex structure of laws, regulations and new layers of bureaucracy through which the regime increasingly tracks and attempts to administrate the importation, storage, distribution and sale of all food products nationally. The official explanation is that the government wants to ensure that every part of Venezuela gets its necessary food supplies. But the real political goal is to control food consumption, as in Cuba. It remains to be seen if Chavez can achieve this goal, but that is the direction his regime is taking.


About Caracas Gringo

Representing less than 0.00000000001515152% of the world population as of 31 December 2011.
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