Bolivarian Coal Mine Canaries

Many hints that President Hugo Chavez and his Bolivarian revolution are in trouble. Enough trouble to predict that the Bolivarian revolution will implode? That’s impossible to say with any hope of accuracy, given that internal conflict and turmoil always have been constants in the Chavez-led revolution. But recently, there have been many hints that some kind of reckoning could be at hand.

There appears to be recently a flock of canaries singing in the Bolivarian coal mine.** For example, and in no particular order of priority:

Cacerolazo in El Los Jardines del Valle: Los Jardines del Valle in Caracas erupted spontaneously on 27 February in a “cacerolazo”– ordinary folks protesting against Chavez by loudly banging their pots and pans together inside their homes. The protest lasted almost the entire time that President Chavez was giving a speech there to celebrate the 21st anniversary of the “Caracazo” of 27 February 1989. Of course, the regime showed very poor judgment in picking Los Jardines del Valle as the site for the president’s anniversary speech. The area’s older residents still remember how army troops commanded by officers that later participated in Chavez’s failed coup in February 1992 were merciless during the 1989 “Caracazo” in restoring order to Los Jardines del Valle.

The event’s staging also tends to confirm that Chavez is scared. Army troops occupied Los Jardines del Valle in large numbers 48 hours before the president spoke on 27 February. Area residents were told to do or say nothing that could be construed as a protest or complaint against Chavez. The regime’s military thugs warned that anyone who protested would be sanctioned severely. So people stayed inside their homes in Los Jardines del Valle on 27 February, while the regime bused in its “supporters” from different parts of the interior. But when Chavez started to speak, many of the residents of Los Jardines del Valle spontaneously started banging their pots and pans together to register their public disapproval of the president.

Warnings of imminent economic collapse: Eighteen of the country’s most respected economists issued a joint statement warning that Venezuela is headed towards a collapse that cannot be avoided with higher oil prices. The Chavez regime’s insistence on imposing a “socialist scheme similar to the former Soviet Union” will plunge Venezuela into “economic failure, poverty and the loss of freedoms.” Central Bank’s most recent macroeconomic data bear out this grim warning. Venezuela’s GDP contracted 3.3% in 2009. However, the economy’s plunge deepened in the fourth quarter of last year as GDP fell 5.8%, led by a 10.2% drop in oil GDP despite an average Venezuelan oil price of just over $70 a barrel. Price sector GDP contracted 7% in fourth quarter 2009, the seventh consecutive quarter in which negative or flat growth has been reported.

Strong price inflation: Inflation averaged 1.6% in February and 1.7% in January, for a two-month cumulative rise in the CPI of 3.3%, compared with 3.6% in the first two months of 2009. This yielded annualized inflation of 24.7% in the first two months of 2010 compared with 28.8% annualized rate at end-February 2009. Inflation in full-year 2009 was 25.1%, and it held steady in the first two months of 2010. But inflationary pressures will increase in coming months. The regime just authorized price increases of 25% to 35% for rice, sugar, chicken and other basic foodstuffs, and lifted controls on other products like mayonnaise, margarine and ketchup. However, letting some food producers raise their prices won’t halt the worsening scarcity of many food products in supermarkets and abastos. Chavez’s decision to kill trade with Colombia hurt the Venezuelan food supply, as did his wholesale expropriation (theft) of productive private farm and ranch lands.

The power crisis: It’s real, inevitable and unavoidable. The Chavez regime cannot contain the power crisis even if it rains 24 hours a day every day for the next 12 months. The Caroni River Basin, an area of some 95,000 km2, is suffering its worst drought in decades. If hydropower utility Edelca is forced to shut down 5,000 MW of power generation capacity at Guri, which reportedly now generates power at only 63% of its installed capacity of 10,000 MW, it’s lights out across most of Venezuela. And it’s not just the Guri Dam that will suffer. Edelca’s other hydropower complexes further downriver – Caruachi, Macagua, etc. – also could be forced to reduce their generation of hydro-power.

President Chavez boasts that his regime has the power crisis under control. But he jests. State-owned mega-utility Corpoelec does not have any thermal power generation capacity it can bring online to offset the impact on Venezuela of the sudden loss of at least 5,000 MW of power generation capacity. At best, perhaps 40% of Corpoelec’s total installed thermal power generation capacity is operational. The rest is junk. The Chavez regime did not invest for 11-plus years in maintaining the existing national power grid. Cadafe, Edelca and other state-owned utilities that now are bundled together in Corpoelec did not invest sufficiently in new generation and transmission capacity. Chavez says he spent over $16 billion on power projects since 1999, but the results aren’t apparent anywhere. Cadafe in 11 years has never finished even 25% of its planned generation and transmission projects.

The regime’s forced consumption cuts to conserve power aren’t working. The official goal is to reduce power consumption by 20%, but the available information so far is that consumption has been reduced, on average, less than 10%. The private sector is talking about cutting back the work week to four business days, in effect creating a three-day weekend, which perhaps for some Venezuelans sadly will be celebrated in typical “Viva la Pepa” tradition with more “birras” at the beach – if they have the disposable cash to buy beer, and if there is power to run icemakers and refrigerators at abastos, restaurants and liquor stores.

When – if – Edelca is forced to pull some switches to the off position at Guri, it’s a given that the Chavez regime will do everything possible to keep the lights burning in the greater Caracas area, although it means that most of the interior of Venezuela will spend days in the dark, that what’s left of the CVG’s basic steel/iron and aluminum industries will shut down completely, and that private economic activity in the interior would suffer huge disruptions. None of that will matter as the Chavez regime focuses on maintaining power (and water) supplies to the greater Caracas area. God forbid that Caracas should go dark for any length of time. The barrios could boil over with unpredictable consequences for everyone.

Lights – Water – Food: A chain reaction is building up, but most Venezuelans have not perceived this yet. However, taking 5,000 MW of power generation capacity offline will impact immediately on potable water and food supplies nationally. The country’s decrepit water aqueduct systems (40% of the water is lost en route to end users) cannot operate without electricity (30% of which is also lost en route to end users). Refrigerated buildings that store and transport perishable food – fish, poultry, beef and pork, produce and vegetables and countless other items – will not refrigerate without power. Some may have their own power generation equipment, but most do not.

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**Early coal mines did not feature ventilation systems, so miners would routinely bring a caged canary into new coal seams. Canaries are very sensitive to methane and carbon monoxide, which made them ideal for detecting any dangerous gas build-ups. As long as the canary in a coal mine kept singing, the miners knew their air supply was safe. A dead canary in a coal mine signaled an immediate evacuation. Today, the whrase “canary in a coal mine” is used to describe a harbinger of the future. One small event in an isolated area may not seem especially noteworthy, but it may offer the first tangible warning of a larger problem developing.

About Caracas Gringo

Representing less than 0.00000000001515152% of the world population as of 31 December 2011.
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6 Responses to Bolivarian Coal Mine Canaries

  1. Roy says:

    CG,

    Not to pick nits, but to make the metaphor of the canaries work, you should say that the canaries are dropping like flies. The only one singing at this point in time is the fat lady.

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  2. Hugo Groening says:

    I would add another canary. This would be the bolting of psuv membership by Lara’s governor Falcón. I think that his distancing from Chávez is an important thermometer, even if he’s using submissive ppt as a staging area before the final break.

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  3. Gringo says:

    electricity (30% of which is also lost en route to end users).
    Does that figure include free electricity in the barrios?

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  4. BOB says:

    One 200 pound canary worth mentioning is governor Henry Falcon´s publicized defection from the PSUV ranks.
    Probably more canaries will fall out of the blue.

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  5. Gerry says:

    The canary is perhaps a better example than you might think. (canary = ministers).
    Up until the beginning of January, this year, the Ministers of the Chavez regime were always on some media or another spouting their actions or beliefs. Where have they gone? Some have resigned others have shunned public attention (the majority it seems).
    Chavez started out most loquaciously in a very authoritative manner and kept going, (sign of inferiority)? With his current problems he has not a lot to say, few to push blame to. Maybe he is discovering just how corrupt his ministers were/are.
    This does not absolve him from being the chief administrator and their selector.
    None of these “ministers “ have the guts to call Chavez out even though their futures depend on making a distance from the leader.
    Uncle “Fidel” please help me!!!! ———
    The only mistake I have made here is not having my likeness imposed on the currency of the realm.———
    I would love to say “Render unto Chavez the things that are Chavez and to Venezuela – Thanks for the gullibility”
    The cross of the ‘Barinas’is a heavy one.

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  6. Roy says:

    Some of the irony of the Chavez saga it is that it is so truly banal. Rather than being the heroic epic that he imagines, it is really just another tawdry soap opera.

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