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.”