Random Thoughts on Bolivarian Chaos

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.”

About Caracas Gringo

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8 Responses to Random Thoughts on Bolivarian Chaos

  1. RWG says:

    God help Venezuela. Pray that no one starves to death for the revolution. Chavez wants everyone to be a beggar to him.

    The decline of Venezuela appears to be picking up speed. Petro dollars alone can no longer run Venezuela.

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  2. Federico says:

    Dense, nevertheless a true analisys.

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  3. Roberto Ruiz says:

    CG – Your best write up ever! as a 17 year exiled Venezuelan in NYC, I could not agree more with your diagnosys and prognosys. Loved the North quote about the importance and rile of institutions. Funny ( really tragic in all serousness) I have been telling my parents it is time to get out. In my mind is Chavez saying something like “from now on all foreign trips have to have a social purpose and be approved by the state…” and just like that people will be locked like in Cuba…..
    Thanks for keeping us informed, and grounded. Masterfull writing.

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  4. wycards says:

    I read your “random thoughts” and as a Venezuelan can only be saddened about what the future looks like for us. It’s even worse than the present and that’s already harsh!

    It’s true that we Vzlans remain for the most part silent, afraid or resigned to this fate, to this man. I think most people just want to close their eyes and think all of this is not even happening. On the other hand, the lame and corrupt representatives of the opposition, and the media, have contributed to the current distrust and skepticism of “el pueblo”. People don’t believe anymore what Chavez says, nor the opposition. They have chosen to continue surviving and to ignore the situation. Just trying to make their lifes somewhat livable.

    No matter who’s to blame, this situation that continues to worsen does demand action. It’s true we need to confront and fight this man back. I do believe it’s our responsibility ALONE to stop it. Change needs to come from the people, not from any other power, least of all an exterior one. And I mean change in mentality, not only regime.

    There will come a time when we will think “enough is enough” and that may take longer than necessary but it’s a process itself. A time needed for reflexion, for planning, for taking responsibility and finding ways, real ways of bringing change about.

    In the meantime, we will suffer (even if we’re not in the country we all do) from the immobility but nothing can stop the increasing desire for change.

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  5. Lazarus says:

    As an expat in Venezuela I have been hearing the same question for many years: when will the gringos come to save us? And I give the same response, never. He was initially democratically elected, now he’s your problem to solve.

    However I would appreciate some expansion (a blog entry) on your comments regarding the US response, and lack thereof, in engaging this and other Latin governments. What is your opinin on the correct approach?

    Keep up the great work.

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  6. Marlboro Man says:

    Good summary of the mess Venezuela has got itself into. Why should the U.S. bail out Venezuela? Venezuelans elected this clown — they need to grow some cojones and fix it themselves.

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  7. Kepler says:

    Well, I agree with your analysis of the disease but I am weary about the suggestion I seem to read between the lines. Perhaps I am over-interpreting things. Do you want the US to send a commando to get rid of Chávez? Would you like CIA to solve the Chavista problem? Venezuelans screwed it up and it is Venezuelans who have to solve this issue. Now, it seems you are mourning the way in which the US was formerly supporting just about anyone who was “right” in most of America, from Guatemala to Argentina, never mind if they screwed it up time after time: Noriega was a CIA man, Pinochet murdered thousands, the Argentina military the same. It is the same with the “war on drugs”. What do you expect now? What is the purpose of following up the same approach the North has followed for decades? Do you want cocaine to be more expensive? The more war on drugs, the better for drug dealers. Some may end up in jail, a couple may die, but those are just “gajes del oficio” for them. I am a member of the opposition from day 1 but I think those Venezuelans asking for the US Americans to solve things for them in Venezuela are actually particularly responsible for creating Chavismo in the first place.

    CG reply: If you think you’re reading suggestions between the lines, perhaps you should read the post again, carefully. We write about we see and feel and think, we’re direct and to the point, and we don’t care if what we post offends anyone. Folks who don’t like what they read on this blog are free to not read the blog. Caracas Gringo was created because most of the news reports and analysis about Venezuela churned out by foreign-based sources is crap, basically. We’re not into wasting our time, or anyone else’s time, by making subliminal hints or suggestions. If we thought the US should intervene, we would say so, upfront. We did not suggest that the US should intervene in any way. We have never written anything on this blog that suggests, even indirectly, that we think the US should invade Venezuela, send commandos, the CIA or whatever. In fact, we hope the US never intervenes because it’s certain that the US will screw things up worse than they are now. That said, we do not believe there is any chance at all that Chavez and gang will leave power peacefully and democratically. If we’re right, Venezuelans have a huge dilemma summed up in three words: surrender, flight or confrontation. Personally, we believe that most of the self-declared dirigentes de oposicion will kowtow or get the hell out of Dodge before taking a stand in defense of democracy. Re your comment about right and left….in the 57 years we have been roaming the Americas we have lived in many countries, under many systems, and in our experience it doesn’t matter much in Latin America if the tinpot tyrant de turno is ultra-right, military, communist, revolutionary or whatever, or whether the tinpot de turno is supported by the US, Havana, Beijing, Moscow, Tehran or whomever…the bottom line is that the pueblo always gets screwed, lots of people die and socioeconomic progress stalls. We have never said in anything we have posted that the US-centric war on drugs is good. In fact, we think US drug policy is a fine example of the navel-gazing idiocy that seems to afflict most US policymakers. We personally know US ambassadors who, while serving as Ambassadors in Venezuela, Colombia and Mexico vigorously defended US drug policy in the Americas, and then upon retiring from the foreign service immediately start saying that US drug policy is about as intelligent as a sack of hammers. As you note, Chavez is a creation of all Venezuelans, not just the ones whining for the Gringos to save their butts, so don’t be too hard on your “compatriotas” who wish the Gringos would come to the rescue.

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  8. Neil says:

    As usual, dead on target, CG. Since 2002 I have resisted the impulse to leave this country. I knew in my heart, way back then, that this would go from bad to worse, way worse. I listened as my Venezuelan (and some foreign) friends dissed the more sanguinary critics of the regime as radicals and profetas del desastre, and wondered “what planet do these people live on?” Because, in retrospect, it was in fact the people like Robert Alonso and his guarimba gang who got it right. The wild-eyed “the Cubans are coming!” types were, in fact, the ones who got it right. And meanwhile we were lulled into complacency by the charade of fraudulent elections and our claque of mostly show-me-the-money politicians who justified lining their pockets and going along to get along with the pretext that a politician’s first responsibility is to survive.

    I knew what I was getting into as I kept putting off the day of reckoning, and yet I admit that somewhere, somehow, I believed that there were enough decent, conscious people in this country who would find a way to put a stop to this madness. But the trap had been set with Puente Llaguno, and the noose has been pulled tight, slowly but surely.

    My wife and I are pulling up stakes and leaving Venezuela for good within a month. She talks about leaving some things here with family, not burning our bridges completely, and keeping a door open for an eventual return, but I look at the blasted wasteland this country is becoming and doubt, with tears in my eyes, that there’ll be much for me to want to come back for, except perhaps the friendship of people I’ve come to know and love in my 30 years here. And most of them, the ones who are left here, are also making plans to leave.

    One of the jokes I used to hear when I first arrived in Caracas went something like this. God decided to create the most wonderful country in the world. He gave it magnificent natural resources, more petroleum than anyplace in the world, landscapes of extraordinary and varied natural beauty; seas, rivers, mountains, plains, jungles, a perfect temperature, lush farnlands, the best chocolate and coffee, and lets not forget the most gorgeous women in the world.

    And then God beheld this masterpiece and said, “this is too good, I must make something that will screw it up a bit.” And, as the joke went, God decided to create Venezuelans.

    Now, I would hear this “joke” over and over again at cocktail parties, parrillas and other social events where members of the privileged classes gathered, and regaled this gringo visitor with anecdotes about what a wonderful country he had stumbled into. And this gringo visitor was shocked. I could not understand how so many people could suffer such a low collective self-esteem.

    I’m sad to say I understand it now. I watch the Malandro Mayor rave on for hours on television, stringing together bits and pieces of nonsense, completely immersed in his self-referential, narcissistic rapture, holding forth for hours at a time before the idiotically grinning ranks of ministers and hangers-on, and I can’t help but understand the perverse logic that’s transforming this once beautiful country into a nightmare.

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