Another email volley...
...somewhat calmer this one...
On Thu, 26 Jun 2003 06:08:36 -0700 (PDT), "Anton" said:
> Second, I have to respond to your response to the
> letter from 'Paul', your token US lefty. I've been
> pondering this for a few days now, and well, I think
> your position is nearly as wrong as his.
>
> Given the state of the world today, I don't think you
> can simply ignore the US in the analysis of any
> country's political situation, especially in this
> hemisphere. The US government may not have the
> influence in Venezuela that it does in, say, Columbia,
> but to dismiss it's influence as "marginal" would seem
> to me to be a mistake nearly as great as casting the
> CIA as South America's puppet masters. The failed coup
> that installed Carmona for a few hours demonstrated
> this -- we can argue about the extent of US
> involvement, but that they were involved should be
> unquestioned.
You know, I really disagree with this. The US did fund organizations that
later got involved in the coup. It also met with a bunch of leaders who
later ended up mixed up in it. That funding was not secret, and neither
were the meetings - both got written about amply in the Venezuelan press.
In the months leading up to the coup, as it became clearer and clearer
that democracy here was going to shit, any number of Venezuelan
political, trade union and business leaders travelled to washington to
talk not just with the gov?t, but also with NGOs, intellectuals,
academics, media, latino organizations, anyone who would listen,
basically. It became such a trend that the government eventually decided
they needed a counterstrategy and started sending delegations of their
own to counter what they perceived as a campaign of disinformation...and
so the chavistas met with the same damn people as the opposition, really
... but you don?t see anyone claiming that that amounts to US support of
the gov't...
What happened is that all those meetings, which were public and numerous,
and which happened with any number of organization, including but
definitely not limited to those who ended up in the coup, then got
reinterpreted after the fact as a conspiracy. But I've never seen any
particularly convincing evidence to that effect - a lot of innuendo and
supposition, yes, but no convincing connecting lines.
The fact is that the internal political dynamic in Venezuela in April
2002 was so white hot, had such a massive charge of endogenous anger and
mobilization and polarization and outrage, that April 11th was going to
happen regardless. I was there, I was at that march, I was on Avenida
Baralt 5 minutes before the shootout started with a camera crew in tow.
NOBODY that day was thinking about Washington. We, all 800,000 of us
marching that day, were rather more concerned with the mounting
authoritarianism we saw in Ch?vez and our imminent fear for the future of
our country if somebody didn't stop him.
And you know what, looking back, we weren't wrong to demand he leave
office immediately - the country really couldn't take it anymore. Today,
due to his mismanagement and narcissistic excess, millions - literally
millions - of Venezuelans who were barely hanging on to a poor but not
destitute existence in April 2002 now find themselves without enough to
eat. It's a massive tragedy - and that's without going into the costs in
terms of the utter fraying of our democratic institutions, which 15
months on are so deeply screwed up they're arguably beyond repair, at
least in the short run.
But I digress. It's easy for you to abstract from such questions though.
You don't live here. I live here. I have to live with the social and
institutional rot this man will leave behind . . . and this is exactly
what lies behind my exasperation with "Paul" - that the ongoing obsession
with the US, the fixation with US power and US conspiracies, mutes the
debate on, frankly, something that's far more important, interesting, and
worth considering as far as I'm concerned: a society that's slowly but
definitly going down the crapper.
> Personally I see the US, when it comes to Latin
> American politics, as more opportunists and jackals
> than anything -- they'll exploit a situation to their
> advantage, and maybe even stir the pot to try and
> create a situation they can exploit (which is what
> seems to have happened in Chile -- the CIA certainly
> chipped in to help create that "psychology of rampant
> fear that took over the Chilean middle class" you
> mentioned) but they're reluctant to get their hands
> dirty. I'd classify that presence, even if it's not an
> active presence, as something more than marginal.
This is another thing that's hard to explain to people outside the
country - the assumption that the US has a single, organized coherent
policy on Venezuela just doesn't seem to hold. There are evident splits
between various factions in the US foreign policy establishment on what
to do about Ch?vez, with warring leak campaigns between the Otto Reich
hardliners and the softly-softly camp John Maisto leads from the Nat.
Security Council. These splits are open and publicly discussed here, and
the resulting "policy" often ends up being schizophrenic - with part of
the US government wanting to find a modus vivendi with Chavez and another
part of it looking for any chance to confront him they can find. This is
all clearly number 27,392 in Colin Powell's list of things to worry
about, and neither side really seems powerful enough to impose its view
on the other. But if the US can't get its shit together on its Venezuela
policy, if it can't even decide what its Venezuela policy is, then how
the hell are they suppose to have some Rasputinian stranglehold on
anything important that happens here?
> Let me put it this way. If the opposition to Chavez
> hadn't known they could count on some support from the
> US, do you think the April coup -- without the full
> support of the military, and with a divided populace
> -- would have even happened?
Definitely.
ft
June 16, 2003
Your favorite feature is back...
Mail from a US lefty!
Dear Francisco
When I began reading about the recent upheavals in Venezuela I was struck by the parallel between the US involvement in Allende's Chile and the possibility of the same in Venezuela, both economically and politically. There are more world-wide examples of course, many of them of them in the Americas, but I'm interested in your knowledge of the US involved in the Venezuelan oppostion.
As You know the US involvement in Chile was not just with the military, but also with trade unions, the church, the press (El Mercurio), and various multinationals with vested interests.
You must have felt the US has had a hand in the current opposition not only given the history of the US in the region, but it's immediate endorsement of the recent coup.
I would be very interested in your response.
Paul
-----------------
Oh Paul, Paul, Paul...you've inadvertently stumbled into one of my big pet peeves. I've heard this question many, many times from many, many US readers, and I find it deeply annoying and, well, borderline offensive. I've thought about it a lot, and I guess what annoys me is that it betrays this deep navel-gazing strand in American lefty thought, this unwillingness or inability to take Latin American societies in their own terms, to grapple with their complexities, to understand the dynamics that drive them internally. All of that is so boring, though, isn't it, and so detached from the one and only subject American lefties seem to be able to get interested in - US power, US influence, the evil of US power, the evil of US influence, US this, US that, U - S - A ! U - S - A !
The only people I ever run into who seem to think that the US is an important player in Venezuelan politics today are US lefties. I suppose through some NED and USAID grants and a bit of behind the scenes haggling the embassy hacks are doing their bit to bolster organizations they see as belonging to the moderate end of the opposition. Their influence is marginal. The ambassador and the undersecretary of state for hemispheric affairs can't seem to agree on what their venezuela policy is, and nobody, here or there, seems to care that much. Almost everyone in Venezuela, whether chavista or anti, recognizes that both in direct logistical terms and indirect ideological terms, Cuba has a far stronger impact on Venezuelan politics than the US does. Can you deal with that?
My point being...get over yourselves already! Not everything that happens in Latin America is the result of some plot hatched in a smoky room at the State Dept., y'know? Learn to deal: there was going to be a coup in Chile anyway - because whatever the CIA might have been up to, a huge swathe of Chilean society and almost all of the military supported it. CIA connnivance sure didn't hurt, but for the love of christ, what kind of catatonically self-involved view of the world puts a little CIA logistical and financial help at the center of the analysis, while showing no interest at all in the psychology of rampant fear that took over the Chilean middle class, its order and progress ideology, its deep catholic roots, and its cultural ascendancy over the military? Is it really that difficult, or boring, for you to stop thinking about your own damn country for five minutes and consider the internal dynamics of the societies you're purportedly interested in? Because, you see, these kinds of questions strongly suggest that you're not actually interested in Latin America at all! You're just using Latin America as a screen on which to project your little ideological anti-US-imperialism circle jerk. Enough!
Sorry about that,
ft
Mail from a US lefty!
Dear Francisco
When I began reading about the recent upheavals in Venezuela I was struck by the parallel between the US involvement in Allende's Chile and the possibility of the same in Venezuela, both economically and politically. There are more world-wide examples of course, many of them of them in the Americas, but I'm interested in your knowledge of the US involved in the Venezuelan oppostion.
As You know the US involvement in Chile was not just with the military, but also with trade unions, the church, the press (El Mercurio), and various multinationals with vested interests.
You must have felt the US has had a hand in the current opposition not only given the history of the US in the region, but it's immediate endorsement of the recent coup.
I would be very interested in your response.
Paul
-----------------
Oh Paul, Paul, Paul...you've inadvertently stumbled into one of my big pet peeves. I've heard this question many, many times from many, many US readers, and I find it deeply annoying and, well, borderline offensive. I've thought about it a lot, and I guess what annoys me is that it betrays this deep navel-gazing strand in American lefty thought, this unwillingness or inability to take Latin American societies in their own terms, to grapple with their complexities, to understand the dynamics that drive them internally. All of that is so boring, though, isn't it, and so detached from the one and only subject American lefties seem to be able to get interested in - US power, US influence, the evil of US power, the evil of US influence, US this, US that, U - S - A ! U - S - A !
The only people I ever run into who seem to think that the US is an important player in Venezuelan politics today are US lefties. I suppose through some NED and USAID grants and a bit of behind the scenes haggling the embassy hacks are doing their bit to bolster organizations they see as belonging to the moderate end of the opposition. Their influence is marginal. The ambassador and the undersecretary of state for hemispheric affairs can't seem to agree on what their venezuela policy is, and nobody, here or there, seems to care that much. Almost everyone in Venezuela, whether chavista or anti, recognizes that both in direct logistical terms and indirect ideological terms, Cuba has a far stronger impact on Venezuelan politics than the US does. Can you deal with that?
My point being...get over yourselves already! Not everything that happens in Latin America is the result of some plot hatched in a smoky room at the State Dept., y'know? Learn to deal: there was going to be a coup in Chile anyway - because whatever the CIA might have been up to, a huge swathe of Chilean society and almost all of the military supported it. CIA connnivance sure didn't hurt, but for the love of christ, what kind of catatonically self-involved view of the world puts a little CIA logistical and financial help at the center of the analysis, while showing no interest at all in the psychology of rampant fear that took over the Chilean middle class, its order and progress ideology, its deep catholic roots, and its cultural ascendancy over the military? Is it really that difficult, or boring, for you to stop thinking about your own damn country for five minutes and consider the internal dynamics of the societies you're purportedly interested in? Because, you see, these kinds of questions strongly suggest that you're not actually interested in Latin America at all! You're just using Latin America as a screen on which to project your little ideological anti-US-imperialism circle jerk. Enough!
Sorry about that,
ft
May 4, 2003
Chávez, Totalitarianism, and the fecklessness of the opposition
These days, it seems to happen alarmingly often. And it makes me shudder each time. Antichavista talking heads keep describing the Chávez government as a "totalitarian regime." Like nazism or Stalinism, or Pol Pot's Cambodia.
The tendency to call the Chávez government "totalitarian" lays bare, to my mind, a worrying contempt for history, a kind of idiotized indifference towards the past. The comparison is so shrill, so obviously detached from any kind of serious consideration, that it suggests to me a deeply worrying contempt for the meaning of the words used in the public sphere.
But do they stop to think about what that actually means?
It takes a bit of a re-read of Hannah Arendt to realize afresh the scale of the historical travesty perpetrated when Venezuelans liken our half-baked autocracy to actual totalitarianism. As a jew who lived through the holocaust, Arendt knew a thing or two about what real totalitarianism is like, of the scale of human suffering it inflicts. Reserving the term mostly for the regimes of Stalin and Hitler, she dissected it with clinical precision.
The first thing to understand about "totalitarianism" is that the term has a precise meaning. It's not just some loose synonym for dictatorship, autocracy, and authoritarianism. For Arendt, it's a unique form of state power, a conceptual category all its own.
Totalitarianism isn't about losing any inhibition in the use mass-scale violence to stay in power: mere dictatorships reach that level all the time. Totalitarianism of the brand pioneered in Germany and Russia in the 1930s goes much further than that. Its aim is not just to silence all sources of political dissent. Its goal is to dominate the totality of each and every thought and activity of each and every citizen each and every day.
As Arendt explains in The Origins of Totalitarianism, this form of political organization is not to be confused with dictatorship, which is much more common historically. Dictatorial violence is politically motivated, politically-rational violence. It's violence that "makes sense" if your main goal is to hang on to power.
Totalitarianism isn't like that. The Stalinist purges could not be explained in those terms. Stalin was willing to put Soviet society through immense dislocation, not just in human but in economic and military terms, even though as Arendt puts it,
None of these immense sacrifices in human life was motivated by a raison d'état in the old sense of the term. None of the liquidated social strata was hostile to the regime or likely to become hostile to the regime. Active organized opposition had ceased to exist by 1930.
In the Soviet Union, dictatorial terror (which is distinguished from totalitarian terror insofar as it threatens only authentic opponents, not harmless citizens without political views,) had been grim enough to suffocate all political life, open or clandestine, even before Lenin's death.
But totalitarianism is not content with that. Going beyond the bounds of the political sphere as traditionally understood, Stalin's totalitarian violence was about gaining total power over everything anyone in Russia did or thought.
In a chilling passage, Arendt explains what this means:
If totalitarianism takes its own claim seriously, it must finish once and for all with 'the neutrality of chess,' that is, with the autonomous existence of any activity whatsoever. The lovers of 'chess for the sake of chess,' are not absolutely atomized elements in a mass society whose completely heterogenous uniformity is one of the primary conditions for totalitarianism. From the point of view of totalitarian rulers, a society devoted to chess for the sake of chess is only in degree different and less dangerous than a class of farmers for the sake of farming.This is what the "total" in "totalitarian" means - a system of government that will use any amount of violence it takes to control literally everything that happens in that society - even something as seemingly harmless as a citizen's relationship towards chess. Authoritarianism might be contented merely with absolute control over the political sphere. Totalitarianism is about total control over everything - about eradicating any basis for social organization not dominated by a central authority.
To achieve this level of control, the state must destroy any alternative links that could imaginably call into question any citizen's loyalty - it must "atomize" its citizens, destroying any alternative objects of identification or repositories of loyalty they might have. This it does through fear:
Mass atomization in Soviet society was achieved by the skillful use of repeated purges which invariably precede actual group liquidation. In order to destroy all social and family ties, the purges are conducted in such a way as to threaten with the same fate the defendant and all his ordinary relations, from mere acquaintances up to his closest friends and relatives.
The consequence of the simple and ingenious device of guilt by association is that as soon as a man is accused, his former friends are transformed immediately into his bitterest enemies; in order to save their own skins, they volunteer information and rush in with denunciations to corroborate the nonexistent evidence against him; this obviously is the only way to prove their own trustworthiness. Retrospectively, they will try to prove that their acquaintance or friendship with the accused was only a pretext for spying on him and revealing him as a saboteur, a Trotskyite, a foreign spy, or a Fascist. Merit being gauged by the number of your denunciations of your closest comrades, it is obvious that the most elementary caution demands that one avoid all intimate contacts, if possible - not in order to prevent discovery of one's own secret thoughts , but rather to eliminate, in the almost certain case of future trouble, all persons who might have not only an ordinary interest in your denunciation but an irresistible need to bring about your ruin simply because they are in danger of their own lives.
In the last analysis, it has been through the development of this device to its farthest and most fantastic extremes that Bolshevik rulers have succeeded in creating an atomized and individualized society the like of which we have never seen before.
Take a minute to think about that passage, about the extent of domination, terror and violence it reveals, the next time you hear Antonio Ledezma describe the Chávez government as totalitarian.
"Totalitarian governments," Arendt concludes,
are mass organizations of atomized, isolated individuals. Compared with all other parties and movements, their most conspicuous external characteristic is their demand for total, unrestricted, unconditional and unalterable loyalty of the individual member. Such loyalty can be expected only from the completely isolated human being who, without any other social ties to family, friends, comrades, or even mere acquaintances, derives his sense of having a place in the world only from his belonging to a movement, his membership in the party. Totalitarian domination is something that no state and no mere apparatus of violence can achieve, namely, the permanent domination of each single individual in each and every sphere of life.In other words, make no mistake about it: if the Chávez regime was "totalitarian", I would be dead, and so would you.
The tendency to call the Chávez government "totalitarian" lays bare, to my mind, a worrying contempt for history, a kind of idiotized indifference towards the past. The comparison is so shrill, so obviously detached from any kind of serious consideration, that it suggests to me a deeply worrying contempt for the meaning of the words used in the public sphere.
Yet the charge is so commonplace it's become almost a cliche, constantly hurled through the media by opposition leaders who've clearly never stopped to consider that if they lived in anything even approaching the kind of regime they claim to be oppose, making such a statement in public would certainly cost them their lives.
May 2, 2003
Back, for now
Well, the site has been off-line for a while now, obviously. The reason, in short, is that blogger.com decided to do me wrong: some incomprehensible technical glitch kept me from posting for a long time.
For what is worth, Weisbrot did write a response to my criticism, which you can read here. After reading it, and going through a bit of a back-and-forth with him, I started to feel bad about some of what I'd written earlier, because I accused him of bad faith and intellectual dishonesty, and those are very serious charges. After our back and forth, though, I've come around to the view that there's more ignorance than ill intention to his propagandizing: again and again in our mails he kept making arguments that made it clear he's not familiar with basic facts about the Venezuelan economy that any serious writer on the subject really ought to know about.
But that's neither here nor there, I suppose.
April 4, 2003
What happened to "What happened to profits?" ?
Update: The offending briefing paper by Mark Weisbrot seems to have been taken down from the CEPR.net website. The link to the paper is gone from the CEPR site's main page, and the old URL (http://www.cepr.net/what_happened_to_profits.htm) is yielding a 404 ("file not found") error now.
Why? I don't know.
In personal email to me, Weisbrot promised a rebuttal. Oughta be good.
Update: The offending briefing paper by Mark Weisbrot seems to have been taken down from the CEPR.net website. The link to the paper is gone from the CEPR site's main page, and the old URL (http://www.cepr.net/what_happened_to_profits.htm) is yielding a 404 ("file not found") error now.
Why? I don't know.
In personal email to me, Weisbrot promised a rebuttal. Oughta be good.
April 1, 2003
Note to Mark Weisbrot:
Kindly remove head from ass.
José Bové is coming, as well as Ignacio Ramonet of Le Monde diplomatique, and Danielle Mitterand…a virtual who’s who of the most clueless strata of the anti-globalization movement. The occasion is the chavista commemoration of the glorious events of April 11th-14th, and the government sponsored festivity can be expected to dissolve into three days of feverish hero-worship for President Chávez.
Among the lesser known, but perhaps most dangerous, of the featured speakers is one Mark Weisbrot, co-director of the grandiloquently named Center for Economic and Policy Research. A member in good standing of the DC lefty think-tank community, Weisbrot strikes me as the most dangerous kind of chavista apologist, because the propaganda he publishes out of CEPR comes cloaked in the stylistic conventions of academia, and that makes it look to the uninitiated like more or less credible independent analysis. If you’ve followed the issues he covers, though, you can recognize his writing as more or less unadulterated government propaganda. In a sense, what’s most remarkable about his analysis is its failure to go an inch beyond tired old chavista arguments founded on misrepresentation that enjoy near-zero credibility among anyone who knows anything about the issues at hand.
Through What happened to profits?, his latest CEPR Briefing Paper, Weisbrot joins the chavista campaign to sling mud at Venezuela’s state oil company, PDVSA, and specifically at the way it used to be run in the pre-Chávez era. This he does with all the intellectual honesty of, well, a chavista.
At the center of his critique is the claim that PDVSA’s fiscal contributions to the Venezuelan state are significantly lower now than they were immediately following nationalization in 1976, or when compared to other state-owned oil companies in the region. Thus, he concludes, PDVSA’s performance has been very poor and the company was in serious need of a massive overhaul.
Weisbrot is careful not to lie outright, but almost all his arguments are deeply misleading. Take, for instance, this jewel of a sentence: “In fiscal year 2001,” he writes, “the state-owned oil company in Mexico, PEMEX, had sales of $46.5 billion and contributed $28.8 billion to the government budget. By contrast, in 2000 PDVSA took in $53.2 billion and paid only $11.6 billion to the government of Venezuela.” What he’s saying is, strictly speaking, true. It’s also wildly misleading. It’s worth taking a few paragraph to unpack just how many tricks and misrepresentations are packed into this one, harmless-seeming sentence.
To start with terminally silly to compare PDVSA to PEMEX in this way, because the two companies are structured radically differently. While PEMEX produces 3.7 million barrels a day and sells almost exclusively oil produced in Mexico, PDVSA produces (or used to produce) about 2.3 million b/d and, more importantly, sells oil from all over the world. PDVSA is a major player in the intermediation business, meaning that much of what it does is buy oil from third-party producers (Ecuador, say, or Nigeria) and use its huge marketing and distribution network to sell it on in international markets. Indeed, in 2001, over half the oil PDVSA sold ($22 billion out of $43 billion in total sales abroad) was not produced in Venezuela.
Of course, intermediation and production are vastly different businesses, and not surprisingly production is vastly more profitable. Weisbrot and Baribeau’s trick is to conflate the two: they report PDVSA’s combined profit margin for both intermediation and production and then compare that number with a company that’s all production and no intermediation. Apples and oranges. Had Weisbrot excluded the third-party produced oil PDVSA sells from the equation, he would have found that in 2000 PDVSA exported $26.7 billion worth of Venezuelan produced oil and contributed $12.7 billion to the government. That’s 48% of its Venezuelan sales going to the state, and that’s not that far off from PEMEX’s reported 62%.
So that’s trick number one, and it sets the tone of appalling intellectual dishonesty that permeates the briefing paper. However, you could argue that PEMEX still contributes 14 percentage points of its domestic sales more to the state than PDVSA. This, again, is true but misleading.
The reason is two-fold. In the first place, notice that while Weisbrot entitles his paper “What happened to profits?” what he’s actually talking about is not profits but fiscal contributions. PEMEX surely gave the Mexican government a lot of money in 2001, but it also yielded a $3 billion after-tax loss. This suggests strongly that its hefty contribution to the Mexican state was not a function of sterling management or world-beating profitability, but rather it was a function of getting milked by the Mexican government far beyond what is wise. (An appreciation that accords with PEMEX’s reputation as one of the worst managed state oil companies around.) PDVSA, meanwhile, reported a modest after tax profit in 2000.
You won’t learn that from reading Weisbrot and Baribeau’s piece, though.
The second little bait-and-switch is tucked away in a footnote to the paper. Comparing the number of dollars the Venezuelan, Mexican and Brazilian governments perceive per barrel of oil produced, the paper reveals an anomaly. In 1999 and 2000, PEMEX’s fiscal-contribution-per barrel produced was actually higher than the market value of those barrels. A footnote handily explains that this is due to “revenue from downstream operations.” Elsewhere in the paper, Weisbrot and Baribeau slam PDVSA for the disastrous performance of its domestic downstream operations, noting that PDVSA’s losses in that business “have climbed from $75 million in 1998 to $1.35 billion in 2001.”
What’s this about? What are those mysterious “domestic downstream operations?”
From what I can make out, what he’s talking about is basically internal sales, especially gasoline sales. Once you make that connection, then those climbing losses are pretty easy to understand. Gas is absurdly cheap in Venezuela – about 21 cents a gallon (figuring it at the official exchange rate.) Just a couple of days ago, I filled up my old beater, which has a 19-gallon gas tank, for less than 4 bucks. In Mexico, you still get relatively cheap gas, but they at least charge you enough for PEMEX to recoup costs and even make a bit of profit. When you go through the two companies’ statements to the SEC, you find out that PDVSA was selling gasoline domestically at $7/barrel in 2001, while PEMEX was selling it at $35/barrel. The simple fact is that 7 bucks a barrel is far below the cost of production – there’s a huge implied subsidy here, and somebody has to pay for it. In this case, it’s PDVSA.
Now, it’s a bit fresh to blame PDVSA for this situation – it is, after all, the government that sets retail gasoline prices in the Venezuelan market. It’s especially fresh to use a 1998-2001 comparison period since it’s hard not to notice that this was a time when Hugo Chávez was in power. So lets see what’s happening here: Chávez takes power. Chávez refuses to index up the cost of gasoline even in bolívar terms, - the price of gas today is the same Bs.90 per liter as it was in 1998, even though the exchange rate has climbed from Bs.483:$ to Bs.1600:$. So Chávez forces PDVSA to sell gasoline at far, far below its cost of production, making PDVSA to absorb a billion-dollar loss on domestic gas sales. Follow me so far? Good, because here’s where it gets weird: Seeing this situation, philochavista first world economists pounce, but not on the government for subsidizing the ecocidal overuse of fossil fuels, but rather on PDVSA! You read dark mutterings about poor performance, and they wonder how on earth the company could possibly lose all this money on “downstream domestic operations.”
This is just absurd.
In fact, if you factor out the gasoline subsidy forced on PDVSA by the government, the company’s fiscal contribution rises to 53% of Venezuelan barrels exported. And if you factor out PEMEX’s multibillion dollar after-tax loss from its fiscal contribution, (as a way of getting at what PEMEX could actually afford to contribute and still break even) you find that a rationally run PEMEX might have contributed 54% of its domestic oil sales to the government. Funny, huh? When you actually go through the numbers, you realize that the seemingly huge disparity between the two companies’ fiscal contributions are explained almost totally by bad fiscal policymaking in Mexico, an absurd gas subsidy in Venezuela, and, more than anything else, by Mark Weisbrot’s rampant will to deceive.
So just taking apart that one sentence you start to get a feel for the guy’s modus operandi, for his blithe disregard for the basic standards of intellectual honesty one ought to be able to expect from a serious academic.
I have to say I’m especially galled by his cowardly pussyfooting on the gas subsidy: this is, after all, an anti-globalization activist, someone you might reasonably expect to see standing up against a policy as criminally stupid as subsidizing global warming. If he really feels that these domestic market losses are unacceptable, then he should come right out and say so. He should say, straight out, that there are far better ways of spending $1.3 billion a year than subsidizing gas. Who could possibly argue with him if he did?
Hugo Chávez, that’s who!
Advocating gas-price hikes is the ultimate political no-no here. Ever since a gas-price increase set off mass looting throughout the country on February 27th, 1989, the issue has been a kind of third-rail in Venezuelan politics - especially in irresponsible lefty/populist circles. So arguing against the gas subsidy openly would put Weisbrot and Baribeau at odds with the idiotic Chávez administration policy of wasting billions of dollars in scarce resources to subsidize a toxic chemical that benefits middle-class car drivers disproportionately. They couldn’t do that, clearly! The solution? Hide behind a sterile sounding euphemism - “downstream operations in Venezuela” – and blame it on PDVSA, to boot!
But there’s more. Weisbrot devotes half the paper to a searing critique of the pre-Chávez drive to open up the Venezuelan oil industry to foreign capital, alleging that the higher operating costs and lower tax rates on these deals has taken a major bite out of PDVSA’s profitability. Again, his critique is so bizarrely warped, it’s impossible to understand it aside from an ulterior political motive.
First, you need a bit of background. In 1996, PDVSA found itself with a dilemma. While the country had gigantic oil reserves, most of the yet-to-be-exploited oil here was extra-heavy crude in the east of the country. This is not commercially attractive oil. Basically, it’s gunk, a semi-solid black sludge rather than the flowing syrupy black liquid you probably picture when you picture crude petroleum. Eastern crudes here are so thick and laden with impurities, geologists don’t even call it oil but rather “bitumen” – not-quite-oil.
Meanwhile, much of the “good oil” in the country comes from wells in the West of the country that have been in operation, in some cases, since the 1930s. These are the highly depleted deposits known as “marginal fields,” or “squeezed-out oranges” as an oil exec once put it to me. The wells still have some exploitable oil in them, but not very much. Understandably, it takes far more effort, expertise, technology and investment to get oil out of these marginal fields than out of a brand spanking new oil field.
In 1996, PDVSA decided that it wanted to expand its production, to boost it all the way to 6.7 million b/d by 2007. Had the plan been carried out, Venezuela would have become the world’s second leading exporter after Saudi Arabia, and PDVSA would have been able to take advantage of the huge marketing and distribution networks it’s currently using to market third-party crudes. (In fact, much of the reason those extensive marketing and distribution networks were set-up in the first place was the expectation that, in time, Venezuelan production would expand enough that they could be devoted to selling high-margin Venezuelan oil rather than low-margin third-party oil.) However, without much in the way of fresh deposits of light or medium crudes to exploit, PDVSA had to expand domestic production through marginal fields, and through Eastern bitumen. That’s just the geological hand the country was dealt.
But PDVSA had neither the technology, the expertise, nor the financing needed to put these expensive-to-start-up projects into operation. The Eastern bitumen projects required building “upgrading facilities,” a new(ish) technology that amounts to pre-refining bitumen from a semi-solid gunk to something closer to standard crude oil (which receives the somewhat paradoxical name of “synthetic crude.”) PDVSA didn’t have the money or the technology to do this, but the foreign majors did, so PDVSA asked the big foreign companies to come in and build the upgraders. The cost of a barrel of synthetic crude would be significantly higher than that of nice, naturally light crude, but at around $9-10 a barrel it was still a pretty good deal.
However, these upgrader facilities would cost billions of dollars to build. The capital costs were so large that the pre-Chávez government realized it would need to sweeten the deal for the foreign companies to attract them. And the way they chose to do this was by dropping the royalty rate on these projects from the usual 16.67% to just 1%.
This decision comes in for particular scorn in Weisbrot’s piece, which seems to have no idea why the royalty rate was cut in the first place. He produces a handy chart showing how much more money PDVSA would have gotten had it taxed these projects at the previous rate, or at the Petrobras or Pemex rates. It’s a fun bit of mental-masturbation, but meaningless – these projects wouldn’t have been built if the government hadn’t dropped the royalty rates, because they would not be profitable at that higher rate. There would have been nothing to tax.
Pushing absurdity and intellectual bad faith to the limit, the paper then turns around and slams PDVSA for its rising capital costs during that period – precisely the time when the costly high-tech upgrader facilities were being built. “Capital expenditures on domestic downstream operations soared to $2.517 billion in 2001,” they argue, adding that “rom the viewpoint of standard financial accounting these investments do not make sense if they produce a low return for the shareholders.”
Now, perhaps Weisbrot and Baribeau aren’t quite clear on the concept of investment, but the word usually denotes a one-time expenditure meant to generate profits over a long period of time – some 30 years, for these projects. So looked at in context, their argument dissolves into utter meaninglessness, something like: it costs a lot of money to build expensive things meant to pay off in the long run. Gotcha…why is that bad again?
(Weisbrot and Baribeau also criticize a tax-reform effort carried out in 1992 that’s too boring to go into here, but on that score too their critique is highly misleading.)
The authors then segue into a critique of the marginal field operating contracts, where foreign companies were hired to squeeze out the last few remaining drops from old, worn out fields. Here, as far as I can tell, their argument boils down to an impassioned denunciation of the fact that more-expensive-to-operate oil fields are less profitable than less-expensive-to-operate oil fields. It’s a “well, duh!” moment, though that doesn’t stop them from regaling us with all kinds of facts, figures and charts detailing the scale of this outrage.
The argument is so silly, even Weisbrot seems to realize it, admitting that these marginal fields are still profitable, but arguing that “it is questionable if it is worth it for PDVSA to produce such high-cost oil, since it presumably counts as part of the country’s OPEC quota and displaces other oil that could be produced at much lower cost.” But this rejoinder only makes sense if a-you think staying within OPEC makes any sense (which I don’t) and b-you have some kind of spare capacity in low-cost, high-margin fields which you could substitute for the marginal field production, which Venezuela doesn’t. And why doesn’t it? Due to under-investment and dropping capacity figures in the Chávez era, as a result of Chávez’s policy from squeezing every last dollar from PDVSA until the company could not afford to even maintain production capacity at previous levels.
Weisbrot and Baribeau then complain about the rise in overall production costs – saying from 1997 to 2001 the cost of producing a barrel of oil or equivalent increased by 35.6%, from $2.33 to $3.16. This is the one part of his argument that is not total bunk: PDVSA’s costs have indeed been rising way too fast, and part of this is due to PDVSA mismanagement, particularly to the company’s bloated payroll.
However, even when they get it right, they get it wrong – this time by omitting key parts of the reason for this cost-increase. They casually paper over “details” like the fact that the Chávez administration’s mismanagement of collective bargaining negotiations with oil sector workers in 2001 is a major contributor to PDVSA’s rising cost structure over the past few years, as a Fedepetrol strike backed the government into having to offer a much higher than usual pay rise and setting the industry minimum wage at over three times the legal minimum wage (but that’s Chávez’s fault, not PDVSA management’s, so shhhhh!)
They also fail to mention the way the government’s broader macroeconomic mismanagement made the bolívar more and more overvalued from 1997 to 2001, making the cost of everything you did in Venezuela increased alarmingly…in dollar terms! (Note to the macroeconomically challenged: that’s what it means for a currency to be overvalued.)
(It’s also fun to note that if you go back to the much vaunted PEMEX - which elsewhere in the paper the authors treat as the model of a highly profitable state oil company – their 2001 per-barrel production costs were $3.34 – 18 cents more than PDVSA’s.)
I could keep going, picking apart other, similarly warped aspects of this dreadful paper, but why bother? It’s very hard for me to believe that anyone as bright as Mark Weisbrot who sets out to analyze PDVSA’s performance in good faith, freed from the drive to blacken the company’s reputation for ideological reasons, could have gotten it so, so wrong. Weisbrot and Baribeau are the very worst sorts of pseudo-intellectuals – using the stylistic conventions of academia to produce political propaganda that has the look-and-feel of a serious, respectable policy-paper.
So if you find the tone of this critique somewhat over the top, all I can say is that people like Weisbrot and Baribeau, who refuse to play by even the most stripped down rules of honest academic discourse, forfeit their claim to civility from those who criticize them. They treat reality with disrespect, and deserve nothing but disrespect in return. They are propaganda-mongers masquerading as analysts, and they have become accomplices in the unbelievably misguided drive to dismantle the one institution in the Venezuelan state that, for all its undeniable faults, used to work more or less properly.
Kindly remove head from ass.
José Bové is coming, as well as Ignacio Ramonet of Le Monde diplomatique, and Danielle Mitterand…a virtual who’s who of the most clueless strata of the anti-globalization movement. The occasion is the chavista commemoration of the glorious events of April 11th-14th, and the government sponsored festivity can be expected to dissolve into three days of feverish hero-worship for President Chávez.
Among the lesser known, but perhaps most dangerous, of the featured speakers is one Mark Weisbrot, co-director of the grandiloquently named Center for Economic and Policy Research. A member in good standing of the DC lefty think-tank community, Weisbrot strikes me as the most dangerous kind of chavista apologist, because the propaganda he publishes out of CEPR comes cloaked in the stylistic conventions of academia, and that makes it look to the uninitiated like more or less credible independent analysis. If you’ve followed the issues he covers, though, you can recognize his writing as more or less unadulterated government propaganda. In a sense, what’s most remarkable about his analysis is its failure to go an inch beyond tired old chavista arguments founded on misrepresentation that enjoy near-zero credibility among anyone who knows anything about the issues at hand.
Through What happened to profits?, his latest CEPR Briefing Paper, Weisbrot joins the chavista campaign to sling mud at Venezuela’s state oil company, PDVSA, and specifically at the way it used to be run in the pre-Chávez era. This he does with all the intellectual honesty of, well, a chavista.
At the center of his critique is the claim that PDVSA’s fiscal contributions to the Venezuelan state are significantly lower now than they were immediately following nationalization in 1976, or when compared to other state-owned oil companies in the region. Thus, he concludes, PDVSA’s performance has been very poor and the company was in serious need of a massive overhaul.
Weisbrot is careful not to lie outright, but almost all his arguments are deeply misleading. Take, for instance, this jewel of a sentence: “In fiscal year 2001,” he writes, “the state-owned oil company in Mexico, PEMEX, had sales of $46.5 billion and contributed $28.8 billion to the government budget. By contrast, in 2000 PDVSA took in $53.2 billion and paid only $11.6 billion to the government of Venezuela.” What he’s saying is, strictly speaking, true. It’s also wildly misleading. It’s worth taking a few paragraph to unpack just how many tricks and misrepresentations are packed into this one, harmless-seeming sentence.
To start with terminally silly to compare PDVSA to PEMEX in this way, because the two companies are structured radically differently. While PEMEX produces 3.7 million barrels a day and sells almost exclusively oil produced in Mexico, PDVSA produces (or used to produce) about 2.3 million b/d and, more importantly, sells oil from all over the world. PDVSA is a major player in the intermediation business, meaning that much of what it does is buy oil from third-party producers (Ecuador, say, or Nigeria) and use its huge marketing and distribution network to sell it on in international markets. Indeed, in 2001, over half the oil PDVSA sold ($22 billion out of $43 billion in total sales abroad) was not produced in Venezuela.
Of course, intermediation and production are vastly different businesses, and not surprisingly production is vastly more profitable. Weisbrot and Baribeau’s trick is to conflate the two: they report PDVSA’s combined profit margin for both intermediation and production and then compare that number with a company that’s all production and no intermediation. Apples and oranges. Had Weisbrot excluded the third-party produced oil PDVSA sells from the equation, he would have found that in 2000 PDVSA exported $26.7 billion worth of Venezuelan produced oil and contributed $12.7 billion to the government. That’s 48% of its Venezuelan sales going to the state, and that’s not that far off from PEMEX’s reported 62%.
So that’s trick number one, and it sets the tone of appalling intellectual dishonesty that permeates the briefing paper. However, you could argue that PEMEX still contributes 14 percentage points of its domestic sales more to the state than PDVSA. This, again, is true but misleading.
The reason is two-fold. In the first place, notice that while Weisbrot entitles his paper “What happened to profits?” what he’s actually talking about is not profits but fiscal contributions. PEMEX surely gave the Mexican government a lot of money in 2001, but it also yielded a $3 billion after-tax loss. This suggests strongly that its hefty contribution to the Mexican state was not a function of sterling management or world-beating profitability, but rather it was a function of getting milked by the Mexican government far beyond what is wise. (An appreciation that accords with PEMEX’s reputation as one of the worst managed state oil companies around.) PDVSA, meanwhile, reported a modest after tax profit in 2000.
You won’t learn that from reading Weisbrot and Baribeau’s piece, though.
The second little bait-and-switch is tucked away in a footnote to the paper. Comparing the number of dollars the Venezuelan, Mexican and Brazilian governments perceive per barrel of oil produced, the paper reveals an anomaly. In 1999 and 2000, PEMEX’s fiscal-contribution-per barrel produced was actually higher than the market value of those barrels. A footnote handily explains that this is due to “revenue from downstream operations.” Elsewhere in the paper, Weisbrot and Baribeau slam PDVSA for the disastrous performance of its domestic downstream operations, noting that PDVSA’s losses in that business “have climbed from $75 million in 1998 to $1.35 billion in 2001.”
What’s this about? What are those mysterious “domestic downstream operations?”
From what I can make out, what he’s talking about is basically internal sales, especially gasoline sales. Once you make that connection, then those climbing losses are pretty easy to understand. Gas is absurdly cheap in Venezuela – about 21 cents a gallon (figuring it at the official exchange rate.) Just a couple of days ago, I filled up my old beater, which has a 19-gallon gas tank, for less than 4 bucks. In Mexico, you still get relatively cheap gas, but they at least charge you enough for PEMEX to recoup costs and even make a bit of profit. When you go through the two companies’ statements to the SEC, you find out that PDVSA was selling gasoline domestically at $7/barrel in 2001, while PEMEX was selling it at $35/barrel. The simple fact is that 7 bucks a barrel is far below the cost of production – there’s a huge implied subsidy here, and somebody has to pay for it. In this case, it’s PDVSA.
Now, it’s a bit fresh to blame PDVSA for this situation – it is, after all, the government that sets retail gasoline prices in the Venezuelan market. It’s especially fresh to use a 1998-2001 comparison period since it’s hard not to notice that this was a time when Hugo Chávez was in power. So lets see what’s happening here: Chávez takes power. Chávez refuses to index up the cost of gasoline even in bolívar terms, - the price of gas today is the same Bs.90 per liter as it was in 1998, even though the exchange rate has climbed from Bs.483:$ to Bs.1600:$. So Chávez forces PDVSA to sell gasoline at far, far below its cost of production, making PDVSA to absorb a billion-dollar loss on domestic gas sales. Follow me so far? Good, because here’s where it gets weird: Seeing this situation, philochavista first world economists pounce, but not on the government for subsidizing the ecocidal overuse of fossil fuels, but rather on PDVSA! You read dark mutterings about poor performance, and they wonder how on earth the company could possibly lose all this money on “downstream domestic operations.”
This is just absurd.
In fact, if you factor out the gasoline subsidy forced on PDVSA by the government, the company’s fiscal contribution rises to 53% of Venezuelan barrels exported. And if you factor out PEMEX’s multibillion dollar after-tax loss from its fiscal contribution, (as a way of getting at what PEMEX could actually afford to contribute and still break even) you find that a rationally run PEMEX might have contributed 54% of its domestic oil sales to the government. Funny, huh? When you actually go through the numbers, you realize that the seemingly huge disparity between the two companies’ fiscal contributions are explained almost totally by bad fiscal policymaking in Mexico, an absurd gas subsidy in Venezuela, and, more than anything else, by Mark Weisbrot’s rampant will to deceive.
So just taking apart that one sentence you start to get a feel for the guy’s modus operandi, for his blithe disregard for the basic standards of intellectual honesty one ought to be able to expect from a serious academic.
I have to say I’m especially galled by his cowardly pussyfooting on the gas subsidy: this is, after all, an anti-globalization activist, someone you might reasonably expect to see standing up against a policy as criminally stupid as subsidizing global warming. If he really feels that these domestic market losses are unacceptable, then he should come right out and say so. He should say, straight out, that there are far better ways of spending $1.3 billion a year than subsidizing gas. Who could possibly argue with him if he did?
Hugo Chávez, that’s who!
Advocating gas-price hikes is the ultimate political no-no here. Ever since a gas-price increase set off mass looting throughout the country on February 27th, 1989, the issue has been a kind of third-rail in Venezuelan politics - especially in irresponsible lefty/populist circles. So arguing against the gas subsidy openly would put Weisbrot and Baribeau at odds with the idiotic Chávez administration policy of wasting billions of dollars in scarce resources to subsidize a toxic chemical that benefits middle-class car drivers disproportionately. They couldn’t do that, clearly! The solution? Hide behind a sterile sounding euphemism - “downstream operations in Venezuela” – and blame it on PDVSA, to boot!
But there’s more. Weisbrot devotes half the paper to a searing critique of the pre-Chávez drive to open up the Venezuelan oil industry to foreign capital, alleging that the higher operating costs and lower tax rates on these deals has taken a major bite out of PDVSA’s profitability. Again, his critique is so bizarrely warped, it’s impossible to understand it aside from an ulterior political motive.
First, you need a bit of background. In 1996, PDVSA found itself with a dilemma. While the country had gigantic oil reserves, most of the yet-to-be-exploited oil here was extra-heavy crude in the east of the country. This is not commercially attractive oil. Basically, it’s gunk, a semi-solid black sludge rather than the flowing syrupy black liquid you probably picture when you picture crude petroleum. Eastern crudes here are so thick and laden with impurities, geologists don’t even call it oil but rather “bitumen” – not-quite-oil.
Meanwhile, much of the “good oil” in the country comes from wells in the West of the country that have been in operation, in some cases, since the 1930s. These are the highly depleted deposits known as “marginal fields,” or “squeezed-out oranges” as an oil exec once put it to me. The wells still have some exploitable oil in them, but not very much. Understandably, it takes far more effort, expertise, technology and investment to get oil out of these marginal fields than out of a brand spanking new oil field.
In 1996, PDVSA decided that it wanted to expand its production, to boost it all the way to 6.7 million b/d by 2007. Had the plan been carried out, Venezuela would have become the world’s second leading exporter after Saudi Arabia, and PDVSA would have been able to take advantage of the huge marketing and distribution networks it’s currently using to market third-party crudes. (In fact, much of the reason those extensive marketing and distribution networks were set-up in the first place was the expectation that, in time, Venezuelan production would expand enough that they could be devoted to selling high-margin Venezuelan oil rather than low-margin third-party oil.) However, without much in the way of fresh deposits of light or medium crudes to exploit, PDVSA had to expand domestic production through marginal fields, and through Eastern bitumen. That’s just the geological hand the country was dealt.
But PDVSA had neither the technology, the expertise, nor the financing needed to put these expensive-to-start-up projects into operation. The Eastern bitumen projects required building “upgrading facilities,” a new(ish) technology that amounts to pre-refining bitumen from a semi-solid gunk to something closer to standard crude oil (which receives the somewhat paradoxical name of “synthetic crude.”) PDVSA didn’t have the money or the technology to do this, but the foreign majors did, so PDVSA asked the big foreign companies to come in and build the upgraders. The cost of a barrel of synthetic crude would be significantly higher than that of nice, naturally light crude, but at around $9-10 a barrel it was still a pretty good deal.
However, these upgrader facilities would cost billions of dollars to build. The capital costs were so large that the pre-Chávez government realized it would need to sweeten the deal for the foreign companies to attract them. And the way they chose to do this was by dropping the royalty rate on these projects from the usual 16.67% to just 1%.
This decision comes in for particular scorn in Weisbrot’s piece, which seems to have no idea why the royalty rate was cut in the first place. He produces a handy chart showing how much more money PDVSA would have gotten had it taxed these projects at the previous rate, or at the Petrobras or Pemex rates. It’s a fun bit of mental-masturbation, but meaningless – these projects wouldn’t have been built if the government hadn’t dropped the royalty rates, because they would not be profitable at that higher rate. There would have been nothing to tax.
Pushing absurdity and intellectual bad faith to the limit, the paper then turns around and slams PDVSA for its rising capital costs during that period – precisely the time when the costly high-tech upgrader facilities were being built. “Capital expenditures on domestic downstream operations soared to $2.517 billion in 2001,” they argue, adding that “rom the viewpoint of standard financial accounting these investments do not make sense if they produce a low return for the shareholders.”
Now, perhaps Weisbrot and Baribeau aren’t quite clear on the concept of investment, but the word usually denotes a one-time expenditure meant to generate profits over a long period of time – some 30 years, for these projects. So looked at in context, their argument dissolves into utter meaninglessness, something like: it costs a lot of money to build expensive things meant to pay off in the long run. Gotcha…why is that bad again?
(Weisbrot and Baribeau also criticize a tax-reform effort carried out in 1992 that’s too boring to go into here, but on that score too their critique is highly misleading.)
The authors then segue into a critique of the marginal field operating contracts, where foreign companies were hired to squeeze out the last few remaining drops from old, worn out fields. Here, as far as I can tell, their argument boils down to an impassioned denunciation of the fact that more-expensive-to-operate oil fields are less profitable than less-expensive-to-operate oil fields. It’s a “well, duh!” moment, though that doesn’t stop them from regaling us with all kinds of facts, figures and charts detailing the scale of this outrage.
The argument is so silly, even Weisbrot seems to realize it, admitting that these marginal fields are still profitable, but arguing that “it is questionable if it is worth it for PDVSA to produce such high-cost oil, since it presumably counts as part of the country’s OPEC quota and displaces other oil that could be produced at much lower cost.” But this rejoinder only makes sense if a-you think staying within OPEC makes any sense (which I don’t) and b-you have some kind of spare capacity in low-cost, high-margin fields which you could substitute for the marginal field production, which Venezuela doesn’t. And why doesn’t it? Due to under-investment and dropping capacity figures in the Chávez era, as a result of Chávez’s policy from squeezing every last dollar from PDVSA until the company could not afford to even maintain production capacity at previous levels.
Weisbrot and Baribeau then complain about the rise in overall production costs – saying from 1997 to 2001 the cost of producing a barrel of oil or equivalent increased by 35.6%, from $2.33 to $3.16. This is the one part of his argument that is not total bunk: PDVSA’s costs have indeed been rising way too fast, and part of this is due to PDVSA mismanagement, particularly to the company’s bloated payroll.
However, even when they get it right, they get it wrong – this time by omitting key parts of the reason for this cost-increase. They casually paper over “details” like the fact that the Chávez administration’s mismanagement of collective bargaining negotiations with oil sector workers in 2001 is a major contributor to PDVSA’s rising cost structure over the past few years, as a Fedepetrol strike backed the government into having to offer a much higher than usual pay rise and setting the industry minimum wage at over three times the legal minimum wage (but that’s Chávez’s fault, not PDVSA management’s, so shhhhh!)
They also fail to mention the way the government’s broader macroeconomic mismanagement made the bolívar more and more overvalued from 1997 to 2001, making the cost of everything you did in Venezuela increased alarmingly…in dollar terms! (Note to the macroeconomically challenged: that’s what it means for a currency to be overvalued.)
(It’s also fun to note that if you go back to the much vaunted PEMEX - which elsewhere in the paper the authors treat as the model of a highly profitable state oil company – their 2001 per-barrel production costs were $3.34 – 18 cents more than PDVSA’s.)
I could keep going, picking apart other, similarly warped aspects of this dreadful paper, but why bother? It’s very hard for me to believe that anyone as bright as Mark Weisbrot who sets out to analyze PDVSA’s performance in good faith, freed from the drive to blacken the company’s reputation for ideological reasons, could have gotten it so, so wrong. Weisbrot and Baribeau are the very worst sorts of pseudo-intellectuals – using the stylistic conventions of academia to produce political propaganda that has the look-and-feel of a serious, respectable policy-paper.
So if you find the tone of this critique somewhat over the top, all I can say is that people like Weisbrot and Baribeau, who refuse to play by even the most stripped down rules of honest academic discourse, forfeit their claim to civility from those who criticize them. They treat reality with disrespect, and deserve nothing but disrespect in return. They are propaganda-mongers masquerading as analysts, and they have become accomplices in the unbelievably misguided drive to dismantle the one institution in the Venezuelan state that, for all its undeniable faults, used to work more or less properly.
March 27, 2003
Mirador morning
You turn on the tube, and there he is, giving yet another speech. But after a couple of minutes, you start to realize this isn’t just any old Chávez speech. “I’ve had it, frankly,” he says, “the state redistribution system is just not working here.” Weird. You watch on. “The way we’ve been going about distributing the oil money is all wrong, and the time is ripe for a radical rethinking. From now on, the State is just going to redistribute all of Venezuela’s oil revenue equally to each and every citizen. Just send a check to each person with their share. After all, you can’t possibly do a worse job of administering it than we have, so we’re just going to divvy up the kitty and let each of you decide how to spend your share.”
President Chávez did not, of course, say this, nor will he…but just imagine for a second he did. How much money would each Venezuelan get? Guess. Remember now that this is (or was, until recently), the world’s fourth leading oil producer…and it’s a relatively small country, you’d only be splitting the loot 23 million ways. So how much do you think each person would get?
Pick a number.
The thought exercise is Gerver Torres’s, who has been putting it to audiences all over the country for years now. The answers he gets are a real eye-opener. The average response is about $100,000 per capita, yearly. Often he gets far higher estimates. (How much did you guess?) Very rarely do Venezuelans come even close to the actual figure, and almost always they’re shocked to the point of utter, stammering disbelief when they hear it - about $1/day…the price of a plain arepa.
I heard Gerver give this little spiel this morning, at a forum on corruption and how to fight it put on by Mirador Democrático, a local anti-corruption NGO. Gerver, a one-time communist activist turned World Bank technocrat turned right-wing pundit, makes a powerful case that Venezuelans’ fundamental misunderstanding of the scale of their oil wealth makes it impossible to have a serious debate about corruption in this country. If you live in a miserable shantytown with no running water, but you’re convinced that your fair share of national income is in the hundreds of thousands of dollars yearly, then nothing anyone says has the slightest possibility of convincing you that you’re not being skinned by some shady cabal of corrupt plutocrats. All that money has to be going somewhere, right? And you’re not seeing it. Ergo…
Gerver is at pains to explain that the misconception runs right across Venezuelan society – this is not about very poor, uneducated people having nutty ideas. Running his little mental exercise with audiences from widely differing social backgrounds, he gets more or less the same responses every time. University educated Venezuelans are just as taken with the myth of fantastic oil riches as the destitute.
The point was powerfully driven home just a few minutes later when opposition congressman Conrado Pérez took to the podium. Pérez is the chairman of the National Assembly’s main corruption-busting body, the Comptrollership Committee. According to an old parliamentary tradition here, the biggest opposition party in congress always gets to pick the chair of this committee - in this case, it's Acción Democrática. The Comptrollership chair is perhaps the most influential opposition-controlled post in the National Assembly, so you'd think they'd try to get someone good for the job, someone bright and sophisticated and articulate and willing to learn his shit and make the best out of the job.
Oh, but no. Conrado's speech seemed specifically designed to demonstrate even top-level political decision-makers here haven’t the slightest clue of what they’re talking about in terms of oil wealth, corruption, and the relationship between the two. Top heavy with almost infantile clichés, Pérez’s speech was astonishing in terms of sheer ignorance displayed.
His inability to understand basic concepts about corruption seemed almost staged to prove Gerver’s point. Literally minutes after Gerver had finished delivering his devastating critique, we heard the top congressional anti-corruption official argue that if corruption was stamped out completely, the funds freed up would be enough to pay off the entire National debt (about $45 billion, all in), build 100,000 low-income homes, 5,000 schools, and 300 outpatient clinics, not to mention thousands of kilometers of rural roads, and a monthly $18 “school attendance payment” to encourage low-income families to send their kids to school.
I admit I haven't the slightest idea as to what kind of delusional math got him to those figures, but they are nothing short of laughable. The tirade made it plain that this man simply didn't understand a single word of what Gerver had just said! It was amazing to behold - it's not that the guy's understanding of corruption is spotty, it's that Conrado Pérez knows nothing, understands nothing, and can be expected to contribute nothing to the fight against corruption. Still, when you go to the National Assembly and ask them to investigate a corruption allegation, it’s his desk your request eventually ends up at.
[Later, he managed to keep a straight face as he told the auditorium that while AD had had some problems with corruption in the past (the understatement of the decade), that these days 99.99% of adecos are squeaky clean - a claim so transparently false it actually elicited some audible snickering from the audience. The claim only reinforced my belief that adecos are genetically incapable of a straightforward mea culpa...how can you expect them to do better in future if even today they refuse to own up to even the most blatant of their excesses?]
Good grief…hearing this babbling moron talk this morning depressed me to no end. It struck me that the morning conference captured perfectly Venezuela’s basic problem with development. It’s not that we don’t have bright, articulate, talented, intellectually honest people working on the issues of the day. We have plenty! It’s not just Gerver – who is a national treasure – it’s every single other speaker at that forum. People like Rogelio Pérez Perdomo of Iesa and Albis Muñoz of Fedecámaras and everyone else who spoke. Each set out a sophisticated, realistic, thoughtful contribution to the debate on corruption, each had clear and sensible ideas as to how it works and how it ought to be fought. But all have one other thing in common: they have no political power whatsoever, nor any real prospect at getting some.
Meanwhile, the one guy in an institutional position to do something about corruption is a bona fide imbecile.
It’s shocking, really, and deeply sad. The country has problems. The country has people with clear, serious, pragmatic ideas about how to solve those problems. But the country can’t seem to put the two together at all. For some baffling reason, only the clueless get power, while the clued-in are systematically ghettoized into academia or the private sector.
So forget about the angry tirades in the newspapers. Disregard the neverending, terminally boring ideological cat-fights between chavistas and antichavistas. The country's real problem is a shocking, almost limitless tolerance for mediocrity in the public sector. Somehow the gate-keepers to the key positions of political power and influence have no problem at all putting the likes of Conrado Pérez in leading roles. Doubtlessly, he’s earned his stripes by showing unending, canine obedience to AD party leaders, and they’ve rewarded him with a plum appointment. It makes no difference at all to them that he generates the intellectual wattage of a cucumber – he’s their cucumber.
Meanwhile, the Gerver Torreses of the world are reduced to going door-to-door, university-to-university, NGO-to-NGO desperately seeking someone, anyone who will value and reward their commitment to studying key problems honestly, meticulously, and seriously.
What’s sad is that it’s always been like this. It was like this before Chávez got elected, it’s like this now and, depressingly, it very much looks like it’ll be like this after he’s gone. Ultimately, the government/opposition fault-line conceals a far more relevant divide in Venezuelan politics: the huge chasm between the Mediocrity Party and the Excellence Party. The all-consuming fight between government and opposition boils down to a factional struggle between the right and the left wings of the Mediocrity Party. The real tragedy, though, is that Venezuelan society seems to have developed fail-proof mechanisms to make sure the Excellence Party never reaches power.
You turn on the tube, and there he is, giving yet another speech. But after a couple of minutes, you start to realize this isn’t just any old Chávez speech. “I’ve had it, frankly,” he says, “the state redistribution system is just not working here.” Weird. You watch on. “The way we’ve been going about distributing the oil money is all wrong, and the time is ripe for a radical rethinking. From now on, the State is just going to redistribute all of Venezuela’s oil revenue equally to each and every citizen. Just send a check to each person with their share. After all, you can’t possibly do a worse job of administering it than we have, so we’re just going to divvy up the kitty and let each of you decide how to spend your share.”
President Chávez did not, of course, say this, nor will he…but just imagine for a second he did. How much money would each Venezuelan get? Guess. Remember now that this is (or was, until recently), the world’s fourth leading oil producer…and it’s a relatively small country, you’d only be splitting the loot 23 million ways. So how much do you think each person would get?
Pick a number.
The thought exercise is Gerver Torres’s, who has been putting it to audiences all over the country for years now. The answers he gets are a real eye-opener. The average response is about $100,000 per capita, yearly. Often he gets far higher estimates. (How much did you guess?) Very rarely do Venezuelans come even close to the actual figure, and almost always they’re shocked to the point of utter, stammering disbelief when they hear it - about $1/day…the price of a plain arepa.
I heard Gerver give this little spiel this morning, at a forum on corruption and how to fight it put on by Mirador Democrático, a local anti-corruption NGO. Gerver, a one-time communist activist turned World Bank technocrat turned right-wing pundit, makes a powerful case that Venezuelans’ fundamental misunderstanding of the scale of their oil wealth makes it impossible to have a serious debate about corruption in this country. If you live in a miserable shantytown with no running water, but you’re convinced that your fair share of national income is in the hundreds of thousands of dollars yearly, then nothing anyone says has the slightest possibility of convincing you that you’re not being skinned by some shady cabal of corrupt plutocrats. All that money has to be going somewhere, right? And you’re not seeing it. Ergo…
Gerver is at pains to explain that the misconception runs right across Venezuelan society – this is not about very poor, uneducated people having nutty ideas. Running his little mental exercise with audiences from widely differing social backgrounds, he gets more or less the same responses every time. University educated Venezuelans are just as taken with the myth of fantastic oil riches as the destitute.
The point was powerfully driven home just a few minutes later when opposition congressman Conrado Pérez took to the podium. Pérez is the chairman of the National Assembly’s main corruption-busting body, the Comptrollership Committee. According to an old parliamentary tradition here, the biggest opposition party in congress always gets to pick the chair of this committee - in this case, it's Acción Democrática. The Comptrollership chair is perhaps the most influential opposition-controlled post in the National Assembly, so you'd think they'd try to get someone good for the job, someone bright and sophisticated and articulate and willing to learn his shit and make the best out of the job.
Oh, but no. Conrado's speech seemed specifically designed to demonstrate even top-level political decision-makers here haven’t the slightest clue of what they’re talking about in terms of oil wealth, corruption, and the relationship between the two. Top heavy with almost infantile clichés, Pérez’s speech was astonishing in terms of sheer ignorance displayed.
His inability to understand basic concepts about corruption seemed almost staged to prove Gerver’s point. Literally minutes after Gerver had finished delivering his devastating critique, we heard the top congressional anti-corruption official argue that if corruption was stamped out completely, the funds freed up would be enough to pay off the entire National debt (about $45 billion, all in), build 100,000 low-income homes, 5,000 schools, and 300 outpatient clinics, not to mention thousands of kilometers of rural roads, and a monthly $18 “school attendance payment” to encourage low-income families to send their kids to school.
I admit I haven't the slightest idea as to what kind of delusional math got him to those figures, but they are nothing short of laughable. The tirade made it plain that this man simply didn't understand a single word of what Gerver had just said! It was amazing to behold - it's not that the guy's understanding of corruption is spotty, it's that Conrado Pérez knows nothing, understands nothing, and can be expected to contribute nothing to the fight against corruption. Still, when you go to the National Assembly and ask them to investigate a corruption allegation, it’s his desk your request eventually ends up at.
[Later, he managed to keep a straight face as he told the auditorium that while AD had had some problems with corruption in the past (the understatement of the decade), that these days 99.99% of adecos are squeaky clean - a claim so transparently false it actually elicited some audible snickering from the audience. The claim only reinforced my belief that adecos are genetically incapable of a straightforward mea culpa...how can you expect them to do better in future if even today they refuse to own up to even the most blatant of their excesses?]
Good grief…hearing this babbling moron talk this morning depressed me to no end. It struck me that the morning conference captured perfectly Venezuela’s basic problem with development. It’s not that we don’t have bright, articulate, talented, intellectually honest people working on the issues of the day. We have plenty! It’s not just Gerver – who is a national treasure – it’s every single other speaker at that forum. People like Rogelio Pérez Perdomo of Iesa and Albis Muñoz of Fedecámaras and everyone else who spoke. Each set out a sophisticated, realistic, thoughtful contribution to the debate on corruption, each had clear and sensible ideas as to how it works and how it ought to be fought. But all have one other thing in common: they have no political power whatsoever, nor any real prospect at getting some.
Meanwhile, the one guy in an institutional position to do something about corruption is a bona fide imbecile.
It’s shocking, really, and deeply sad. The country has problems. The country has people with clear, serious, pragmatic ideas about how to solve those problems. But the country can’t seem to put the two together at all. For some baffling reason, only the clueless get power, while the clued-in are systematically ghettoized into academia or the private sector.
So forget about the angry tirades in the newspapers. Disregard the neverending, terminally boring ideological cat-fights between chavistas and antichavistas. The country's real problem is a shocking, almost limitless tolerance for mediocrity in the public sector. Somehow the gate-keepers to the key positions of political power and influence have no problem at all putting the likes of Conrado Pérez in leading roles. Doubtlessly, he’s earned his stripes by showing unending, canine obedience to AD party leaders, and they’ve rewarded him with a plum appointment. It makes no difference at all to them that he generates the intellectual wattage of a cucumber – he’s their cucumber.
Meanwhile, the Gerver Torreses of the world are reduced to going door-to-door, university-to-university, NGO-to-NGO desperately seeking someone, anyone who will value and reward their commitment to studying key problems honestly, meticulously, and seriously.
What’s sad is that it’s always been like this. It was like this before Chávez got elected, it’s like this now and, depressingly, it very much looks like it’ll be like this after he’s gone. Ultimately, the government/opposition fault-line conceals a far more relevant divide in Venezuelan politics: the huge chasm between the Mediocrity Party and the Excellence Party. The all-consuming fight between government and opposition boils down to a factional struggle between the right and the left wings of the Mediocrity Party. The real tragedy, though, is that Venezuelan society seems to have developed fail-proof mechanisms to make sure the Excellence Party never reaches power.
March 24, 2003
Life without Janet
Like everyone who knew her, I was shocked and saddened to hear of Janet Kelly’s passing this morning. Janet was that rarest of public figures in Venezuela – truly democratically-minded, fiercely intellectually honest, allergic to extremism, willing to take uncomfortable positions on principle, and gleefully irreverent. Both sides in the political conflict mistrusted her, because she refused to mortgage her brain - or her principles - to either of them. In this, she was truly extraordinary, and in much more than this.
American-born, Janet had lived here since finishing college in the 70s, and became that most endearing of characters: the thoroughly venezuelanized gringa. Though she could never shed her stereotypical American accent, you only had to spend 10 minutes with her to see that Venezuelanity had seeped into her blood. Janet had options, but she chose to make Venezuela her country, and how can you not love that?
At the same time, Janet was such a wonderfully warm, kind person. Weird as hell, too, sure, but truly other-oriented. Looking back now it’s hard not to think that what we’d seen as quirkiness could have been the outward signs of the disease that ultimately claimed her life, depression. It’s too sad to think about, really, that someone like Janet could have taken her own life. Just terrible.
It’s not just a blow to the country, and to English-language publishing in this town, it’s also a terrible loss for this blog. Janet was my favorite reader – always eager to respond with humor, insight, and real appreciation, critical appreciation, which is the best kind. Re-reading her emails now is wrenching – all of that good will that I only reciprocated with a quick “thanks for writing in,” instead of taking the time to really express how much it meant to me that someone of her stature was taking the time to read, examine and comment on my crappy little web-site.
It’s such a sad day. This country needs more, many more Janet Kellys…instead we’ve lost the only one we had.
March 20, 2003
About the Author
After four years as a freelance journalist in Caracas, I've run off to become a doctoral candidate in innovation economics at the United Nations University's Institute for New Technologies in Holland.
I'm working on a dissertation on the impact of WTO rules on developing countries' ability to implement effective technology policies. Yes, I think that's interesting.
Blog email goes to
caracaschronicles at fastmail.fm
Academic email goes to
toro@intech.unu.edu
Personal email goes to
franciscotoro at fastmail.fm
March 19, 2003
The Power of Blogging
There's nothing to blog about out of Caracas, but I am becoming frankly obsessed with the stunning writing going on at Where is Raed? so I'm just going to republish his writing today. Last night, I had nightmares that this kid got hurt in a bombing raid. I woke up in serious distress, I felt like I'd lost a friend. Intense.
From Salam's blog:
A couple of weeks ago journalists were exasperated by that fact that Iraqis just went on with their lives and did not panic, well today there is a very different picture. It is actually a bit scary and very disturbing. To start wit the Dinar hit another low 3100 dinars per dollar. There was no exchange place open. If you went and asked theu just look at you as if you were crazy. Wherever you go you see closed shops and it is not just doors-locked closed but sheet-metal-welded-on-the-front closed, windows-removed-and-built-with-bricks closed, doors were being welded shut. There were trucks loaded with all sort of stuff being taken from the shops to wherever their owner had a secure place. Houses which are still being built are having huge walls erected in front of them with no doors, to make sure they donÕt get used as barracks I guess. Driving thru Mansur, Harthiya or Arrasat is pretty depressing. Still me, Raed and G. went out to have our last lunch together. The radio plays war songs from the 80Õs non-stop. We know them all by heart. Driving thru Baghdad now singing along to songs saying things like Òwe will be with you till the day we die SaddamÓ was suddenly a bit too heavy, no one gave that line too much thought but somehow these days it is sounds sinister. Since last night one of the most played old ÒpatrioticÓ songs is the song of the youth Òal-fituuwaÓ, it is the code that all fidayeen should join their assigned units. And it is still being played.
A couple of hours earlier we were at a shop and a woman said as she was leaving, and this is a very common sentence, ÒweÕll see you tomorrow if good keeps us aliveÓ Ð itha allah khalana taibeen Ð and the whole place just freezes. She laughed nervously and said she didnÕt mean that, and we all laughed but these things start having a meaning beyond being figures of speech.
There still is no military presence in the streets but we expect that to happen after the ultimatum. Here and there you see cars with machine guns going around the streets but not too many. But enough to make you nervous.
The prices of things are going higher and higher, not only because of the drop of the Dinar but because there is no more supply. Businesses are shutting down and packing up, only the small stores are open.
Pharmacies are very helpful in getting you the supplies you need but they also have only a limited amount of medication and first aid stuff, so if you have not bought what you need you might have to pay inflated prices.
And if you want to run off to Syria, the trip will cost you $600, it used to be $50. itÕs cheaper to stay now. anyway we went past the travel permit issuing offices and they were shut with lock and chain.
Some rumors:
It is being said that Barazan (SaddamÕs brother) has suggested to him tat he should do the decent thing and surrender, he got himself under house arrest in one of the presidential palaces which is probably going to be one of the first to be hit.
Families of big wigs and ÒhisÓ own family are being armed to the teeth. More from fear of Iraqis seeking retribution than Americans.
And by the smell of it we are going to have a sand storm today, which means that the people on the borders are already covered in sand. Crazy weather. Yesterday it rains and today sand.
:: salam 3:12 AM [+] ::
There's nothing to blog about out of Caracas, but I am becoming frankly obsessed with the stunning writing going on at Where is Raed? so I'm just going to republish his writing today. Last night, I had nightmares that this kid got hurt in a bombing raid. I woke up in serious distress, I felt like I'd lost a friend. Intense.
From Salam's blog:
A couple of weeks ago journalists were exasperated by that fact that Iraqis just went on with their lives and did not panic, well today there is a very different picture. It is actually a bit scary and very disturbing. To start wit the Dinar hit another low 3100 dinars per dollar. There was no exchange place open. If you went and asked theu just look at you as if you were crazy. Wherever you go you see closed shops and it is not just doors-locked closed but sheet-metal-welded-on-the-front closed, windows-removed-and-built-with-bricks closed, doors were being welded shut. There were trucks loaded with all sort of stuff being taken from the shops to wherever their owner had a secure place. Houses which are still being built are having huge walls erected in front of them with no doors, to make sure they donÕt get used as barracks I guess. Driving thru Mansur, Harthiya or Arrasat is pretty depressing. Still me, Raed and G. went out to have our last lunch together. The radio plays war songs from the 80Õs non-stop. We know them all by heart. Driving thru Baghdad now singing along to songs saying things like Òwe will be with you till the day we die SaddamÓ was suddenly a bit too heavy, no one gave that line too much thought but somehow these days it is sounds sinister. Since last night one of the most played old ÒpatrioticÓ songs is the song of the youth Òal-fituuwaÓ, it is the code that all fidayeen should join their assigned units. And it is still being played.
A couple of hours earlier we were at a shop and a woman said as she was leaving, and this is a very common sentence, ÒweÕll see you tomorrow if good keeps us aliveÓ Ð itha allah khalana taibeen Ð and the whole place just freezes. She laughed nervously and said she didnÕt mean that, and we all laughed but these things start having a meaning beyond being figures of speech.
There still is no military presence in the streets but we expect that to happen after the ultimatum. Here and there you see cars with machine guns going around the streets but not too many. But enough to make you nervous.
The prices of things are going higher and higher, not only because of the drop of the Dinar but because there is no more supply. Businesses are shutting down and packing up, only the small stores are open.
Pharmacies are very helpful in getting you the supplies you need but they also have only a limited amount of medication and first aid stuff, so if you have not bought what you need you might have to pay inflated prices.
And if you want to run off to Syria, the trip will cost you $600, it used to be $50. itÕs cheaper to stay now. anyway we went past the travel permit issuing offices and they were shut with lock and chain.
Some rumors:
It is being said that Barazan (SaddamÕs brother) has suggested to him tat he should do the decent thing and surrender, he got himself under house arrest in one of the presidential palaces which is probably going to be one of the first to be hit.
Families of big wigs and ÒhisÓ own family are being armed to the teeth. More from fear of Iraqis seeking retribution than Americans.
And by the smell of it we are going to have a sand storm today, which means that the people on the borders are already covered in sand. Crazy weather. Yesterday it rains and today sand.
:: salam 3:12 AM [+] ::
March 18, 2003
When blogging isn’t worth it.
I’ve been somewhat delinquent about posting lately. In part, the news out of Venezuela has gotten really boring. Also in part, I finally got satellite TV in my house, and CNN and the BBC are much more compelling right now. Mostly, though, there’s just this forlorn feeling hanging in the air…this despondency, this anger both at the government and the opposition leadership at the same time. The whole country is up a creek without a paddle at the moment, and it’s just too sad to think about, much less write.
Plus, with the world-historical transcendence of events in Iraq, it’s just hard to feel that the latest he-said-she-said on Globovisión is even close to being worth writing about. The entire architecture of post-war international security is going up in smoke and down here we’re consumed in these ridiculous fights about when you’re allowed to start gathering signatures for a referendum. It’s just pathetic.
The upshot is, I think they should just give journalists a few months off here, let us go hang at the beach until the halfway point in Chávez’s mandate rolls around and serious politics resumes. When the time comes, on August 19th, then we’ll know what’s what. Then we’ll know if he’s serious about letting us vote, or if the delaying games will go on indefinitely. We’ll either toss him out through the ballot box or know, finally, for certain, that we’re dealing with an out-and-out dictator, and adapt our tactics accordingly.
For now, all we can do is watch, wait, and be sad about the dismantling of our institutions, our economy, and our freedoms. We might have to fight a minor tactical battle now and then, we might even win a couple, but the fundamentals won’t change until August. So, unless something truly worth writing about happens between now and then, I suppose the blogging will be slow between now and then.
For now, there’s not much to do but hope the civilians of Iraq and the safety of the world system escape what’s coming more or less intact.
I’ve been somewhat delinquent about posting lately. In part, the news out of Venezuela has gotten really boring. Also in part, I finally got satellite TV in my house, and CNN and the BBC are much more compelling right now. Mostly, though, there’s just this forlorn feeling hanging in the air…this despondency, this anger both at the government and the opposition leadership at the same time. The whole country is up a creek without a paddle at the moment, and it’s just too sad to think about, much less write.
Plus, with the world-historical transcendence of events in Iraq, it’s just hard to feel that the latest he-said-she-said on Globovisión is even close to being worth writing about. The entire architecture of post-war international security is going up in smoke and down here we’re consumed in these ridiculous fights about when you’re allowed to start gathering signatures for a referendum. It’s just pathetic.
The upshot is, I think they should just give journalists a few months off here, let us go hang at the beach until the halfway point in Chávez’s mandate rolls around and serious politics resumes. When the time comes, on August 19th, then we’ll know what’s what. Then we’ll know if he’s serious about letting us vote, or if the delaying games will go on indefinitely. We’ll either toss him out through the ballot box or know, finally, for certain, that we’re dealing with an out-and-out dictator, and adapt our tactics accordingly.
For now, all we can do is watch, wait, and be sad about the dismantling of our institutions, our economy, and our freedoms. We might have to fight a minor tactical battle now and then, we might even win a couple, but the fundamentals won’t change until August. So, unless something truly worth writing about happens between now and then, I suppose the blogging will be slow between now and then.
For now, there’s not much to do but hope the civilians of Iraq and the safety of the world system escape what’s coming more or less intact.
March 15, 2003
About the Author
I am a Ph.D. student in Innovation Economics at the United Nations University's Institute for New Technologoes in Maastricht, the Netherlands.
I used to be a freelance journalist/magazine editor in Caracas.
Blog email goes to:
caracaschronicles at fastmail.fm
School email goes to:
toro at intech.unu.edu
Personal email goes to:
franciscotoro at fastmail.fm
Please direct all anguished rants, appalled tirades, horrified lectures and mentadas de madre to the email address on the right.
It's perfect
Carlos Ortega, the country's top labor leader and the brain-behind-the-national-strike, has chosen exile over jail (can't blame him.) Carlos Fernández, his business federation buddy, sits under house arrest. Two days ago, Ibéyise Pacheco, the firebreathing antichavista muckraking journalist, was nearly arrested by the State Security Police (Disip) and went into semi-hiding. The government crack-down appears comprehensive and likely to get worse...it's great!
Yeah, yeah, I know, the onslaught is an appalling, deep and flagrant violation of all sorts of basic democratic principles, an afront to human dignity and civil rights, yaddi yadda, all that. But from a brutally detached, real politik type outlook, it's a godsend for moderates in the opposition camp.
First off, because it's having a deeply negative impact on perceptions of the government abroad. I mean, you know and I know that Carlos Ortega is nearly as narcissistic and authoritarian as Hugo Chávez, but the foreign press is still bound by certain standards of professional ethics to treat him as a proper opposition leader, persecuted for his convictions. You and I know that Carlos Ortega led the entire opposition movement up the garden path, diving headlong into a mad general strike that was never part of a proper plan for getting rid of the government. You and I know that Carlos Ortega is responsible for driving hundreds of businesses into bankruptcy and tens of thousands of workers into unemployment, that he never had a plan B, never thought beyond fomenting chaos, disorder, and economic collapse and hoping all of that would lead someone, somewhere, somehow to shove the government out of power. But as far as international public opinion is concerned, he'll now be retroactively portrayed as a brave, embattled pro-democracy leader persecuted for his beliefs. So it's perfect: this dangerous lunatic is taken out of action, shoved well away from the center of opposition decision-making (where he never should've been in the first place) and, on top of that, we get international sympathy and support too.
Something similar happens with Ibéyise Pacheco - the dean of antichavista extremism in the Caracas newspaper world. Journalists here know all about how the sausage is made over at Asi es la noticia - the embarrasingly bad, El Nacional-owned tabloid rag she "edits." For years Pacheco has been shoving her appalling brand of pseudojournalism down the throats of unsuspecting readers. Her insufferably prima donnaish persona, her galling willingness to stretch, distort or invent to damage her political enemies, and the shrill, near-hysterical tone of her antichavismo have probably done as much damage to the practice of decent journalism in this country as any number of lunatic rants against the press by Chávez. Now, with this travesty of journalism on the run, readers are spared, Pacheco is disempowered, and decent journalism wins that much more space. Meanwhile, foreign governments will be horrified to hear about the prosecution of a "dissident journalist" (such a noble-sounding moniker!) and the government will see one more bit of plaster fall from its democratic façade. It's a godsend!
Though Carlos Fernández, the Fedecamaras house-arrestee, is not as objectionable as these two other characters, you can certainly argue that moving against him the government has freed the business federation of an especially ineffective and unimaginative leader, only to leave Fedecamaras in the hands of his one-time right-hand woman - Albis Muñoz, who's far brighter, more articulate, and more promising as a leader. She's been so dashing in her post-arrest press appearances, some people are starting to think of her as "presidentiable." She probably never would've reached that position were it not for her boss's arrest - yet another unforeseen benefit of this latest wave of repression.
Am I the only one who sees a pattern here? Though it's obvious that only rank authoritarianism motivates the government to move against these opposition radicals, the upshot is that the crack-down is clearing all kinds of dead wood from the opposition deck. The best you could say about the people being persecuted now is that they had clearly failed; the worst, that in their mindless radicalism and immediatism they replicate much of what they decry in the government. Though these radicals were clearly setting back the struggle to unseat the lunatic president, moderate opposition activists had no way to get rid of them. Now, in a delicious own-goal, the government does it for them, in the process not only improving the quality of the opposition's leadership but also giving itself a big, bad, black eye in terms of international standing.
It's perfect.
March 9, 2003
Oh, there are all these things I've been wanting to write about...I can't seem to organize them all into a single coherent essay, so instead you get...
Five short essays about Venezuela
I. Too flaky to be a communist
It's become such a cliche, one foreign journalist actually admitted to me he just cut-and-pastes it into his stories. "The opposition accuses Chávez of governing like a dictator and taking Venezuela towards communism." OK, the dictator part is pretty straightforward. But Chávez a communist?!
To my mind, it amounts to an unconscionable slur against communists everywhere. After all, communists had an ideology, a coherent view of the world, and a thought-out plan about how to make it better. That plan turned out to be wrong, even monstrous, but for decades it had at least some intellectual currency. It offered a vision of a better future for the people who needed it most, and it was grounded on a philosophy that, like it or hate it, was sophisticated, nuanced, and had a long and illustrious intellectual tradition behind it.
The Chávez experiment couldn't be further removed from that. As my uncle Pepe Toro argues, in some senses chavismo is much closer to fascism, because it's really a doctrine about how to obtain and retain power, not about what to do with it. Chavismo might be influenced by marxism, yes - it certainly borrows marxist ways of describing the world - but the overall package is far less coherent than marxism.
Take, for instance, Chávez's relationship to the private sector. In recent months, it's become clear that he's determined to crush it, to drive private entrepreneurs out of business en masse rather than allow them to function as a hotbed of opposition to his regime. This is obviously not what you'd call neoliberalism. But does that make the government communist?
Think of it this way, when Salvador Allende was elected in Chile in 1970, he knew exactly what the road ahead held. As a Marxist, he was committed to ending the control of the capitalist class over the economy, yes, but not as an end in itself. The destruction of Chile's private sector was just what needed to be done in order to collectivize the Chilean economy, to put the means of production in the hands of the proletariat, to use the lingo. A long tradition of Marxist thought pointed to this as a necessary step in the way to liberating the working class and improving their material position. You might find Allende's road-map to a better society aberrant - as I do - but you can't deny he had a plan: he wasn't just wrecking private businesses for the sake of the wrecking itself.
President Chávez has also explicitly set out to destroy the private sector, but unlike Allende he's never proposed any sort of alternative to replace it with. He's been perfectly blunt in saying that the point of the recently announced exchange and price controls is to destroy the traditional private sector. But unlike a marxist, he's not interested in collectivization or mass-nationalization, he has no plan for remaking the nation's economy once the capitalist classes have been done in.
The reason, I think, is that his assault on the private sector is not in fact an economic strategy. Like everything else in chavismo, the onslaught is a political act, designed to undermine a source of political dissent, to dump that particular pebble from the president's shoe, without any reference to anything like a plausible plan for what comes next.
How will the hundreds of thousands of families that rely on income from their private sector jobs make a living after those companies go under? How will the state meet even its most elementary spending necessities after it's through disemboweling the companies at the center of its tax base? What will Venezuelans eat once the companies that produce most of their food have been driven into the ground, with nothing to replace them? Chávez has no answers to these questions. Nothing in his behavior indicates that it's even remotely concerned about these issues. He understands the private sector's opposition as a purely political problem, an unacceptable challenge to his power, and he's just not prepared to tolerate that.
II. Out-argentinaing Argentina.
The consequences for the country are terrible, devastating, hard to overstate. Credible institutions like Deutsche Bank and GM are forecasting a 20% drop in GDP this year - that's almost twice as much as Argentina's contraction last year, and you know what happened to people there. In a country like Venezuela, an economic contraction on that scale simply means people go hungry. Maybe not starvation hungry, but definitely mass-scale undernourishment hungry.
It's already happening. Every month Cenda, a Think Tank associated with the Venezuelan Labor Movement, calculates the cost of a basket of basic foods. The index is made up of the basic staples in poor Venezuelans' diets. Right now, the cost for a family of five stands at $210 - well over the $125 minimum wage. In short, it takes two adults in full-time minimum-wage work to meet even the bare-bones basics of nutrition.
The problem is that households with two adults in full-time, minimum wage work are becoming a rarity here. The unemployment is running at 17% - and that's according to the usually overoptimistic official stats, private firms think 20% or more is probably closer to the mark. Worse still, just over half of working Venezuelans earn a living in the informal economy, sometimes referred to as the "gray market." Most are "self-employed" as streethawkers, odd-job repairmen, or day-laborers - they make a living entirely outside the legally sanctioned employment system. They're not covered by any of the nation's employment protection laws - they have no unemployment insurance, no legally mandated vacation, no provision in case of disability, and of course, no one to guarantee them they'll earn the minimum wage. According to a recent Catholic University study, 90% of informal workers make less than the minimum wage.
To put it bluntly, millions of Venezuelan families can't afford to eat properly right now. To a huge and rapidly growing portion of Venezuelans, "food" means white rice, arepas (little corn flour patties), salt and margarine - once or twice a day. They can't afford anything else.
Cenda, the think-tank, also calculates the monthly cost of a Basic Goods and Services basket, which includes not just food, but also other basic consumption items like clothes, basic school supplies for kids, rent, medicines, electricity and water bills, the bare-bones basics for a modest but reasonable existence. By Cenda's reckoning, a family of five needs $665 a month to cover this basic basket. And what percentage of Venezuelan households earn $665 or more each month? A mere 6.4%. You read that right. After four years of revolutionary government for the poor, 93.6% of Venezuelans can't afford even the basics - a crushing indictment, if you ask me.
It's a dramatic situation. It's not even that Venezuelans' purchasing power is stagnant, it's that it's in free-fall. Venezuelans haven't been this poor since the late 50s. This is not a Guatemalan situation where people are poor because they've always been poor and have never known anything other than grinding poverty.
Think of it this way - from the 60s to the early-80s, per-capita purchasing power in Venezuela was higher than in Spain. This used to be an up-and-coming country with a large and expanding middle class...a place poor spaniards might reasonably want to emigrate to.
(Many did - poor suckers - and now their children are lining up outside the Spanish consulate to get mother-country passports for the return-migration journey.)
Even more traumatic than the experience of mass-poverty is the experience of mass impoverishment. A very large chunk of the 94% of Venezuelans who are now poor know what it's like to lead a middle-class lifestyle. They used to have stable jobs, they used to be able to afford vacations and nights out at restaurants and theaters and things like that. They went to university. They might be children or grandchildren of peasants, but they were implicitly promised the comforts of a middle-class lifestyle. And that promise has been cruelly ripped away from them.
Now, obviously, you can't lay the entire blame for this hideous situation on Chávez. The Venezuelan economy had been in decay for two decades before he took over. But the rate of impoverishment has quickened significantly since he came into office. And just about everything Chávez has done in four years has tended to accelerate the decline - including, crucially, picking an absurd fight with the business community. When the leader of your country spends most of his time dreaming up ways to screw the people who create the wealth and generate the jobs, is it any wonder most people's get much, much poorer? The truth is that chavismo has never had anything you could reasonably call a serious economic strategy.
In its place, what they've offered is turbocharged, unadulterated voluntarism.
III. Will Power
For Chávez, as for any number of megalomanic dictators before him, the sheer will to do something is enough to achieve it. "If the coupsters don't want to make corn-flour (for arepas)," Chávez said recently, "then we'll join together in cooperatives and make the flour ourselves!" If people want to band together and replace Venezuela's private agroindustrial apparatus with a coop, what's to stop them? Technical problems, supply-chain logistics, inventory management, financing needs, sanitary standards, industrial expertise all these things are trifles when matched to the indomitable will of the revolutionary masses.
If you've read about Mao's great leap forward, or Fidel's plan for a 10 million ton sugar harvest in 1970, you can recognize this as a an ideological re-run. Voluntarism run amok is the sure-fire marker of megalomanic authoritarian leadership. I can think of no instance when such a view of the world hasn't led to a huge human catastrophe.
Voluntarists, especially leftish voluntarists, are deeply suspicious of anyone who claims specialized technical know-how or any sort of managerial expertise. Claims of special technical expertise are seen as an arrogant assertion of unjustifiable social privilege, a kind of upper-class ruse to keep the oppressed quiescent. The result is not just disdain towards specialized know-how, but an actual aversion to it, a kind of horror of expertise. '
Venezuelans reading this can probably think of 2 dozen examples of what I'm describing here. But for my money, the most tragic manifestation of this tendency in Venezuela has been in PDVSA - the state owned oil company that provides the government with half its income and the country with 80% of its export earnings. When four fifths of the company's employees joined the General Strike back in December, the government made no attempt at all to negotiate with them, much less to try to woo them back. Instead, it slammed them as saboteurs and coupsters, and fired 16,000 of them - nearly half the company's payroll. Among the fired were literally thousands of highly specialized workers, technicians, engineers, geologists, seismic experts, rig specialists, managers, executives - hundreds of thousands of staff-years worth of experience and know-how on how to run one of the world's largest energy companies.
Chávez simply never saw why he might need any of them. After all, how hard can it be to run a transnational oil company? If the will is there, anyone could do it. Isn't that what the revolution is about?
So out went the people who knew something about how to run the company, in went the ideologically driven chavista "managers." The results have been truly disastrous - three and a half-months after the oil strike started, Venezuela is still producing under half the pre-strike levels. Government oil revenue is projected to drop by half on last year even by the government's own estimates. The costs of this contraction in terms of the horrendous retrenchment it will cause in government spending and the brutal knock-on social effects that will have, largely explains why we're on the verge of an Argentine scenario. Yet Hugo Chávez won't even consider negotiating the strikers' return.
Instead, he's working on jailing their leaders.
IV. Mr. Bean Energy Corporation
Numbers alone don't come close conveying the scale of the disaster in the oil industry, though. They also don't show the way chavista voluntarism has led directly to that disaster. To get a feel for the way PDVSA is being destroyed you really need to hear some of the incredibly alarming anecdotes coming out of the industry these days.
The Eastern Shore of Lake Maracaibo is one of the main oil-producing regions. The region is, of course, full of companies small, medium and large that work with PDVSA. The state giant hires them to perform various highly specialized tasks, quite often very specific, sophisticated work that PDVSA doesn't want to bother with. For instance, a friend of mine who lives out there tells me about one company she's in touch with that services drill-bits. That's all they do. It might seem somewhat pedestrian, until you realize that oil exploration drill bits are actually quite high-tech components - made to operate at fantastic depths, under very high pressure and at incredible temperatures - so keeping them in operating condition is a fairly sophisticated task.
Last month, a group of new (i.e. chavista) PDVSA managers approached this drill bit contractor's management to ask whether they would be interested in an all-inclusive ("turnkey" in the lingo) contract to operate an entire oil field, from logistics and engineering to extraction, well management, and even payroll. The contractor's managers weren't sure if they were joking at first. It was the equivalent of asking a kid with a sidewalk lemonade stand to be chairman of the Coca Cola Company - after all, they're both in the soft drink business.
Apparently, the people who now run PDVSA saw the contractor's name in internal documents, and figured, "hey, these guys are oil sector contractors, maybe they can run this oil field for us," so they just asked before making any effort to ascertain whether they were in anyway qualified to do so. The contractor managers were shocked and, well, just freaked out: they had been working with PDVSA for over 25 years, and suddenly they find themselves dealing with managers who plainly haven't the slightest clue of what it is their company does.
There's more where that came from. Much more. One of the most shocking stories comes out of Carito oil field in southern Monagas State - one of the youngest, most productive oil producing areas in the country. As a relatively young field, it's quite easy to get oil out of Carito. That fact put it high on the new PDVSA's target list for restarting production: it was clearly one of those elusive "easy fields." In fact, the field is so easy because it has plenty of natural well pressure. That means you don't need to do anything to get oil out of it - it just comes to the surface on its own, like the oil in cartoons. But anyone who knows anything about oil knows that you need to start reinjecting natural gas and water back into the field to keep pressure adequate when a field is still young - that's standard operating procedure because it just saves all kinds of trouble down the road.
The problem is that Chávez fired everyone who knows anything about oil production in PDVSA. The new management apparently either didn't know how to operate the reinjection process, or couldn't be bothered with it. So they started pumping oil out of Carito on its own natural pressure - without any reinjection.
The problem is that the chemical makeup of the crude in Carito is such that if pressure drops below a certain critical level, a chemical reaction starts to take place that literally turns the oil into asphalt. Once that happens, there is literally no way to ever get it out again. International contractors who operate in the region estimate in private that up to a billion barrels of oil in the region could be permanently lost due to the mismanagement of the Carito field.
Just mull over that number for a second - at the current $32 to the barrel, that's $32 billion, about the equivalent of Venezuela's entire foreign debt. Flushed, down the drain, through the incompetence of PDVSA's new and improved chavista management.
It's an incredible outrage.
Then there's the story of an international company (which I can't name) that was approached by some new PDVSA managers in Caracas who asked that they do several million dollars worth of service work for PDVSA. The foreign company was thrilled by the deal, and told the managers "sure, lets work out a contract and get on with it." The PDVSA managers dissented. "The thing is," they said, "we're in a real emergency situation here, we really need to get this work done right away. Why don't you go ahead and start, and we'll work out the contract later." My source for this story wasn't so sure whether to laugh or cry as he told me about this. The people now running PDVSA simply had no idea of what an incredibly stupid, amateurish, unacceptable, idiotic request that was.
Trying to collect themselves, the foreign company representatives tried to explain how they would, y'know, all get fired if they even dared to propose something that unprofessional back home, how headquarters in Silicon Valley would laugh them out of the room if they brought it up as a serious possibility. I mean, it's a fairly basic thing, right, it doesn't take an MBA to figure this one out. First you sign the contract, then you do the work. You'd think they could wrap their feeble little brains around that one, wouldn't you?
You'd be wrong, the new PDVSA managers just frowned at the foreign company reps and accused them flat-out of siding with "the coup-mongers even of trying to sabotage the company through this deeply seditious refusal.
Honestly, how do you work with people who think that way?
V. Now what?
One little noted upshot of this entire situation is that, contrary to popular suspicion, foreign energy companies are staying away from Venezuela in droves now. The popular misconception is that with PDVSA dismantled, the Shells and Halliburtons and BPs of the world are salivating over the prospects of a quick buck bailing the new PDVSA out. If the government seriously wants to get production back up, it's their way or the highway, right?
Not that I can see. The oil people I talk to are really leery about wading too deep into the cesspool that is the new PDVSA - not for ideological reasons, just because they're impossible to work with. Add to the sheer incompetence and arrogance the company's deepening financial troubles and the lengthening waits contractors face in trying to get paid, and you start to understand why this is a distinctly dodgy business proposition for the foreign companies. The final whammy, though, is the widespread feeling that when the Chávez regime eventually falls, foreign energy companies that threw it a lifeline will face a very uphill battle in trying to secure new contracts - they could even see some Chávez-granted contracts re-examined, a scenario that keeps foreign managers up at night. So, as far as I can see, the reports of the imminent foreign bailout of the new PDVSA are wildly exaggerated.
The truth is both more banal and far more worrying. The government has managed to crank up oil production to the 1.5 million b/d level, by the end of the year they ought to be in the neighborhood of 2.2-2.4 million b/d. It's a far cry from the 3.3 million b/d directly before the strike, particularly considering at least 500,000 b/d of prestrike capacity has been permanently lost through field mismanagement. But what's really alarming is the possibility that production won't stabilize at 2.2-2.4 million b/d but will only peak there, gradually dropping after that as insufficient investment, well-mismanagement, logistics problems and lack of maintenance start chipping away at production in a chronic way. By some people's reckoning, by the second half of 2004, we could be right back where we are now, stuck at about 1.5 million b/d.
How the government squares its books on that level of production is a mystery to me. It's really a nightmare scenario, one that economists here have never really worked through because it just never seemed like a serious possibility. Without diving too deep into the numbers you can see that a permanent revenue hit on that scale could only be worked through with mass public-sector layoffs, a debt default, or both.
Either way, the already atrocious situation of mass impoverishment I described above looks certain to worsen. The day might still come when we'll remember fondly those halcyon days when a whole 6% of Venezuelans lived above the poverty line.
Five short essays about Venezuela
I. Too flaky to be a communist
It's become such a cliche, one foreign journalist actually admitted to me he just cut-and-pastes it into his stories. "The opposition accuses Chávez of governing like a dictator and taking Venezuela towards communism." OK, the dictator part is pretty straightforward. But Chávez a communist?!
To my mind, it amounts to an unconscionable slur against communists everywhere. After all, communists had an ideology, a coherent view of the world, and a thought-out plan about how to make it better. That plan turned out to be wrong, even monstrous, but for decades it had at least some intellectual currency. It offered a vision of a better future for the people who needed it most, and it was grounded on a philosophy that, like it or hate it, was sophisticated, nuanced, and had a long and illustrious intellectual tradition behind it.
The Chávez experiment couldn't be further removed from that. As my uncle Pepe Toro argues, in some senses chavismo is much closer to fascism, because it's really a doctrine about how to obtain and retain power, not about what to do with it. Chavismo might be influenced by marxism, yes - it certainly borrows marxist ways of describing the world - but the overall package is far less coherent than marxism.
Take, for instance, Chávez's relationship to the private sector. In recent months, it's become clear that he's determined to crush it, to drive private entrepreneurs out of business en masse rather than allow them to function as a hotbed of opposition to his regime. This is obviously not what you'd call neoliberalism. But does that make the government communist?
Think of it this way, when Salvador Allende was elected in Chile in 1970, he knew exactly what the road ahead held. As a Marxist, he was committed to ending the control of the capitalist class over the economy, yes, but not as an end in itself. The destruction of Chile's private sector was just what needed to be done in order to collectivize the Chilean economy, to put the means of production in the hands of the proletariat, to use the lingo. A long tradition of Marxist thought pointed to this as a necessary step in the way to liberating the working class and improving their material position. You might find Allende's road-map to a better society aberrant - as I do - but you can't deny he had a plan: he wasn't just wrecking private businesses for the sake of the wrecking itself.
President Chávez has also explicitly set out to destroy the private sector, but unlike Allende he's never proposed any sort of alternative to replace it with. He's been perfectly blunt in saying that the point of the recently announced exchange and price controls is to destroy the traditional private sector. But unlike a marxist, he's not interested in collectivization or mass-nationalization, he has no plan for remaking the nation's economy once the capitalist classes have been done in.
The reason, I think, is that his assault on the private sector is not in fact an economic strategy. Like everything else in chavismo, the onslaught is a political act, designed to undermine a source of political dissent, to dump that particular pebble from the president's shoe, without any reference to anything like a plausible plan for what comes next.
How will the hundreds of thousands of families that rely on income from their private sector jobs make a living after those companies go under? How will the state meet even its most elementary spending necessities after it's through disemboweling the companies at the center of its tax base? What will Venezuelans eat once the companies that produce most of their food have been driven into the ground, with nothing to replace them? Chávez has no answers to these questions. Nothing in his behavior indicates that it's even remotely concerned about these issues. He understands the private sector's opposition as a purely political problem, an unacceptable challenge to his power, and he's just not prepared to tolerate that.
II. Out-argentinaing Argentina.
The consequences for the country are terrible, devastating, hard to overstate. Credible institutions like Deutsche Bank and GM are forecasting a 20% drop in GDP this year - that's almost twice as much as Argentina's contraction last year, and you know what happened to people there. In a country like Venezuela, an economic contraction on that scale simply means people go hungry. Maybe not starvation hungry, but definitely mass-scale undernourishment hungry.
It's already happening. Every month Cenda, a Think Tank associated with the Venezuelan Labor Movement, calculates the cost of a basket of basic foods. The index is made up of the basic staples in poor Venezuelans' diets. Right now, the cost for a family of five stands at $210 - well over the $125 minimum wage. In short, it takes two adults in full-time minimum-wage work to meet even the bare-bones basics of nutrition.
The problem is that households with two adults in full-time, minimum wage work are becoming a rarity here. The unemployment is running at 17% - and that's according to the usually overoptimistic official stats, private firms think 20% or more is probably closer to the mark. Worse still, just over half of working Venezuelans earn a living in the informal economy, sometimes referred to as the "gray market." Most are "self-employed" as streethawkers, odd-job repairmen, or day-laborers - they make a living entirely outside the legally sanctioned employment system. They're not covered by any of the nation's employment protection laws - they have no unemployment insurance, no legally mandated vacation, no provision in case of disability, and of course, no one to guarantee them they'll earn the minimum wage. According to a recent Catholic University study, 90% of informal workers make less than the minimum wage.
To put it bluntly, millions of Venezuelan families can't afford to eat properly right now. To a huge and rapidly growing portion of Venezuelans, "food" means white rice, arepas (little corn flour patties), salt and margarine - once or twice a day. They can't afford anything else.
Cenda, the think-tank, also calculates the monthly cost of a Basic Goods and Services basket, which includes not just food, but also other basic consumption items like clothes, basic school supplies for kids, rent, medicines, electricity and water bills, the bare-bones basics for a modest but reasonable existence. By Cenda's reckoning, a family of five needs $665 a month to cover this basic basket. And what percentage of Venezuelan households earn $665 or more each month? A mere 6.4%. You read that right. After four years of revolutionary government for the poor, 93.6% of Venezuelans can't afford even the basics - a crushing indictment, if you ask me.
It's a dramatic situation. It's not even that Venezuelans' purchasing power is stagnant, it's that it's in free-fall. Venezuelans haven't been this poor since the late 50s. This is not a Guatemalan situation where people are poor because they've always been poor and have never known anything other than grinding poverty.
Think of it this way - from the 60s to the early-80s, per-capita purchasing power in Venezuela was higher than in Spain. This used to be an up-and-coming country with a large and expanding middle class...a place poor spaniards might reasonably want to emigrate to.
(Many did - poor suckers - and now their children are lining up outside the Spanish consulate to get mother-country passports for the return-migration journey.)
Even more traumatic than the experience of mass-poverty is the experience of mass impoverishment. A very large chunk of the 94% of Venezuelans who are now poor know what it's like to lead a middle-class lifestyle. They used to have stable jobs, they used to be able to afford vacations and nights out at restaurants and theaters and things like that. They went to university. They might be children or grandchildren of peasants, but they were implicitly promised the comforts of a middle-class lifestyle. And that promise has been cruelly ripped away from them.
Now, obviously, you can't lay the entire blame for this hideous situation on Chávez. The Venezuelan economy had been in decay for two decades before he took over. But the rate of impoverishment has quickened significantly since he came into office. And just about everything Chávez has done in four years has tended to accelerate the decline - including, crucially, picking an absurd fight with the business community. When the leader of your country spends most of his time dreaming up ways to screw the people who create the wealth and generate the jobs, is it any wonder most people's get much, much poorer? The truth is that chavismo has never had anything you could reasonably call a serious economic strategy.
In its place, what they've offered is turbocharged, unadulterated voluntarism.
III. Will Power
For Chávez, as for any number of megalomanic dictators before him, the sheer will to do something is enough to achieve it. "If the coupsters don't want to make corn-flour (for arepas)," Chávez said recently, "then we'll join together in cooperatives and make the flour ourselves!" If people want to band together and replace Venezuela's private agroindustrial apparatus with a coop, what's to stop them? Technical problems, supply-chain logistics, inventory management, financing needs, sanitary standards, industrial expertise all these things are trifles when matched to the indomitable will of the revolutionary masses.
If you've read about Mao's great leap forward, or Fidel's plan for a 10 million ton sugar harvest in 1970, you can recognize this as a an ideological re-run. Voluntarism run amok is the sure-fire marker of megalomanic authoritarian leadership. I can think of no instance when such a view of the world hasn't led to a huge human catastrophe.
Voluntarists, especially leftish voluntarists, are deeply suspicious of anyone who claims specialized technical know-how or any sort of managerial expertise. Claims of special technical expertise are seen as an arrogant assertion of unjustifiable social privilege, a kind of upper-class ruse to keep the oppressed quiescent. The result is not just disdain towards specialized know-how, but an actual aversion to it, a kind of horror of expertise. '
Venezuelans reading this can probably think of 2 dozen examples of what I'm describing here. But for my money, the most tragic manifestation of this tendency in Venezuela has been in PDVSA - the state owned oil company that provides the government with half its income and the country with 80% of its export earnings. When four fifths of the company's employees joined the General Strike back in December, the government made no attempt at all to negotiate with them, much less to try to woo them back. Instead, it slammed them as saboteurs and coupsters, and fired 16,000 of them - nearly half the company's payroll. Among the fired were literally thousands of highly specialized workers, technicians, engineers, geologists, seismic experts, rig specialists, managers, executives - hundreds of thousands of staff-years worth of experience and know-how on how to run one of the world's largest energy companies.
Chávez simply never saw why he might need any of them. After all, how hard can it be to run a transnational oil company? If the will is there, anyone could do it. Isn't that what the revolution is about?
So out went the people who knew something about how to run the company, in went the ideologically driven chavista "managers." The results have been truly disastrous - three and a half-months after the oil strike started, Venezuela is still producing under half the pre-strike levels. Government oil revenue is projected to drop by half on last year even by the government's own estimates. The costs of this contraction in terms of the horrendous retrenchment it will cause in government spending and the brutal knock-on social effects that will have, largely explains why we're on the verge of an Argentine scenario. Yet Hugo Chávez won't even consider negotiating the strikers' return.
Instead, he's working on jailing their leaders.
IV. Mr. Bean Energy Corporation
Numbers alone don't come close conveying the scale of the disaster in the oil industry, though. They also don't show the way chavista voluntarism has led directly to that disaster. To get a feel for the way PDVSA is being destroyed you really need to hear some of the incredibly alarming anecdotes coming out of the industry these days.
The Eastern Shore of Lake Maracaibo is one of the main oil-producing regions. The region is, of course, full of companies small, medium and large that work with PDVSA. The state giant hires them to perform various highly specialized tasks, quite often very specific, sophisticated work that PDVSA doesn't want to bother with. For instance, a friend of mine who lives out there tells me about one company she's in touch with that services drill-bits. That's all they do. It might seem somewhat pedestrian, until you realize that oil exploration drill bits are actually quite high-tech components - made to operate at fantastic depths, under very high pressure and at incredible temperatures - so keeping them in operating condition is a fairly sophisticated task.
Last month, a group of new (i.e. chavista) PDVSA managers approached this drill bit contractor's management to ask whether they would be interested in an all-inclusive ("turnkey" in the lingo) contract to operate an entire oil field, from logistics and engineering to extraction, well management, and even payroll. The contractor's managers weren't sure if they were joking at first. It was the equivalent of asking a kid with a sidewalk lemonade stand to be chairman of the Coca Cola Company - after all, they're both in the soft drink business.
Apparently, the people who now run PDVSA saw the contractor's name in internal documents, and figured, "hey, these guys are oil sector contractors, maybe they can run this oil field for us," so they just asked before making any effort to ascertain whether they were in anyway qualified to do so. The contractor managers were shocked and, well, just freaked out: they had been working with PDVSA for over 25 years, and suddenly they find themselves dealing with managers who plainly haven't the slightest clue of what it is their company does.
There's more where that came from. Much more. One of the most shocking stories comes out of Carito oil field in southern Monagas State - one of the youngest, most productive oil producing areas in the country. As a relatively young field, it's quite easy to get oil out of Carito. That fact put it high on the new PDVSA's target list for restarting production: it was clearly one of those elusive "easy fields." In fact, the field is so easy because it has plenty of natural well pressure. That means you don't need to do anything to get oil out of it - it just comes to the surface on its own, like the oil in cartoons. But anyone who knows anything about oil knows that you need to start reinjecting natural gas and water back into the field to keep pressure adequate when a field is still young - that's standard operating procedure because it just saves all kinds of trouble down the road.
The problem is that Chávez fired everyone who knows anything about oil production in PDVSA. The new management apparently either didn't know how to operate the reinjection process, or couldn't be bothered with it. So they started pumping oil out of Carito on its own natural pressure - without any reinjection.
The problem is that the chemical makeup of the crude in Carito is such that if pressure drops below a certain critical level, a chemical reaction starts to take place that literally turns the oil into asphalt. Once that happens, there is literally no way to ever get it out again. International contractors who operate in the region estimate in private that up to a billion barrels of oil in the region could be permanently lost due to the mismanagement of the Carito field.
Just mull over that number for a second - at the current $32 to the barrel, that's $32 billion, about the equivalent of Venezuela's entire foreign debt. Flushed, down the drain, through the incompetence of PDVSA's new and improved chavista management.
It's an incredible outrage.
Then there's the story of an international company (which I can't name) that was approached by some new PDVSA managers in Caracas who asked that they do several million dollars worth of service work for PDVSA. The foreign company was thrilled by the deal, and told the managers "sure, lets work out a contract and get on with it." The PDVSA managers dissented. "The thing is," they said, "we're in a real emergency situation here, we really need to get this work done right away. Why don't you go ahead and start, and we'll work out the contract later." My source for this story wasn't so sure whether to laugh or cry as he told me about this. The people now running PDVSA simply had no idea of what an incredibly stupid, amateurish, unacceptable, idiotic request that was.
Trying to collect themselves, the foreign company representatives tried to explain how they would, y'know, all get fired if they even dared to propose something that unprofessional back home, how headquarters in Silicon Valley would laugh them out of the room if they brought it up as a serious possibility. I mean, it's a fairly basic thing, right, it doesn't take an MBA to figure this one out. First you sign the contract, then you do the work. You'd think they could wrap their feeble little brains around that one, wouldn't you?
You'd be wrong, the new PDVSA managers just frowned at the foreign company reps and accused them flat-out of siding with "the coup-mongers even of trying to sabotage the company through this deeply seditious refusal.
Honestly, how do you work with people who think that way?
V. Now what?
One little noted upshot of this entire situation is that, contrary to popular suspicion, foreign energy companies are staying away from Venezuela in droves now. The popular misconception is that with PDVSA dismantled, the Shells and Halliburtons and BPs of the world are salivating over the prospects of a quick buck bailing the new PDVSA out. If the government seriously wants to get production back up, it's their way or the highway, right?
Not that I can see. The oil people I talk to are really leery about wading too deep into the cesspool that is the new PDVSA - not for ideological reasons, just because they're impossible to work with. Add to the sheer incompetence and arrogance the company's deepening financial troubles and the lengthening waits contractors face in trying to get paid, and you start to understand why this is a distinctly dodgy business proposition for the foreign companies. The final whammy, though, is the widespread feeling that when the Chávez regime eventually falls, foreign energy companies that threw it a lifeline will face a very uphill battle in trying to secure new contracts - they could even see some Chávez-granted contracts re-examined, a scenario that keeps foreign managers up at night. So, as far as I can see, the reports of the imminent foreign bailout of the new PDVSA are wildly exaggerated.
The truth is both more banal and far more worrying. The government has managed to crank up oil production to the 1.5 million b/d level, by the end of the year they ought to be in the neighborhood of 2.2-2.4 million b/d. It's a far cry from the 3.3 million b/d directly before the strike, particularly considering at least 500,000 b/d of prestrike capacity has been permanently lost through field mismanagement. But what's really alarming is the possibility that production won't stabilize at 2.2-2.4 million b/d but will only peak there, gradually dropping after that as insufficient investment, well-mismanagement, logistics problems and lack of maintenance start chipping away at production in a chronic way. By some people's reckoning, by the second half of 2004, we could be right back where we are now, stuck at about 1.5 million b/d.
How the government squares its books on that level of production is a mystery to me. It's really a nightmare scenario, one that economists here have never really worked through because it just never seemed like a serious possibility. Without diving too deep into the numbers you can see that a permanent revenue hit on that scale could only be worked through with mass public-sector layoffs, a debt default, or both.
Either way, the already atrocious situation of mass impoverishment I described above looks certain to worsen. The day might still come when we'll remember fondly those halcyon days when a whole 6% of Venezuelans lived above the poverty line.
February 28, 2003
Revolutionary justice
So, Carlos Fernández got arrested – what’s the big problem? Listening to his speeches during the General Strike, it’s hard to argue he didn’t break some laws. In particular, when he urged people not to pay their taxes, isn’t it obvious that that’s incitement? And it’s not like Chávez went and arrested him personally: a court ordered his arrest. Isn’t that what courts are for?
It’s an argument you might find compelling, but only if you know nothing about the Venezuelan justice system. The story of Venezuela’s courts in the last four years is the story of a systematic, thorough political purge. By now, the vast majority of Venezuela’s judges have been handpicked by presidential cronies – a good number are clearly presidential cronies themselves. Take, for instance, the judge who initially heard the Fernández case. He’s a long-time chavista activist with a murder conviction on his police rap-sheet who, just a couple of months ago, was serving as defense council for one of the chavista gunmen videotaped emptying his gun into an opposition crowd back in April. He’s far from the exception.
It all started in 1999. It’s hard to believe now, but just four years ago Hugo Chávez had 80% approval ratings and the political capital to do just about anything he pleased. As part of his pledge to reinvent the state from the ground up, Chávez launched a so-called “Judicial Restructuring Committee” charged with overhauling the court system. It was a popular decision back then, and understandably so: years of old regime cronyism had left the courts riddled with political picks who took their marching orders from their respective party patrons. The courts were badly in need of a shake-up, and after years of railing against the political subordination of the judiciary, Chávez seemed like just the man for the job.
But the exercise went wrong from the start. Daunted by the prospect of having to investigate each and every judge one by one, the Judicial Restructuring Committee adopted a highly dubious expedient. They decided to just suspend all judges who had eight or more corruption complaints pending against them. Obviously, it was a quick-and-dirty shorthand. Just as obviously, it demonstrated appalling contempt for the procedural rights of the judges involved. While the move certainly cleared away many of the worst cases of judicial abuse, it doubtlessly also included all kinds of “false-positive” – honest judges who’d accumulated several spurious complaints against them and found themselves booted from the bench with no chance to defend themselves. Indeed, some 80% of Venezuelan judges had that many complaints pending against them, and it’s hard to believe that all of them really were corrupt.
The Restructuring Committee had the power to replace the suspended judges with “provisionally appointed judges.” To keep the purge from bringing the court system to a halt altogether, these provisional judges were hired after a superexpedited selection process. And that’s where the trouble started. In typical form, Chávez had named only personal supporters to the Restructuring Committee. Not surprisingly, they selected only chavistas as provisional judges. The result was a mass swap of politically motivated magistrates: out went the adecos, in went the chavistas.
But the abuse went further than that. A normal Venezuelan judge, under the old system, was terribly hard to get rid of. This created some problems – bad apples were hard to dump – but solved others – honest judges were hard to pressure. Though many judges clearly supplemented their income with bribes, and many answered faithfully to their political patrons, at least they didn’t have to worry that they’d lose their jobs if they handed down a decision that displeased their higher ups.
Provisional judges are different: they have no special labor protections. In fact, they can be removed just as quickly and easily as they were appointed by the same people who initially chose them. So by the end of 1999, not only were the vast majority of Venezuelan judges chavistas, but they were chavistas who knew their job security was totally dependent on their willingness to follow the orders handed down by their political masters.
The president and his cronies soon developed a taste for this new brand of judiciary, chuck-full as it was of defenseless provisional judges. The system made it much easier to keep judges on the straight-and-narrow. So provisional appointments – which, as the name suggests, were initially supposed to last only a few months while regular judges could be selected – became, in fact if not in law, permanent. Today, four years after the restructuring drive started, a whopping 84% of the nation’s 1380 judges are provisional appointments.
Keep this in mind the next time you read a story about a Venezuelan judge ordering an arrest of a political leader. The scrupulously neutral language of international journalism contributes to the appearance that these decisions are based on at least a minimum of democratic legality. But when it comes down to it, these judges are not any harder for Chávez to appoint or remove than his minister, and just as beholden to him.
The situation is just as bad in the Supreme Tribunal, though there the story is a bit more complex. Chávez continually says it’s absurd for people to charge him with controling the Supreme Tribunal, because the tribunal has ruled against him on a couple of high-profile cases. That, he implies, is living proof that he’s purer than pure and never set out to subjugate the court. The truth is far less flattering than that: he did try, it’s just that he was too clumsy to pull it off.
Following the approval of the new constitution in 1999, the old Supreme Court was fired en masse, and a brand new Supreme Tribunal was selected. The appointments required a two-thirds majority in parliament, which Chávez didn’t have. He had no choice but to cut a deal with some of his opponents in the National Assembly to select a new court. To their eternal shame, Acción Democrática and Proyecto Venezuela decided to play ball.
The parliamentary deal to select a new tribunal was old regime politics at its worst - a stereotypical smoky room deal. Between them, the three parties had the required 2/3rds of parliament needed for the appointments, so they more-or-less divvied up the court the way a butcher might cut up a salami. Since MVR had about 70% of the three-party-coalition’s seats, they claimed 70% of the 20-member court: 14 magistrates. AD had about 20% of the seats, so they got to pick their four magistrates. Proyecto Venezuela, as the junior partner, got to pick two. This is not speculation: I’ve heard AD leaders, who were later excorciated by the opposition for playing along on this, defend themselves publicly by saying that only by cutting a deal could they block Chávez from appointing a 100% court. “At least we have a few magistrates,” they say.
Each of the Supreme Tribunal magistrates selected in this way know precisely which party they owe their appointment to, and which party they have to take orders from. Years of angry chavista denunciations against these sorts of shenanigans were left by the wayside. It was, as one pundit memorably put it – “more of the same, but worse.”
The problem is that Chávez screwed it up. Big time. He outsourced the task of picking “his” magistrates to Luis Miquilena, who was his then right-hand man back then. He thought he could trust him. But Miquilena picked personal buddies for the job, some of whom obviously saw him, and not Chávez, as the real boss. Eventually, as Chávez’s governing style became more erratic and authoritarian, Miquilena jumped ship. And when he did, he dragged some of the Supreme Court justices along with him.
That, in essence, is why Chávez has lost some cases before the court: Miquilena has enough pull over a few of the magistrates to turn them against Chávez on selected occasions. So, in a sense, Chávez is right: he doesn’t totally control the tribunal – not anymore. But that’s hardly because either he or the magistrates underwent some sort of mystical conversion to Montesquieu’s liberal vision. The magistrates are still puppets, it’s just that one of the puppeteers switched sides.
Of course Chávez finds this situation intolerable: the very notion that an important branch of government could fall outside his control runs directly counter to the autocratic spirit that animates his whole government. So he’s had his cronies at the National Assembly hatch a plan to expand the number of magistrates from twenty to thirty, together with expedited new methods for appointing magistrates that would allow him to pick ten new, this time reliable, candidates to solidify his wavering majority in the tribunal. It’s shameless court packing. But then, shame is in short supply in Caracas these days.
The move would also solidify his control of the lower courts. Since the new constitution came into force, the Judicial Restructuring committee was wound down and responsibility for managing the nation’s courts now lies with the Supreme Tribunal, through something called the Executive Directorate of the Magistracy – DEM, after its Spanish acronym. Control of the Supreme Tribunal means control of the DEM, and through it, of all the lower courts. So packing the Supreme Tribunal allows Chávez to strengthen his control of the lower courts, and to continue to pack them with provisionally appointed cronies.
In short, the judicial system has become, like the rest of the Venezuelan state, a presidential plaything. The orders to arrest Carlos Fernández and the PDVSA strike leaders are patently, transparently political decisions, bits extracted whole from presidential speeches. These courts, which act with such frightful celerity when it comes to prosecuting the president’s opponents, slow to a glacial pace when it comes to prosecuting the president’s friends, even when those who have been videotaped shooting into crowds of unarmed civilians. To summarize the government’s judicial philosophy: if you call an opposition march you go to jail, but if you empty your gun into that march, you’re a revolutionary hero, and your lawyer is appointed judge.
So, Carlos Fernández got arrested – what’s the big problem? Listening to his speeches during the General Strike, it’s hard to argue he didn’t break some laws. In particular, when he urged people not to pay their taxes, isn’t it obvious that that’s incitement? And it’s not like Chávez went and arrested him personally: a court ordered his arrest. Isn’t that what courts are for?
It’s an argument you might find compelling, but only if you know nothing about the Venezuelan justice system. The story of Venezuela’s courts in the last four years is the story of a systematic, thorough political purge. By now, the vast majority of Venezuela’s judges have been handpicked by presidential cronies – a good number are clearly presidential cronies themselves. Take, for instance, the judge who initially heard the Fernández case. He’s a long-time chavista activist with a murder conviction on his police rap-sheet who, just a couple of months ago, was serving as defense council for one of the chavista gunmen videotaped emptying his gun into an opposition crowd back in April. He’s far from the exception.
It all started in 1999. It’s hard to believe now, but just four years ago Hugo Chávez had 80% approval ratings and the political capital to do just about anything he pleased. As part of his pledge to reinvent the state from the ground up, Chávez launched a so-called “Judicial Restructuring Committee” charged with overhauling the court system. It was a popular decision back then, and understandably so: years of old regime cronyism had left the courts riddled with political picks who took their marching orders from their respective party patrons. The courts were badly in need of a shake-up, and after years of railing against the political subordination of the judiciary, Chávez seemed like just the man for the job.
But the exercise went wrong from the start. Daunted by the prospect of having to investigate each and every judge one by one, the Judicial Restructuring Committee adopted a highly dubious expedient. They decided to just suspend all judges who had eight or more corruption complaints pending against them. Obviously, it was a quick-and-dirty shorthand. Just as obviously, it demonstrated appalling contempt for the procedural rights of the judges involved. While the move certainly cleared away many of the worst cases of judicial abuse, it doubtlessly also included all kinds of “false-positive” – honest judges who’d accumulated several spurious complaints against them and found themselves booted from the bench with no chance to defend themselves. Indeed, some 80% of Venezuelan judges had that many complaints pending against them, and it’s hard to believe that all of them really were corrupt.
The Restructuring Committee had the power to replace the suspended judges with “provisionally appointed judges.” To keep the purge from bringing the court system to a halt altogether, these provisional judges were hired after a superexpedited selection process. And that’s where the trouble started. In typical form, Chávez had named only personal supporters to the Restructuring Committee. Not surprisingly, they selected only chavistas as provisional judges. The result was a mass swap of politically motivated magistrates: out went the adecos, in went the chavistas.
But the abuse went further than that. A normal Venezuelan judge, under the old system, was terribly hard to get rid of. This created some problems – bad apples were hard to dump – but solved others – honest judges were hard to pressure. Though many judges clearly supplemented their income with bribes, and many answered faithfully to their political patrons, at least they didn’t have to worry that they’d lose their jobs if they handed down a decision that displeased their higher ups.
Provisional judges are different: they have no special labor protections. In fact, they can be removed just as quickly and easily as they were appointed by the same people who initially chose them. So by the end of 1999, not only were the vast majority of Venezuelan judges chavistas, but they were chavistas who knew their job security was totally dependent on their willingness to follow the orders handed down by their political masters.
The president and his cronies soon developed a taste for this new brand of judiciary, chuck-full as it was of defenseless provisional judges. The system made it much easier to keep judges on the straight-and-narrow. So provisional appointments – which, as the name suggests, were initially supposed to last only a few months while regular judges could be selected – became, in fact if not in law, permanent. Today, four years after the restructuring drive started, a whopping 84% of the nation’s 1380 judges are provisional appointments.
Keep this in mind the next time you read a story about a Venezuelan judge ordering an arrest of a political leader. The scrupulously neutral language of international journalism contributes to the appearance that these decisions are based on at least a minimum of democratic legality. But when it comes down to it, these judges are not any harder for Chávez to appoint or remove than his minister, and just as beholden to him.
The situation is just as bad in the Supreme Tribunal, though there the story is a bit more complex. Chávez continually says it’s absurd for people to charge him with controling the Supreme Tribunal, because the tribunal has ruled against him on a couple of high-profile cases. That, he implies, is living proof that he’s purer than pure and never set out to subjugate the court. The truth is far less flattering than that: he did try, it’s just that he was too clumsy to pull it off.
Following the approval of the new constitution in 1999, the old Supreme Court was fired en masse, and a brand new Supreme Tribunal was selected. The appointments required a two-thirds majority in parliament, which Chávez didn’t have. He had no choice but to cut a deal with some of his opponents in the National Assembly to select a new court. To their eternal shame, Acción Democrática and Proyecto Venezuela decided to play ball.
The parliamentary deal to select a new tribunal was old regime politics at its worst - a stereotypical smoky room deal. Between them, the three parties had the required 2/3rds of parliament needed for the appointments, so they more-or-less divvied up the court the way a butcher might cut up a salami. Since MVR had about 70% of the three-party-coalition’s seats, they claimed 70% of the 20-member court: 14 magistrates. AD had about 20% of the seats, so they got to pick their four magistrates. Proyecto Venezuela, as the junior partner, got to pick two. This is not speculation: I’ve heard AD leaders, who were later excorciated by the opposition for playing along on this, defend themselves publicly by saying that only by cutting a deal could they block Chávez from appointing a 100% court. “At least we have a few magistrates,” they say.
Each of the Supreme Tribunal magistrates selected in this way know precisely which party they owe their appointment to, and which party they have to take orders from. Years of angry chavista denunciations against these sorts of shenanigans were left by the wayside. It was, as one pundit memorably put it – “more of the same, but worse.”
The problem is that Chávez screwed it up. Big time. He outsourced the task of picking “his” magistrates to Luis Miquilena, who was his then right-hand man back then. He thought he could trust him. But Miquilena picked personal buddies for the job, some of whom obviously saw him, and not Chávez, as the real boss. Eventually, as Chávez’s governing style became more erratic and authoritarian, Miquilena jumped ship. And when he did, he dragged some of the Supreme Court justices along with him.
That, in essence, is why Chávez has lost some cases before the court: Miquilena has enough pull over a few of the magistrates to turn them against Chávez on selected occasions. So, in a sense, Chávez is right: he doesn’t totally control the tribunal – not anymore. But that’s hardly because either he or the magistrates underwent some sort of mystical conversion to Montesquieu’s liberal vision. The magistrates are still puppets, it’s just that one of the puppeteers switched sides.
Of course Chávez finds this situation intolerable: the very notion that an important branch of government could fall outside his control runs directly counter to the autocratic spirit that animates his whole government. So he’s had his cronies at the National Assembly hatch a plan to expand the number of magistrates from twenty to thirty, together with expedited new methods for appointing magistrates that would allow him to pick ten new, this time reliable, candidates to solidify his wavering majority in the tribunal. It’s shameless court packing. But then, shame is in short supply in Caracas these days.
The move would also solidify his control of the lower courts. Since the new constitution came into force, the Judicial Restructuring committee was wound down and responsibility for managing the nation’s courts now lies with the Supreme Tribunal, through something called the Executive Directorate of the Magistracy – DEM, after its Spanish acronym. Control of the Supreme Tribunal means control of the DEM, and through it, of all the lower courts. So packing the Supreme Tribunal allows Chávez to strengthen his control of the lower courts, and to continue to pack them with provisionally appointed cronies.
In short, the judicial system has become, like the rest of the Venezuelan state, a presidential plaything. The orders to arrest Carlos Fernández and the PDVSA strike leaders are patently, transparently political decisions, bits extracted whole from presidential speeches. These courts, which act with such frightful celerity when it comes to prosecuting the president’s opponents, slow to a glacial pace when it comes to prosecuting the president’s friends, even when those who have been videotaped shooting into crowds of unarmed civilians. To summarize the government’s judicial philosophy: if you call an opposition march you go to jail, but if you empty your gun into that march, you’re a revolutionary hero, and your lawyer is appointed judge.
February 25, 2003
Correspondence with a different first world lefty
Foreign philochavistas come in two flavors: the ones who don't know what the hell they're talking about and argue in broad strokes and abstract categories (those damn oligarchs are just angry because finally someone's taking on their privileges!) and the ones who do know what they're talking about - generally because they live here - and argue in good faith. While I have almost no patience for the former, I think it's important to engage the latter. Greg Wilpert, who is decidedly among the latter, writes in about my last post:
------------------
I am wondering if either you are not aware of the threats that prominent government
officials and supporters live under or if you think that such threats are not worth
mentioning. Perhaps you think they are not worth mentioning because you blame
Chavez for creating the atmosphere in which such threats exist?
If you are not aware of the threats, I suggest that you talk to some MVR diputados,
for example. Not too long ago Iris Varela's home was bombed, for example. Shortly
after the brief coup attempt, even an insignificant person such as me received
kidnapping threats via e-mail, for having written the truth about what happened on
April 11 and 12. I've intentionally been keeping a relatively low profile as a result.
The upshot is, I have no doubt that the threats against prominent pro-government
individuals are every bit as common as against anti-government individuals. The
difference perhaps is that the threats against pro-government individuals are
occasionally carried out. Perhaps you don't know about the over fifty campesino
organizers who have been murdered in the past year? There are incidents
happening all of the time, that don't even get mentioned in the government
television, perhaps to encourage the image of a happy Venezuela.
You might think that foreign correspondents should mention the threats against
anti-government politicians; I think they should mention all threats, no matter who is
being targeted - that might at least correct the image of the oh-so holy opposition
and the oh-so evil government. I personally believe that the balance of good and
evil on both sides of the conflict is more or less the same.
Best, Greg
wilpert@cantv.net
----------------
I'll be honest: I wasn't aware of a really broad-based campaign of intimidation against government supporters, though it sounds entirely likely that one exists. I've heard plenty about chavistas being harassed and intimidated when they go to the "wrong" public spaces, and I think that's awful, near-fascist, detestable, and I've argued against it both in private and in public. The overall breakdown of tolerance and civility in society is really one of the worst and most ominous aspects of the crisis.
But I have to admit I find it somewhat hard to believe that the intimidation being metted out to government supporters is anywhere near as systematic and broad as what the opposition is getting. And not because the opposition is good and the government is evil (a view I've argued against repeatedly for months,) but because in order to mount a campaign on the scale of the one opposition leaders are now subject to you really need an organization behind it - you need wiretaps and surveilance capabilities, you need money and manpower and technology and centralized decisionmaking. In other words, you need control of the state.
And this, to my mind, is the key difference, as well as the root of so much of the instability in this country: when a Chávez supporter is threatened, he can call on the state for protection. When an opposition leader is threatened, it's probably the state doing it. Or, at least, someone with the aid, or at the very least the quiescent complicity, of the state. It's the principle of equal protection under the law turned on its head.
If you want to know why Venezuela is so unstable, here's an excellent place to start. The notion that the state ought to protect all its citizens equally, regardless of their political views, seems to me like a minimal requirement for stable democratic coexistence. But President Chávez has never made a secret of his contempt for the idea. From the word go he made it clear, again and again, that he intended to govern for one part of society only, and against the other. For a long time he tried to sell the idea that he would govern for the poor and against the rich. But as anyone with open eyes here knows by now, the real dividing line is purely political: he governs in favor of those who support him acritically and unconditionally and against everyone else.
It seems entirely predictable to me that those who suddenly saw the might of the state turned against them would react with virulent rage. You threaten people, they respond. There's no mystery there. Some of those reactions have gone really way too far, and they've only made the original problem worse, yes. But the original problem hasn't changed, and it won't go away until those who have hijacked the state for their own personal purposes cease and desist.
As Teodoro Petkoff has argued many times, it's entirely specious to say that the government and the opposition are equally responsible for the crisis. Enforcing the law equally, without arbitrary distinctions, is one of the core duties of a democratic state. When a government flouts that duty as comprehensibly as this one has - when it systematically uses state money, state facilities and state power to intimidate critics, all the while giving its supporters carte blanche to do anything they want any time they want, then the minimal basis for stable democratic coexistence are compromised, and the entire edifice of a free society teeters.
And with the edifice we're in teetering, it's obviously crucial not to do anything at all to exacerbate the problem. So yes, you're right, my original post was wrong. At times like these it's very imortant to avoid mindlessly partisan postures. That's what this blog is supposed to be all about, and I was wrong not to bring up the detestable threats made against government supporters in my last post.
But I reject, strenuously, the notion that that means that we can just split the blame down the middle and leave it at that. The Venezuelan state belongs to all Venezuelans equally - all Venezuelans have a right to demand its protection regardless of their political views. It just so happens that the Venezuelan state is momentarily led by someone who vigorously disagrees with that view, someone who's launched a sort of personal crusade against the principle of equal treatment under the law, who sees of the state as a personal plaything, as a political sledgehammer he can use to pound his enemies and a petty cash box he can use to bankroll his friends. So long as we're led by someone who thinks that way, Venezuela will never be both stable and democratic again.
Foreign philochavistas come in two flavors: the ones who don't know what the hell they're talking about and argue in broad strokes and abstract categories (those damn oligarchs are just angry because finally someone's taking on their privileges!) and the ones who do know what they're talking about - generally because they live here - and argue in good faith. While I have almost no patience for the former, I think it's important to engage the latter. Greg Wilpert, who is decidedly among the latter, writes in about my last post:
------------------
I am wondering if either you are not aware of the threats that prominent government
officials and supporters live under or if you think that such threats are not worth
mentioning. Perhaps you think they are not worth mentioning because you blame
Chavez for creating the atmosphere in which such threats exist?
If you are not aware of the threats, I suggest that you talk to some MVR diputados,
for example. Not too long ago Iris Varela's home was bombed, for example. Shortly
after the brief coup attempt, even an insignificant person such as me received
kidnapping threats via e-mail, for having written the truth about what happened on
April 11 and 12. I've intentionally been keeping a relatively low profile as a result.
The upshot is, I have no doubt that the threats against prominent pro-government
individuals are every bit as common as against anti-government individuals. The
difference perhaps is that the threats against pro-government individuals are
occasionally carried out. Perhaps you don't know about the over fifty campesino
organizers who have been murdered in the past year? There are incidents
happening all of the time, that don't even get mentioned in the government
television, perhaps to encourage the image of a happy Venezuela.
You might think that foreign correspondents should mention the threats against
anti-government politicians; I think they should mention all threats, no matter who is
being targeted - that might at least correct the image of the oh-so holy opposition
and the oh-so evil government. I personally believe that the balance of good and
evil on both sides of the conflict is more or less the same.
Best, Greg
wilpert@cantv.net
----------------
I'll be honest: I wasn't aware of a really broad-based campaign of intimidation against government supporters, though it sounds entirely likely that one exists. I've heard plenty about chavistas being harassed and intimidated when they go to the "wrong" public spaces, and I think that's awful, near-fascist, detestable, and I've argued against it both in private and in public. The overall breakdown of tolerance and civility in society is really one of the worst and most ominous aspects of the crisis.
But I have to admit I find it somewhat hard to believe that the intimidation being metted out to government supporters is anywhere near as systematic and broad as what the opposition is getting. And not because the opposition is good and the government is evil (a view I've argued against repeatedly for months,) but because in order to mount a campaign on the scale of the one opposition leaders are now subject to you really need an organization behind it - you need wiretaps and surveilance capabilities, you need money and manpower and technology and centralized decisionmaking. In other words, you need control of the state.
And this, to my mind, is the key difference, as well as the root of so much of the instability in this country: when a Chávez supporter is threatened, he can call on the state for protection. When an opposition leader is threatened, it's probably the state doing it. Or, at least, someone with the aid, or at the very least the quiescent complicity, of the state. It's the principle of equal protection under the law turned on its head.
If you want to know why Venezuela is so unstable, here's an excellent place to start. The notion that the state ought to protect all its citizens equally, regardless of their political views, seems to me like a minimal requirement for stable democratic coexistence. But President Chávez has never made a secret of his contempt for the idea. From the word go he made it clear, again and again, that he intended to govern for one part of society only, and against the other. For a long time he tried to sell the idea that he would govern for the poor and against the rich. But as anyone with open eyes here knows by now, the real dividing line is purely political: he governs in favor of those who support him acritically and unconditionally and against everyone else.
It seems entirely predictable to me that those who suddenly saw the might of the state turned against them would react with virulent rage. You threaten people, they respond. There's no mystery there. Some of those reactions have gone really way too far, and they've only made the original problem worse, yes. But the original problem hasn't changed, and it won't go away until those who have hijacked the state for their own personal purposes cease and desist.
As Teodoro Petkoff has argued many times, it's entirely specious to say that the government and the opposition are equally responsible for the crisis. Enforcing the law equally, without arbitrary distinctions, is one of the core duties of a democratic state. When a government flouts that duty as comprehensibly as this one has - when it systematically uses state money, state facilities and state power to intimidate critics, all the while giving its supporters carte blanche to do anything they want any time they want, then the minimal basis for stable democratic coexistence are compromised, and the entire edifice of a free society teeters.
And with the edifice we're in teetering, it's obviously crucial not to do anything at all to exacerbate the problem. So yes, you're right, my original post was wrong. At times like these it's very imortant to avoid mindlessly partisan postures. That's what this blog is supposed to be all about, and I was wrong not to bring up the detestable threats made against government supporters in my last post.
But I reject, strenuously, the notion that that means that we can just split the blame down the middle and leave it at that. The Venezuelan state belongs to all Venezuelans equally - all Venezuelans have a right to demand its protection regardless of their political views. It just so happens that the Venezuelan state is momentarily led by someone who vigorously disagrees with that view, someone who's launched a sort of personal crusade against the principle of equal treatment under the law, who sees of the state as a personal plaything, as a political sledgehammer he can use to pound his enemies and a petty cash box he can use to bankroll his friends. So long as we're led by someone who thinks that way, Venezuela will never be both stable and democratic again.
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