Venezuela

Boligarchs’ fall

By Peter Krupa | Published: February 17, 2010

The New York Times’ always-excellent Simon Romero has written a great piece on the recent crack-downs and shake-ups in Venezuela’s Bolivarian power structure. Magnates who mysteriously became billionaires under Chávez are being arrested by the secret police and having their property confiscated.

Mr. Fernández rose from obscurity to put together a web of 270 companies in industries as diverse as tuna-fishing and banking, amassing a fortune of about $1.6 billion by 2005, according to study by the Caracas affiliate of the KPMG accounting firm. He thrived in rural Venezuela, where Mr. Chávez’s dominance goes largely unchallenged, acquiring an interest in a pro-government newspaper in Barinas, a state that is a Chávez family bastion.

Still, Mr. Fernández remained an enigma as his wealth increased. Today, he resides in a military intelligence holding cell.

At the same time, Chávez is welcoming more and more Cuban “advisers” into the country, presumably to beef up the government’s domestic spy capabilities.

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Bonding

By Peter Krupa | Published: February 16, 2010

Venezuela’s system of foreign exchange restrictions has always been two-tiered. On the bottom tier are normal people, who have to go through the government to get dollars. They suffer months of delays and bureaucracy, if they get approval at all. On the top tier are rich people and financial institutions, who purchase dollar-denominated Argentine bonds from the Venezuelan government with bolivares, at the official exchange rate, then turn around and sell the bonds for dollars outside Venezuela.

Interesting, then, that these dollar-denominated Argentine bonds (of which the Venezuelan government purchased US$6.5 billion between 2006 and 2008 in a show of “solidarity”) are in free-fall. Why would that be?

Simply enough, the Venezuelan government has declared war on the non-official exchange market, which means it needs to somehow flood Venezuelan investors with U.S. dollars, boosting the bolivar and making the parallel market less attractive. One way to do this is to increase dollar auctions, which it has done.

Another way is to increase the availability of those Argentine bonds, which is exactly what Venezuela’s state banks are doing. But with inflation up over 26% and billions of dollars fleeing Venezuela every year, it’s doubtful even this will sate the Venezuelan appetite for foreign currency.

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Who’s the best paid of them all?

By Peter Krupa | Published: February 8, 2010

Of the top 12 highest paid presidents in the region, who do you think is number one? OK, fine, Barack Obama, who makes about US$400k annually. What about number two? Colombian news magazine Portafolio says it’s Guatemalan President Álvaro Colom, who makes about US$220k annually presiding over a country of 12 million people.

At the bottom of the list is Bolivia’s Evo Morales, who supposedly makes $22,200 a year, which is not enough. And around about the middle is Venezuela’s Hugo Chávez, who makes about US$90k, which is surely not true. Canada’s Stephen Harper didn’t even make the list, which has to be a mistake (or maybe because he’s only a prime minister?). And finally, Cuba’s Raul Castro supposedly makes only $30 a month, which is not a big deal when you already own an entire country.

(link: “Los 12 presidentes que mas ganan en América”)

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“Expropriate it”

By Peter Krupa | Published: February 7, 2010

An clip from Chávez’ weekend talk show “Alo Presidente” show’s Chávez ordering the expropriation of businesses around Plaza Bolívar in Caracas:

Apparently he would like to turn the area into a “historic center.” This afternoon, shortly after the clip was broadcast, the mayor of Caracas declared that the buildings were of “public use,” which is apparently enough to take them over. No word yet on whether the businesses will have a shot at due process.

Earlier this year, Reuters published a nice list of Venezuela’s state takeovers under Chávez. All this might go some ways toward explaining why, despite strict foreign exchange controls, $93 billion in capital has fled the country since 2005.

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Here to fix the leak

By Peter Krupa | Published: February 4, 2010

Source: BBC

Cuba would not top anyone’s list of go-to countries in matters of successful and efficient industrialization. So why is Venezuela enlisting the help of Cuba’s technology minister, Ramiro Valdés, as an energy consultant? Supposedly, this representative of the impoverished, oppressive nation is going to help Venezuela with its roving power outages.

But think about it: What is Cuba really good at? From the BBC:

Communications expert Antonio Pasqualli pointed out the role that Valdés has played in controlling communication and the Internet.

…

“Two years ago, this man stated before Congress that ‘the Internet is an invention of the West for the extermination of humanity,’” the expert said, recalling the restrictions to Internet access that reign in Cuba.

According to a source in Semana, he’s also one of the founders of Cuba’s G2 domestic spy agency.  Curious that Chávez would hire a guy like this just a few days after calling Twitter “an instrument of terrorism.”

UPDATE: More on Valdés: “To sum up, a military officer, with a talent for repression and censorship, is to advise the Venezuelan government on electricity. Let there be light.”

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A little help from Ortega’s friends

By Peter Krupa | Published: January 31, 2010

Venezuela just became the proud owner of a Nicaraguan television channel, Telenica (Canal 8 ). The Venezuelans themselves confirmed to El Nuevo Diario that the money for the purchase of the channel came from ALBA de Nicaragua S.A., a corporation founded to manage incoming Venezuelan petrodollar handouts that is, in point of fact, 51% owned by Venezuela’s state-owned oil company, Petróleos de Venezuela (PdVSA).

The purchase is just the latest addition to the swelling business holdings of President Daniel Ortega, according to an excellent round-up on the whole affair published in The Nica Times. The purchase also appears to be another step in the silencing of independent media outlets by ALBA countries. From the El Nuevo Diario article:

The change in the news and information profile of Channel 8 was evident just one week after orteguismo took control of the media. Now it broadcasts international reports from the Telesur network, of which the son of the presidential couple – Juan Carlos Ortega Murillo – is part owner. Government spokesman William Grisgby appeared with his program “Without Borders,” replacing “Tonight” with Carlos Fernando Chamorro. Several vignettes of Daniel Ortega talking during various activities appear during the commercials.

The article also points out that Nicaraguan law bans corporations majority owned by foreigners to own major media outlets, although that doesn’t appear to have made much of a difference.

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Storm gathers, says Semana

By Peter Krupa | Published: January 29, 2010

Behind you.

Semana has a story up about “The 10 plagues afflicting Chávez.” It’s mostly predictable (inflation, student protests, cabinet shake-ups), and I think my favorite part was the illustration, but overall it’s a good review of the confluence of bad news he’s having to deal with at this particular moment.

One particular point stuck out. Point number three, I believe:

Several facts indicate that the Venezuelan president is becoming isolated in the region:

Chile elected right-leaning businessman Piñera as president. Honduras is now led by conservative Porfirio Lobo, after the coup that brought down Manuel Zelaya, an ally of the Venezuelan president. Rafael Correa, president of Ecuador, has distanced himself from the Venezuelan government after reestablishing relations with Colombia; the Kirchner government in Argentina continues to lose popularity, and in Brazil, despite the popularity of Ignacio Lula, the favorite for October’s elections is José Serra, an opposition leader.

I would add also that Panama recently elected a businessman as president, and in Costa Rica, another pro-business “libertarian” candidate is running even with the ruling party’s center-left candidate. Now, one has to be careful about these Latin America political wind stories. The electorates in countries like Panama and Chile have almost nothing to do with each other, and I think a lot of North American media connect the dots with a little too much gusto.

That said, one could probably make the argument that the region is experiencing one of those natural undulations of the democratic process, wherein the public gets exhausted with one side of the spectrum and decides to try something new. If that’s the case, we might expect a shift in Venezuela as well during this year’s legislative elections, and indeed, the Semana article mentions that recent polls put Chávez’ approval rating at an all-time low of 46.2%.

Of course, for the shift to be peaceful, the Chávez administration would have to respect the democratic will of the people, which it did not do when it lost several key governorships in 2008. Instead, Chávez responded by gutting their budgets and their autonomy. With his steady attacks on independent media, it appears rather likely that Chávez won’t go down without a fight.

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Currency woes

By Peter Krupa | Published: January 29, 2010

A very interesting article in Bloomberg yesterday about Chávez’ attempts to prop up the boliver and whack black market currency exchanges by meeting dollar demand with the government’s reserves:

The plan will fail because Chavez’s nationalizations and land seizures are prompting Venezuelans to pull money from the country, said Alberto Ramos, a Goldman Sachs economist. More than $93 billion has left the South American nation since 2005, according to the central bank’s capital account data.

The article says the Central Bank has been throwing about $100 million a week at propping up the bolivar, when real dollar demand is something closer to $100 million a day. Demand is high because no one who owns anything wants to keep it in Venezuela:

Venezuela, which last had a capital account surplus in 1998, the year before Chavez became president, posted a capital account deficit of $10.8 billion through the first nine months of 2009, the most recent central bank data show.

That means billions of net dollars in capital are fleeing Venezuela every year, despite strict foreign currency exchange controls. It’s going to get worse. With the bolivar now devalued by 50% against the dollar and the vast majority of goods consumed in Venezuela being imports, Morgan Stanley is projecting an incredible 45 percent.

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Venezuela: Still on the brink

By Peter Krupa | Published: January 27, 2010

Nothing to see here.

The recent move by the Chávez administration to shut down cable TV channels has called down harsh criticism from basically everyone: Human Rights Watch, Reporters Without Borders, the Organization of American States, hell, even France. What will happen as a result is approximately nothing. The international community (excepting the King of Spain) lacks the cojones to take on Chávez in the kind of international diplomatic games of chicken that he lives for.

Of course, Chávez still has plenty to worry about. Power and water rationing are angering basically everyone, a 50% devaluation of the bolivar is going to cause inflation to fly even higher (it’s already the highest in the region), soaring crime means Venezuela has the second highest murder rate in the world, and the price of oil has been falling all year even as Chávez continues to give the stuff away to buddy countries.

With legislative elections coming up in September, it’s no wonder Chávez is stepping up his efforts to silence the media. Even a perfectly objective reporter would have to write or speak some incredibly negative things about the performance of the Chávez administration. The last 10 years have been quite frankly disastrous, even though some of the country’s extreme poor are supposedly better off thanks to expanded social spending.

But while it’s good to see people getting angry about Chávez’ power grabs and mismanagement, student and popular protests have happened before with no result. Venezuela has seemed to be at the breaking point for years now. The smart money says that these protests will fade as well, and the international community will go back to standing around looking sheepish.

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Venezuela shuts down cable TV channels

By Peter Krupa | Published: January 24, 2010

Last night, the Venezuelan government cut off the cable transmissions of four channels nationwide, including that of RCTV. You might recall that the government had already cut off RCTV once, in 2007, by not renewing its bandwidth concession. Now it’s been silenced via cable as well.

It’s not yet clear why exactly the government moved to silence the channels. The message on the screen for cable providers says that the channels haven’t complied with the the Law on Radio and Television Social Responsibility, which might mean that they refused to replace their regular programming with one of the government’s cadena nacionales.

Last year, the Chávez administration shut down 29 opposition radio stations and continued to harass other media outlets, raising the ire of the Inter-American Commission on Human Rights.

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  • DAILY LINKS

    • The Nation has a long, wonky, wonderful article on Mexican maize cultivation, the effects of NAFTA, and the dangers of genetically-modified seeds. Author Peter Canby backs up his excellent writing with piles and piles of meticulous research. Not to be missed. [link, via SM] (Image from Joel Penner.)

    • Cuban dissident Guillermo Farinas ended his hunger strike yesterday after 134 days. Farinas decided to end his strike after the Cuban government said it would release political prisoners rounded up in the "Black Spring" crackdown of 2003. Get well soon. [link]

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    • From the days when coups were something of a regional sport, new documents detail a famous British ballerina's role in a plot to topple the government of Panama. The plan was to use her yacht to gather men and arms, then "land somewhere and collect in the hills." It didn't work. [link]

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