Sunday, April 10, 2005

The implausible tale told by the Attorney General about the role of Lucas Rincon on April 11th. One of the biggest mysteries of what happened on April 11th. 2002, was the role played by General Lucas Rincon. Rincon was not only the Chief of Staff, but was also the highest ranking General in the Venezuelan Armed Forces, the only one to receive three stars in decades. Rincon was also the man the set in motion the so called “coup” against Hugo Chavez by appearing on a nationwide telecast that evening, surrounded by the Chiefs of Staff and said: “ We asked the President for his resignation, which he accepted”. The rest is of course history. Chavez claims he never resigned, Carmona came along, Chavez came back in what was probably a sequence of coups rather than a single one as Chavez likes to make believe. To compound the mystery even further, Rincon showed up again only months later in Chavez’ Cabinet where he occupied important positions for a couple of years. The final mystery is how come, despite the incredibly significant role he played, the Prosecutor’s office has never called Rincon to testify or even charged him with anything. After all, it was Rincon who set in motion everything that happened that night. Had he not shown up on TV that night history would have been much different. Despite this, Rincon has never been called and his role remains a mystery Today (El Nacional, page A-2), the Prosecutor himself, Isaias Rodriguez attempts to shed light on it and his explanation is so laughable, implausible and improbable that nobody will ever believe it. Moreover, it is not the Prosecutor’s role to decide whether Rincon was or not involved or not, his role is to have him testify and let others decide. According to Rodriguez, Chavez sent Rincon that day to negotiate with the Generals that wanted Chavez out. When Rincon gets there, he is surprised that absolutely all of them are against the President and they “forced” him. Now, I find it hard to believe that they would force him take their side! Even more, I just can’t believe that if all of the Generals were on the opposite side, that he would be forced to speak to the nation and announce Chavez resignation. Even more laughable is that Rodriguez then says: “I have information that a Colonel had the intention of assassinating Lucas (Rincon) of shooting him up close”. When asked who he was, the Attorney General says: “I can’t remember, but he must have been identified because I am talking about something that happened. Lucas found himself in a very complex situation, difficult, because he finds a de facto situation. At that moment he called the President and tells him there is no possibility of negotiations. Te President tells him: You know what we have talked handle the situation in the terms that we have talked about…Rincon decides on his own in terms of what the President said…he tried to gain time” I see, very logical, in order to gain time Lucas Rincon decided to announce to the country that Chavez had resigned! Rodriguez then proceeds to talk about Rincon as having to deal with a situation he was not accustomed to. He then toots his won horn, saying that he was, because he has been a politician all his life. I see, a mediocre politician who only rose in power because he rode Chavez’ coattails has more abilities than a guy who became the only three star General in decades and Chief of Staff! This guy really thinks the world is truly stupid. But in the end the Prosecutor/Attorney General fails to explain why Lucas Rincon’s role has never been investigated, why he has never been called to testify. As the Attorney General, it is unacceptable for him to first say that someone almost killed Rincon, but he has failed in these last three years to even look into that. This is the same man that is in charge of upholding the law in Venezuela! He has had his people look at videos to charge the people seeing in them for just going to the Presidential Palace on April 12th., but has not bothered to look into who forced Rincon to say he was against Chávez? Everything Rodriguez says is so implausible and inconsistent that anywhere else, he would be forced to resign because his statements simply show he has not performed his duties and has instead devoted his time to persecute the opposition. This guy must really take us for fools, but in the end, maybe we are anyway. 9:52:36 PM    comment []

Poverty swallows Chavez despite the waste of petrodollars Excellent article on Venezuela in Spain's La Vanguardia by Joaquim Ibarz, he definitely did his homework. Poverty swallows Chavez despite the waste of petrodollars President Hugo Chavez has one hundred ideas a day. Some 97 are discarded as impractical, but the three remaining ones can cost Venezuela a lot of money, since they are aimed only at mediatic and political repercussion, instead of economic return. Hugo Chavez finances poverty so that everyone depends on him a Venezuelan entrepreneur of asturian origin, explains in a few words the orientation of the revolutionary regime that is being implemented in gradual fashion in Venezuela. Financing poverty, without creating wealth, is very costly to a State that in six years has not only spent US$ 200 billion that have been received thanks to high oil prices, but has also increased external debt (from US$ 22 billion went to US$ 27 billion) and multiplied internal debt (In six years, from US$ 1.069 billion it became US$ 13.5 billion). One has to add US$ 1 billion in a euro bond and a new issue of some US$ 1.5 billion. To prevent that the incumbent President dilapidate oil income, the Macroeconomic Stabilization Find was created destined to generate savings when the price of oil was over that one fixed in the national budget. The differential would be reserved for when the price went down; it was like insurance for junctures with fiscal deficits. Chavez no only eliminated the Fund, but as if it were petty cash, he grabbed the US$ 7 billion that had been saved up to 2002. The increase in debt has taken place in the middle of an oil boom. According to analyst Gustavo Garcia Osio, what is happening with Chavez is the same that happened with the management by Carlos Andres Perez and in the Government of Luis Herrera, when public debt was multiplied in the middle of a spectacular rise in hydrocarbons, whose bad consequences Venezuelans know well. When the price of oil moderated, the debt became impossible to pay, which brought successive devaluations of the Bolivar and a deterioration of public expenditures. Chavez is repeating the same errors of Perez and Luis Herrera, Chavez is a good exponent of the past he denigrates so much, says to La Vanguardia, economist Hugo Faria. According to this Professor, Chavez shows great fiscal irresponsibility to finance the uncontainable public expenditures, not only with petrodollars and an increase in debt, but also with successive devaluations. The curious thing is that Chavez devalues while his mentor Fidel Castro, thanks to the billion dollars that he receives from Venezuela in cheap oil, revaluates the peso. In all of America, local currencies are revaluing with respect to the dollar, except in Venezuela, No country has managed to reduce poverty without sustained economic growth points out Farias. A large part of today income is wasted on current expenditures looking for electoral yields. Chavez said it very clearly: the money has to be spent with political criteria, not an economic one. The purchase of Argentine bonds for US$ 500 million is not advisable from an economic point of view, but it is from a political point of view. Although the income from the petrodollars is huge, the expenses are even bigger. Populism is expensive and there are many interests, both internal and external, that have to be covered. Only part of the expenditures goes through the official controls, the rest goes via parallel paths, without much supervision. The budget of the Ministry of Defense, which is higher than the Education one, was increased with the boundless purchase of war material. Military expenditures are shooting through the roof with the creation of a body of reserves which is the equivalent to a parallel army, which must be composed of hundreds of thousands of people. In the same manner, in the last few months he has created five new Ministries, with the corresponding increase in payrolls. The National Institute for Statistics (INE) has registered that between February 2004 and February 2005 the public sector hired in the same period 227.201 workers, while the private sector only added 24.069 workers to its staff. Even though Chavez devotes a good part of the oil income to assistance plans destined to those that have the least, during his term, poverty has increased by 10.2 percentage points. According to the President of INE, Elia Eljuri, when Chavez assumed the Presidency the poverty index was 42.8%, while at the end of 2004 it has increased to 53% (Non Government organizations raise it to 80% with 50% of the population in extreme poverty) Poverty is swallowing Chavez; he thought poverty could be reduced with subsidies and giving away money, but only creating wealth can you combat poverty in a sustainable way. Chavez is not concerned with generating growth. Because he thinks wealth is badly distributed, he looks to eliminate inequality making everyone poor as manager Gustavo Nahmens tells us. Creating wealth is not Chavez€™ priority. On the contrary, he seems intent in destroying it. Instead of backing private initiatives, he harasses the private sector, who he considers his enemy for having signed in favor of the recall referendum. The populist policies of the Government, together with the lack of confidence in the future of the country and to a tax policy that forces companies to pay the VAT ahead of time-on the basis of measures set by the State-provoked the fall of investment and the bankruptcy of many firms. According to data from Fedecamaras, in the last six years half the private companies have disappeared, which was followed by and increase in unemployment. The high price of oil, debt, the improvement in tax collection and the CD's issued by the Central Bank (by as much as US$ 5 billion) are insufficient to take care of the expenditure race that Chavez is propelling. Despite the increase in income, the fiscal deficit increases (US$ 9 billion) The lack of administrative control and competence facilities corruption. A new revolutionary elite has surged that moves from the poor barrio to live in the mansions of exclusive areas. Despite the bad economic situation, there is a waiting list in Venezuela to buy high end cars, that only enriched Chavistas are ready to acquire. Chaos in the financial execution of public funds accentuated with the creation of a parallel financial sector. Without much infrastructure and without experts who had his confidence, Chavez created eight new banks-Bank of Women, Bank of the People, Bank of Popular Housing, Bank of the Armed Forces etc.-which give out loans without guarantees and without worrying about collecting. Delinquency in Venezuela ranges between 8 and 10%, but that if these banks reaches 53%, despite their recent creation, some have been refloated by the State up to four times. Social programs under Chavez are doubly costly, since they duplicate activities and function of already existing institutions. In the poor barrios he created health clinics and centers with Cuban doctors, but he is allowing the slow agony of the Social Security system (Hospital and emergencies), cutting their budgets. All of it has a political end. For Chavez, what was there before he got to power, does not work. The only things that work are those he creates.One of the measures that increased the popularity of the Venezuelan President the most before the recall referendum was a network of popular supermarkets known as Mercal-that offer foodstuffs at subsidized prices. In some products, Mercal supplies 40% of what Venezuelans eat. Sugar, flour, rice, beans, milk, oil, canned goods, pasta and other products enjoy a direct subsidy (the difference between the purchase and the sale price) and an indirect one when the price is not affected by operating and administrative costs. The program is beginning to come apart at the seams: an increasing number of foodstuffs are detoured to parallel markets at free market prices. The same beneficiaries stockpile them, and sell them. Mercal confronts increasing difficulties due to its management, commercial and financial contradictions. Chavez is imposing a barter economy. He gives oil in exchange for political support or diverse products. To Castro's regime he facilitates under advantageous conditions some 80,000 barrels of oil a day, that Havana pays for by sending 16,000 doctors sports trainers m advisors and agents of all kinds. Given the good friendship n that Chavez maintains with Kirchner, he will buy 500 million dollars of Argentine debt and sends crude in exchange for pregnant calves. He exchanges with China fuel oil for bicycles and tractors. 7:24:41 PM    comment []

Thoughts on armies by Alberto Barreda Alberto Barreda in today's El Nacional (page A-12) expresses something I have always believed in about the Venezuelan military, which becomes even more important in the context of the new reserves and the assymetric war: "It it not an epistemological whim. The truth is that I can not stop thinking that armies, in general, are symbols of backwardness in our civilization, an expression of human misery, of the inability to face and resolve differences in a different way. The history of humanity can be a detailed registry of the adminsitration of violence, of its controls, of its domination. Armies are the last powerful reresentation of a kingdom that should by now be, more than anything, an antiquity." 2:00:42 PM    comment []

Chavez' folly: The President Chavez continued raising the specter of an external enemy Friday. This strategy of inducing fear and nationalistic feelings in the population is typical of autocratic regimes that want to hide the failure of their accomplishments. In this case, the Chavez administration has raised the fear of a US invasion which is seldom mentioned explicitly but is referred to as the “asymmetrical war”. The subject is brought up almost daily and is accompanied by the daily mention of the military reserve, which has quickly grown from an already exaggerated half a million men to two million in less than two weeks. The whole thing is not only typical of autocrats, but it shows the military framework of Chavez’ mind. This is a folly that will cost money and effort and bring nothing to the Venezuelan population but grief and wasted resources. Chavez’ folly is embarking Venezuela in a terrible path attempting to create fears that exist only in Chavez’ mind. But as usual, it will be the people, those same “people” that Chavez regularly claims to love and care for that will pay and suffer for all of it. On Friday Chavez announced that in the next few months there would be joint military exercises between the armed forces and the civil population. About the only good thing he said was that Otaiza was wrong in calling for the hate of the US, but Otauza is still holding his post. Here, in his own words, Chavez defines the asymmetric war and the folly he is embarking this poor country on: “ Never in 100 years, that we recall, the thesis that is being considered that leads us to think in military maneuvers that are not only military, but are civilian-military has occured. The participation of the people in the defense of the country, and in the promotion of the country, is essential in the asymmetric war we are starting to focus on here” “The asymmetric war, in short, can be described as a war strategy that a contender under inferior conditions uses to confront an enemy whose military forces openly surpass their own, not only quantitatively but technologically. The asymmetry supposes the application of non conventional tactics, like guerrilla war and terrorism, with the purpose of wearing down the adversary: it is considered that the US Army is involved in an asymmetrical conflict with the Iraqi resistance.” “In an eventual conflict, there will be various steps of defense; the first one will be the structured armed forces, the second one, the organized reserve, and the last, all of the people, in a sequence of retreats to the plains, the barrios, and the mountains. With this the potential enemies that would think of invading Venezuela to appropriate its oil richness “would leave with their tail between their legs." There you have it, direct from the madman's mouth. 10:59:11 AM    comment []