Friday, November 20, 2015

Venezuela -- Upside Down, As Usual


Venezuelan voters will participate in legislative elections early next month.  Against widespread opposition, President Nicolas Maduro is working hard to maintain his party's control of the National Assembly.

Election authorities have refused to put at least one opposition leader's name on the ballot, but Maduro's very political wife has secured a ballot slot.  

Another opposition leader, jailed for inciting violence after national protests in 2014, was sentenced in September to almost 14 years in prison after an apparently rigged trial that has been condemned by Human Rights Watch and protested by the US Department of State.
       Yesterday the man's wife said she was "cornered by violent collectives" -- more than 100 motor bikes and trucks -- as she traveled to carry his message to the southwest part of the country.

In Venezuela, it was ever thus.  The country's fate seems determined by the volatile value of its enormous oil reserves.

Hugo Chavez

Chavez Memorialized

Hugo Chavez, the Venezuelan president from 1999 until his death in 2013, began agitating against the previous government in 1992.  He tapped into widespread dissatisfaction in the country.  

Oil, which accounts for 90 percent of Venezuela's exports, was selling at low prices in the 1980s and 1990s.  Despite a broad expansion and improvement of education in the country during this period,* average wages declined by 70 percent.  

People were understandably ready for a change, and Chavez was elected.  He had the good fortune to be president when oil prices began to shoot up in the early 2000s.  His government used the new riches to provide social welfare benefits that the broader population deeply craved.  He was very popular, especially among the poor.

Chavez fashioned his own form of Venezuelan socialism, known as Chavismo.  He castigated the rich as greedy leeches, and he nationalized joint venture oil partners like ExxonMobil and Conoco, replacing their leadership and technical employees with loyalists.


Venezuelan oil is not like light, sweet crude.  It is less pure with more sulfur -- more expensive to pump and to process.  This was not a problem as long as oil prices were high.  In fact, oil prices continued to rise during Chavez' tenure, running above $100 a barrel from 2010 until early last year.

Then, when oil prices declined, several problems came to light.  Maintenance of drilling and refining infrastructure had been deferred while oil revenues were devoted to social programs.  The loyalist managers also did not replace the technical skills lost when large companies and their staffs were tossed out.  And the high costs of extraction and refining made Venezuela's oil industry much less profitable.

By the end of last year, Venezuela had begun importing oil from Algeria and Russia.

By early this year, Venezuelan wells were producing 13 percent less oil than they had in 1999, and the oil was selling for less the half its 2012 price. 

Maduro's Problem

Reduced oil revenues, coupled with very high currency inflation, has frustrated Venezuelan citizens.  The government set price limits on certain essential goods, which discouraged companies from producing enough to meet popular demand.

As soon as price-controlled goods hit the stores, they were snatched up, often by black marketeers who resold the goods at higher prices.

We read last year that Venezuela was facing a toilet paper shortage, among others.  A government report leaked two months ago concluded that at least 15 food items and 26 cleaning and personal care products were essentially unavailable in Venezuela.  Unavailability of baby diapers was 96 percent; fruits, 92 percent; toothpaste, 58 percent, and on and on.   

Now lines form overnight at two-thirds of Venezuela's stores, private and public.  Grocery stores are patrolled by Venezuelan soldiers.  Working as a delivery truck driver has become a dangerous job. 

Early this year, the Venezuelan government arrested the chief executive of a private supermarket chain and accused him of provoking the long lines outside his stores.  The charge seems to be that the private sector was hoarding goods, possibly to smuggle them out of the country.

Things are hard in Venezuela right now.  A South American survey group says that 30 percent of the population ate two meals or less each day in the second quarter of 2015; the proportion had been 20 percent in the first quarter.


Support for Maduro is at or below 25 percent, and there are worries about the legitimacy of the December 6 elections.  

Brazil, which was to send election observers, has withdrawn from the program, citing Venezuelan manipulation and insufficient transparency.  The head of the Organization of American States has said the scales are stacked in favor of the ruling party. 

Failed Government?

The Chavismo movement always has been heavy-handed in its approach to governance, and it always has taken care of its own. 

There's an old expression -- Meet the new boss, same as the old boss -- that may apply here. 

A couple months ago, it was reported that Hugo Chavez' 35-year-old daughter is the richest woman in Venezuela.  Her net worth of $4.2 billion is invested mostly in the US and Andorra, which have more stable currencies and economies than Venezuela's.
       Nobody seems to have advanced a theory of how she amassed this wealth, but her father used to say, "The rich don't work, they're lazy." One Latin American paper called the situation  "(in)compatible with the socialist doctrine that Chavez tried to force on the oil-rich country." 
     Chavez died two years ago, but his daughters still live, very comfortably and at the country's expense, in Venezuela's presidential palace. Maduro, who succeeded Chavez, lives in the vice president's quarters.
     There have been other charges of Chavez family corruption.  

Maduro's wife has been active in the Chavismo uprisings and government for more than 20 years.  A former (and presumably future) legislator, she succeeded her husband as speaker of the National Assembly when he became foreign minister.  
     During her five years in the leadership, she installed 40 of her family members in legislative jobs.  When people objected, she maintained, apparently with a straight face, that all 40 were the most qualified candidates for their positions. One of her nephews holds three jobs and titles:  national treasurer, CFO of the state oil company and director of the Venezuelan development bank.
     A couple weeks ago, two other nephews were arrested in Haiti and extradited to the United States for scheming to smuggle cocaine from Honduras to the US.  She of course has said this was an American plot.

I'm sure any serious investigator could find many more connections between Chavez supporters and lucrative jobs and fortunes. 

The point is not that socialism failed in Venezuela.  It doesn't seem as if socialism ever was given a try there.  It's just another strong-man government buying people's support with their own money.

Like many revolutions inspired by revulsion at sitting governments, the Chavez movement replicated the government it replaced but with a new name.

* One of the most distinctive elements of Venezuela's improved education system was the development of possibly the finest public music education program in the world.  It started in the pre-Chavismo period and presumably has been continued since.

One of its most famous alumni is Gustavo Dudamel, just 34, who is in his seventh season as the Music and Artistic Director of the Los Angeles Philharmonic, which has signed him to a contract through 2022.  He is also the Music Director of the Simon Bolivar Symphony Orchestra of Venezuela.  Dudamel is in demand as a guest conductor worldwide and has devoted himself to musical education for children. 

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