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Venezuela Also Is Being Overthrown By The Criminal Regime In Washington — Paul Craig Roberts – PaulCraigRoberts.org

Venezuela Also Is Being Overthrown By The Criminal Regime In Washington — Paul Craig Roberts – PaulCraigRoberts.org.

Dear Readers, now that US Secretary of State John Kerry has issued an ultimatum to Russia, telling Putin that he has until Monday to follow Washington’s orders or else,
hopefully everyone can see the repeat of the March of Folly that produced World War 1.
In my last column, “Merkel Whores For Washington,” I mistakenly attributed to Khrushchev all transfers of Russian territory to Ukraine. The first gifts of Russian territories to Ukraine were made by Lenin, and the last was Sevastopol in the early 1990s. I have posted today Alexandr Solzhenitsyn’s account of how Russian territory was given to Ukraine. In the meantime, Washington’s puppet regime in Kiev has sent in thugs to commit violence against protesting Russians who want nothing to do with Washington’s stooges in Kiev, prompting Russia to issue another warning that the Russian military will protect Russians. Clearly, Washington is doing everything it can to provoke Putin into sending the Russian Army into eastern Ukraine. Now that Merkel has sold out Europe, the course of Ukrainian events seems clear, which provides an opportunity for me to address Washington’s coup-in-the-making against Venezuela.

Venezuela Also Is Being Overthrown By The Criminal Regime In Washington

Paul Craig Roberts

The Washington orchestrated coup in Ukraine has kept Venezuela out of the headlines.
A confrontation with nuclear armed Russia is more dangerous than with Venezuela. But the violence that Washington has unleashed on Venezuela almost simultaneously with Ukraine is testimony to Washington’s stark criminality.

South America has always consisted of a tiny Spanish elite with all the money and power ruling over large majority populations of indigenous peoples who have not had political representation. In Venezuela, Chavez broke this pattern. An indigenous president was elected who represented the people and worked in their behalf instead of looting the country. Chavez became a role model, and indigenous presidents were elected in Ecuador and Bolivia.

Chavez was hated by Washington and demonized by American presstitutes. When Chavez died of cancer, Washington celebrated.

Evo Morales, President of Bolivia, was inclined in favor of granting asylum to NSA whistleblower Edward Snowden. Consequently, Washington ordered its European puppet states to deny overflight permission to President Morales’ airplane on its return to Bolivia from Russia. Morales’ airplane, in violation of every diplomatic protocol, was forced down and searched. Morales has since suffered other indignities at the hands of the Washington criminals.

Rafael Correa, President of Ecuador, made himself a target of Washington by granting political asylum to Julian Assange. On Washington’s orders, Washington’s British puppet state has refused to grant free passage to Assange, and Assange is spending his life in the London Embassy of Ecuador, just as Cardinal Mindszenty spent his life in the US Embassy in Communist Hungary.

With Chavez’s death, indigenous Venezuelan Nicolas Maduro became president. Maduro does not have Chavez’s charisma, which makes him an easier target for the tiny Spanish elite that owns the media.

Washington began the attack on Maduro by attacking the Venezuelan currency and driving down its value in currency markets. Then university students, many of whom are the children of the rich Spanish elites, were sent out to protest. The falling Venezuelan currency raised prices and spread dissatisfaction among Maduro’s poor indigenous base. To put down the rioting, property damage, and unrest that Washington is using to launch a coup, Maduro had to turn to the police. Secretary of State John Kerry has labeled the government’s effort to reestablish public order and forestall a coup a “terror campaign against its own citizens.”

Having orchestrated the protests and plotted a coup, Kerry blamed Maduro for the violence that Kerry unleashed and called on Maduro “to respect human rights.”

For Washington, it is always the same script. Commit a crime and blame the victim.

If Washington can overthrow Maduro, the next target will be Correa. If Washington can get rid of Correa and re-empower a puppet government of rich Spanish elites, Washington can have the Ecuadoran government revoke the political asylum that Correa granted to Julian Assange. The Ecuadoran Embassy in London will be ordered to kick Assange out into the waiting arms of the British police who will send him to Sweden who will send him to Washington to be tortured until he confesses to whatever Washington demands.

The poor gullible dupes demonstrating in Venezuelan streets have no more idea of the damage they are doing to themselves and others than their counterparts in Ukraine had. Venezuelans have already forgot what life for them was like under the rule of the Spanish elites. It appears that Venezuelans are determined to help Washington to return them to their servitude.

If Washington reconquers Venezuela and Ecuador, Bolivia will be next. Then Brazil. Washington has its sights on Brazil, because the country is a member of the BRICS (Brazil, Russia, India, China, South Africa), and Washington intends to destroy this organization before the countries can establish a trading bloc that does not use the US
dollar.

Not long ago a US official said that as soon as we (Washington) get Russia in a bind, we will deal with the upstarts in South America.

The program is on schedule.

Meanwhile, in Venezuela … |

Meanwhile, in Venezuela … |.

March 6, 2014 | Author 

Happy Death of Chavez Day

Venezuela  commemorated the late ‘Commandante’ Hugo Chavez on Wednesday – as is so often the case, the fact that the dear leader of the revolution is no longer among the quick probably helped with a good bit of nostalgic transmogrification.

One feels reminded of the many crying babushkas in the streets of Moscow when news of Stalin’s departure from this earthly plane hit, even while his former colleagues in the party probably got ready for a week of vodka-drenched partying to celebrate the psychopathic tyrant’s demise. No longer did they have to worry about who was going to be purged next.

Chavez was of course no Stalin (not by a long shot), we merely want to highlight that no matter how bad a ruler, once he goes to his eternal reward, many of those left behind begin to see him in a better light than he probably deserves. Chavez did of course shower some of Venezuela’s oil riches on the poor, and they loved him for it. However, he incidentally ran the country’s oil industry into the ground, so it was a decidedly mixed blessing, by dint of being completely unsustainable and leaving everybody poorer in the end.

Anyway, there may be a subtle subconscious message in the fact that the rulers of Venezuela have decided to commemorate Chavez’s death rather than his birth. Just saying.

As it happens, the timing was fortuitous from president Maduro’s perspective, as he has an ongoing counter-revolution problem on his hands. He used the opportunity to try to imitate the dear departed “Commandante” by declaring Panama a lapdog of the capitalist enemy deserving to be banned from polite socialist company. Chavez’ cousin meanwhile spontaneously dispensed some valuable advice to Maduro.

Reuters reports:

“Followers of late socialist leader Hugo Chavez flooded the streets of Venezuela on Wednesday for the anniversary of his death, an emotional but welcome distraction for his successor from violent protests raging for the last month.

A year after Chavez succumbed to cancer, his self-proclaimed “son,” President Nicolas Maduro, faces the biggest challenge to his rule from an explosion of anti-government demonstrations that have led to 18 deaths since February.

Though the protests do not appear likely to topple Maduro, neither do they seem to be going away. A hard core of students are determined to maintain street barricades and militant opposition leaders organize daily rallies around Venezuela. Wednesday’s military parade and other events to honor “El Comandante” gave Maduro, 51, an opportunity to reclaim the streets and show that he too can mobilize his supporters.

“This anniversary is enormously sad. There’s not a single day I don’t remember Hugo,” Chavez’s cousin, Guillermo Frias, 60, said from Los Rastrojos village in rural Barinas state, where the pair used to play baseball as kids.

“He changed Venezuela forever, and we cannot go back. Maduro also is a poor man, like us. He’s handling things fine. Perhaps he just needs a stronger hand,” he told Reuters.

Tens of thousands of red-clad “Chavistas” gathered for rallies in Caracas and elsewhere in honor of Chavez, whose 14-year rule won him the adoration of many of Venezuela’s poorest, while alienating the middle and upper classes. Cannon-shots marked the precise time of his death, 4:25 p.m.

Maduro used the occasion to announce the breaking of diplomatic and commercial ties with Panama, whose conservative government he accused of joining the United States in “open conspiracy” against him.

“We’re not going to let anyone get away with interfering with our fatherland, you despicable lackey, president of Panama,” Maduro said in fiery language reminiscent of Chavez.”

(emphasis added)

Poor Maduro just ‘needs a stronger hand’. Doesn’t every good leader? Well, he sure showed that ‘despicable lackey’, the president of Panama. We have no idea what the latter actually did to become the target of such opprobrium. However, Panama reportedly has a great deal more economic freedom than either Venezuela or the US. You may therefore regard us as part of the despicable lackey’s fan club.

Meanwhile, although there seems to be widespread agreement that Maduro cannot be toppled by the protests, the demonstrations actually seem bigger than those seen in Kiev recently (judging just from a quick glance at the pictures, mind). The Kiev protests were probably only more visually arresting due to the constant Molotov cocktail throwing. Here is a picture from an anti-government march in Caracas last Saturday:

Venezuela Protests

A tiny handful of counter-revolutionary malcontents disturbs traffic in Caracas last Saturday. Yes,  Maduro may need a ‘stronger hand’.

(Photo by Juan Barretto / Getty Images)

Elsewhere, currency traders on the black market seemed to celebrate Chavez’ death day as well, by temporarily pushing the bolivar’s true exchange rate higher:

black market bolivar

The ‘parallel’ bolivar strengthens to 79,50 to the dollar from its recent record low of about 90.

We have little doubt it is a selling opportunity, given that Maduro is demonstrably utterly clueless about matters economic.

For all its faults, Venezuela still has a stock market though, which gives those with assets to protect a chance to escape the effects of the inflation of the currency. Recently, the index was subject of a cosmetic 1000:1 split (an index value of 2,700 looks more credible than one of 2,700,000):


 

caracas, decade, log

A bubbly decade on the Caracas Stock Exchange. A similar stock market boom occurred in Zimbabwe, in spite of the economy imploding completely, with formal economy unemployment reportedly soaring to 80%. As Kyle Bass remarked about that particular boom: ‘In the end, you could buy three eggs with your gains’ – click to enlarge.


El Commandante Didn’t Die – He ‘Multiplied’

The celebrations were apparently not exactly lacking in unintentional comedy either:

“Maduro presided over a parade in the capital before leading crowds up to the hilltop military museum where Chavez led a 1992 coup attempt that launched his political career. His remains have been laid to rest in a marble sarcophagus there.

“Hugo Chavez passed into history as the redeemer of the poor,” the president said, comparing his mentor to both Jesus and South American independence hero Simon Bolivar.

Prominent leftist allies including Cuban President Raul Castro joined the lavish ceremonies in Caracas.

[…]

State media have rolled out round-the-clock hagiographical coverage of the late president. Some Chavez loyalists seem barely able to use the word “death,” preferring euphemisms such as his “physical disappearance” or “sowing in the sky.”

“Chavez didn’t die; he multiplied!” said state TV.

(emphasis added)

Well, if he is comparable to Jesus, then it is presumably no wonder that he ‘multiplied’. Look at it as a kind of Chavista selfie version of the luxury miracle at the Wedding of Cana.

What is less funny is that so far, 18 people have died in the protests. The government meanwhile tried to take the edge off the demonstrations by declaring a 6 day-long carnival holiday. As one protester remarked:

“A long six-day national holiday for Carnival and now the anniversary of Chavez’s death have taken some wind out of the protests, but a rump of demonstrators stay out daily.

“Various presidents are here and we want to show them that Venezuela is sick,” said Silvana Lezama, a 20-year-old student, standing in front of a Venezuelan flag as she stood guard at a barricade in the upscale El Cafetal district of Caracas.

“We’re not insulting Chavez, but when he died last year there was a week of mourning. Now we have 18 people dead from protests and they declared five days of Carnival holiday.”

(emphasis added)

Evidently, not everybody feels like there is a good reason for celebrations at this time.

A Chicken in Every Pot Becomes a Plasma TV in Every Home

One wonders what the malcontents are complaining about. After all, Maduro promises the provision of endless material delights, the establishment of the long promised socialist Land of Cockaigne in our lifetime:

In order to combat the country’s massive inflation of over 50 percent, Maduro has introduced price controls. Shops that demand prices that he believes are too high are simply occupied. “We will guarantee everyone has a plasma television,” the president has said, and has forced stores to sell them cheaply.

“It is plundering under the aegis of the state,” says Diego Arriaformerly Venezuela’s UN ambassador. “Maduro is destroying the private sector.”

Many shops are empty, with even corn flour, milk and toilet paper subject to shortages. Lines like those seen in Cuba have become common and people are desperately trying to get their hands on dollars. “A perfect storm is brewing in Venezuela,” says Arria.

The government has been having difficulties supplying even the basics in the slums of Caracas. In the vast quarter of “23 de enero,” people stand in long lines in front of the state-run supermarket; they are issued numbers on strips of cardboard. Chavistas control entry to the store and glorify Maduro and the revolution to shoppers. Most of those waiting remain silent. Every three days, they mumble quietly when the guards aren’t paying attention, their food coupons will get them chicken from Brazil and two kilograms of flour, but nothing more.

(emphasis added)

No wonder Arria is a ‘former’ ambassador, he obviously doesn’t properly grasp the  wisdom of supplying everybody with a Plasma TV with a wave of the presidential magic wand (but not, apparently, with toilet paper and other staples). Those silent shoppers who only “mumble quietly when their guards aren’t paying attention” would make us nervous if we were a guard…

Here is a recent photograph of a store in Maracaibo:

store-empty-shelves

Maracaibo, Super Lider store. Image via @orlandobuesomir: Empty shelves in a PDVAL store in Venezuela.


Maracaibo! In the early days of personal computing we regularly conquered its fortress as one of the freebooters in Sid Meyer’s ‘Pirates’ game. Don’t worry, it was all legal, we had a letter of marque. Moreover, we managed to win the hand of the governor’s daughter after convincing her of our dancing prowess (it was a simple, but really funny game).

For some reason not all Venezuelans seem equipped with Plasma TVs yet, so something has apparently gone wrong. Could it be the fault of global warming? After all, it was just identified as being responsible for the budding ‘guacamole crisis‘, among approximately 5,000 other things it is held to be the cause of. So why not the appalling lack of Plasma TV saturation in Venezuela? Makes more sense than the old ‘socialism just doesn’t work’ canard, right?

We can however confidently state that Maduro is not completely without cunning. He sure knows whom he needs to keep on his side, even it that is allegedly not really working out the way it was supposed to either:

“Venezuela’s military has more power under Maduro, a civilian, than it did under the former officer Chávez. Maduro has handed out senior jobs to some 2,000 soldiers and the military now occupies key positions in business and controls entire companies. Late last week, Maduro sent a parachute battalion to Táchira to curtail the protests there.

But even in the military, dissatisfaction is spreading. “The soldiers just haven’t yet had the courage to open their mouths,” says one administrative employee who works in Fuerte Tiuna, a military base on the outskirts of Caracas.

Even Chávez had begun to realize that the enemy was within. He had officers and a former defense minister who had been critical of him arrested and imprisoned on charges of corruption. Some of them remain locked up in the Ramo Verde military prison not far from Caracas — just a few cells away from Leopoldo López.”

(emphasis added)

Still, buying off the military by handing its leaders ‘senior jobs’ and letting them occupy key positions in business is a strategy that has e.g. worked extremely well in Egypt, where the military controls 40% of the economy and in spite of a temporary setback continues to rule as if Mubarak had never gone away.

venezuela-0218-horizontal-galleryPolicemen during protests in Caracas. So far, they are being hit with stuff that looks a lot more harmless than the Molotov cocktails thrown in Kiev.

(Photo by Juan Barretto / Getty Images)

As one Chavista told reporters (also dispensing advice to the hapless Maduro, so that he may ‘find his own voice’ one day):

Maduro’s had it tough. He has to find his own path, his own ideas, his own speech. He’s not Chavez. The commander is gone; we can’t mourn him permanently. There’s so much work to do, errors to correct,” said Marisol Aponte, a diehard “Chavista” and community activist from a poor zone of west Caracas.

She urged Maduro to purge his cabinet and modernize Chavez-era social programs.”

(emphasis added)

There you go! A good, old-fashioned purge! Even if Chavez failed at this task,  Maduro has an opportunity to one-up him that he only needs to firmly grasp, by ruthlessly employing that ‘strong hand’ Chavez’ cousin is pining for. Can he perhaps become like Stalin?

Naah. Not with that attire:

 


 

maduro-bird-hat

Nicolas Maduro, wearing a landing pad for errant birds.

(Photo via Reuters)

 


 

 

Charts by: BigCharts, dolares.eu

Meanwhile, in Venezuela … |

Meanwhile, in Venezuela … |.

March 6, 2014 | Author 

Happy Death of Chavez Day

Venezuela  commemorated the late ‘Commandante’ Hugo Chavez on Wednesday – as is so often the case, the fact that the dear leader of the revolution is no longer among the quick probably helped with a good bit of nostalgic transmogrification.

One feels reminded of the many crying babushkas in the streets of Moscow when news of Stalin’s departure from this earthly plane hit, even while his former colleagues in the party probably got ready for a week of vodka-drenched partying to celebrate the psychopathic tyrant’s demise. No longer did they have to worry about who was going to be purged next.

Chavez was of course no Stalin (not by a long shot), we merely want to highlight that no matter how bad a ruler, once he goes to his eternal reward, many of those left behind begin to see him in a better light than he probably deserves. Chavez did of course shower some of Venezuela’s oil riches on the poor, and they loved him for it. However, he incidentally ran the country’s oil industry into the ground, so it was a decidedly mixed blessing, by dint of being completely unsustainable and leaving everybody poorer in the end.

Anyway, there may be a subtle subconscious message in the fact that the rulers of Venezuela have decided to commemorate Chavez’s death rather than his birth. Just saying.

As it happens, the timing was fortuitous from president Maduro’s perspective, as he has an ongoing counter-revolution problem on his hands. He used the opportunity to try to imitate the dear departed “Commandante” by declaring Panama a lapdog of the capitalist enemy deserving to be banned from polite socialist company. Chavez’ cousin meanwhile spontaneously dispensed some valuable advice to Maduro.

Reuters reports:

“Followers of late socialist leader Hugo Chavez flooded the streets of Venezuela on Wednesday for the anniversary of his death, an emotional but welcome distraction for his successor from violent protests raging for the last month.

A year after Chavez succumbed to cancer, his self-proclaimed “son,” President Nicolas Maduro, faces the biggest challenge to his rule from an explosion of anti-government demonstrations that have led to 18 deaths since February.

Though the protests do not appear likely to topple Maduro, neither do they seem to be going away. A hard core of students are determined to maintain street barricades and militant opposition leaders organize daily rallies around Venezuela. Wednesday’s military parade and other events to honor “El Comandante” gave Maduro, 51, an opportunity to reclaim the streets and show that he too can mobilize his supporters.

“This anniversary is enormously sad. There’s not a single day I don’t remember Hugo,” Chavez’s cousin, Guillermo Frias, 60, said from Los Rastrojos village in rural Barinas state, where the pair used to play baseball as kids.

“He changed Venezuela forever, and we cannot go back. Maduro also is a poor man, like us. He’s handling things fine. Perhaps he just needs a stronger hand,” he told Reuters.

Tens of thousands of red-clad “Chavistas” gathered for rallies in Caracas and elsewhere in honor of Chavez, whose 14-year rule won him the adoration of many of Venezuela’s poorest, while alienating the middle and upper classes. Cannon-shots marked the precise time of his death, 4:25 p.m.

Maduro used the occasion to announce the breaking of diplomatic and commercial ties with Panama, whose conservative government he accused of joining the United States in “open conspiracy” against him.

“We’re not going to let anyone get away with interfering with our fatherland, you despicable lackey, president of Panama,” Maduro said in fiery language reminiscent of Chavez.”

(emphasis added)

Poor Maduro just ‘needs a stronger hand’. Doesn’t every good leader? Well, he sure showed that ‘despicable lackey’, the president of Panama. We have no idea what the latter actually did to become the target of such opprobrium. However, Panama reportedly has a great deal more economic freedom than either Venezuela or the US. You may therefore regard us as part of the despicable lackey’s fan club.

Meanwhile, although there seems to be widespread agreement that Maduro cannot be toppled by the protests, the demonstrations actually seem bigger than those seen in Kiev recently (judging just from a quick glance at the pictures, mind). The Kiev protests were probably only more visually arresting due to the constant Molotov cocktail throwing. Here is a picture from an anti-government march in Caracas last Saturday:

Venezuela Protests

A tiny handful of counter-revolutionary malcontents disturbs traffic in Caracas last Saturday. Yes,  Maduro may need a ‘stronger hand’.

(Photo by Juan Barretto / Getty Images)

Elsewhere, currency traders on the black market seemed to celebrate Chavez’ death day as well, by temporarily pushing the bolivar’s true exchange rate higher:

black market bolivar

The ‘parallel’ bolivar strengthens to 79,50 to the dollar from its recent record low of about 90.

We have little doubt it is a selling opportunity, given that Maduro is demonstrably utterly clueless about matters economic.

For all its faults, Venezuela still has a stock market though, which gives those with assets to protect a chance to escape the effects of the inflation of the currency. Recently, the index was subject of a cosmetic 1000:1 split (an index value of 2,700 looks more credible than one of 2,700,000):


 

caracas, decade, log

A bubbly decade on the Caracas Stock Exchange. A similar stock market boom occurred in Zimbabwe, in spite of the economy imploding completely, with formal economy unemployment reportedly soaring to 80%. As Kyle Bass remarked about that particular boom: ‘In the end, you could buy three eggs with your gains’ – click to enlarge.


El Commandante Didn’t Die – He ‘Multiplied’

The celebrations were apparently not exactly lacking in unintentional comedy either:

“Maduro presided over a parade in the capital before leading crowds up to the hilltop military museum where Chavez led a 1992 coup attempt that launched his political career. His remains have been laid to rest in a marble sarcophagus there.

“Hugo Chavez passed into history as the redeemer of the poor,” the president said, comparing his mentor to both Jesus and South American independence hero Simon Bolivar.

Prominent leftist allies including Cuban President Raul Castro joined the lavish ceremonies in Caracas.

[…]

State media have rolled out round-the-clock hagiographical coverage of the late president. Some Chavez loyalists seem barely able to use the word “death,” preferring euphemisms such as his “physical disappearance” or “sowing in the sky.”

“Chavez didn’t die; he multiplied!” said state TV.

(emphasis added)

Well, if he is comparable to Jesus, then it is presumably no wonder that he ‘multiplied’. Look at it as a kind of Chavista selfie version of the luxury miracle at the Wedding of Cana.

What is less funny is that so far, 18 people have died in the protests. The government meanwhile tried to take the edge off the demonstrations by declaring a 6 day-long carnival holiday. As one protester remarked:

“A long six-day national holiday for Carnival and now the anniversary of Chavez’s death have taken some wind out of the protests, but a rump of demonstrators stay out daily.

“Various presidents are here and we want to show them that Venezuela is sick,” said Silvana Lezama, a 20-year-old student, standing in front of a Venezuelan flag as she stood guard at a barricade in the upscale El Cafetal district of Caracas.

“We’re not insulting Chavez, but when he died last year there was a week of mourning. Now we have 18 people dead from protests and they declared five days of Carnival holiday.”

(emphasis added)

Evidently, not everybody feels like there is a good reason for celebrations at this time.

A Chicken in Every Pot Becomes a Plasma TV in Every Home

One wonders what the malcontents are complaining about. After all, Maduro promises the provision of endless material delights, the establishment of the long promised socialist Land of Cockaigne in our lifetime:

In order to combat the country’s massive inflation of over 50 percent, Maduro has introduced price controls. Shops that demand prices that he believes are too high are simply occupied. “We will guarantee everyone has a plasma television,” the president has said, and has forced stores to sell them cheaply.

“It is plundering under the aegis of the state,” says Diego Arriaformerly Venezuela’s UN ambassador. “Maduro is destroying the private sector.”

Many shops are empty, with even corn flour, milk and toilet paper subject to shortages. Lines like those seen in Cuba have become common and people are desperately trying to get their hands on dollars. “A perfect storm is brewing in Venezuela,” says Arria.

The government has been having difficulties supplying even the basics in the slums of Caracas. In the vast quarter of “23 de enero,” people stand in long lines in front of the state-run supermarket; they are issued numbers on strips of cardboard. Chavistas control entry to the store and glorify Maduro and the revolution to shoppers. Most of those waiting remain silent. Every three days, they mumble quietly when the guards aren’t paying attention, their food coupons will get them chicken from Brazil and two kilograms of flour, but nothing more.

(emphasis added)

No wonder Arria is a ‘former’ ambassador, he obviously doesn’t properly grasp the  wisdom of supplying everybody with a Plasma TV with a wave of the presidential magic wand (but not, apparently, with toilet paper and other staples). Those silent shoppers who only “mumble quietly when their guards aren’t paying attention” would make us nervous if we were a guard…

Here is a recent photograph of a store in Maracaibo:

store-empty-shelves

Maracaibo, Super Lider store. Image via @orlandobuesomir: Empty shelves in a PDVAL store in Venezuela.


Maracaibo! In the early days of personal computing we regularly conquered its fortress as one of the freebooters in Sid Meyer’s ‘Pirates’ game. Don’t worry, it was all legal, we had a letter of marque. Moreover, we managed to win the hand of the governor’s daughter after convincing her of our dancing prowess (it was a simple, but really funny game).

For some reason not all Venezuelans seem equipped with Plasma TVs yet, so something has apparently gone wrong. Could it be the fault of global warming? After all, it was just identified as being responsible for the budding ‘guacamole crisis‘, among approximately 5,000 other things it is held to be the cause of. So why not the appalling lack of Plasma TV saturation in Venezuela? Makes more sense than the old ‘socialism just doesn’t work’ canard, right?

We can however confidently state that Maduro is not completely without cunning. He sure knows whom he needs to keep on his side, even it that is allegedly not really working out the way it was supposed to either:

“Venezuela’s military has more power under Maduro, a civilian, than it did under the former officer Chávez. Maduro has handed out senior jobs to some 2,000 soldiers and the military now occupies key positions in business and controls entire companies. Late last week, Maduro sent a parachute battalion to Táchira to curtail the protests there.

But even in the military, dissatisfaction is spreading. “The soldiers just haven’t yet had the courage to open their mouths,” says one administrative employee who works in Fuerte Tiuna, a military base on the outskirts of Caracas.

Even Chávez had begun to realize that the enemy was within. He had officers and a former defense minister who had been critical of him arrested and imprisoned on charges of corruption. Some of them remain locked up in the Ramo Verde military prison not far from Caracas — just a few cells away from Leopoldo López.”

(emphasis added)

Still, buying off the military by handing its leaders ‘senior jobs’ and letting them occupy key positions in business is a strategy that has e.g. worked extremely well in Egypt, where the military controls 40% of the economy and in spite of a temporary setback continues to rule as if Mubarak had never gone away.

venezuela-0218-horizontal-galleryPolicemen during protests in Caracas. So far, they are being hit with stuff that looks a lot more harmless than the Molotov cocktails thrown in Kiev.

(Photo by Juan Barretto / Getty Images)

As one Chavista told reporters (also dispensing advice to the hapless Maduro, so that he may ‘find his own voice’ one day):

Maduro’s had it tough. He has to find his own path, his own ideas, his own speech. He’s not Chavez. The commander is gone; we can’t mourn him permanently. There’s so much work to do, errors to correct,” said Marisol Aponte, a diehard “Chavista” and community activist from a poor zone of west Caracas.

She urged Maduro to purge his cabinet and modernize Chavez-era social programs.”

(emphasis added)

There you go! A good, old-fashioned purge! Even if Chavez failed at this task,  Maduro has an opportunity to one-up him that he only needs to firmly grasp, by ruthlessly employing that ‘strong hand’ Chavez’ cousin is pining for. Can he perhaps become like Stalin?

Naah. Not with that attire:

 


 

maduro-bird-hat

Nicolas Maduro, wearing a landing pad for errant birds.

(Photo via Reuters)

 


 

 

Charts by: BigCharts, dolares.eu

A cascade of woes hitting Venezuela’s oil industry « The Barrel Blog

A cascade of woes hitting Venezuela’s oil industry « The Barrel Blog.

By John Kingston | February 28, 2014 10:11 PM 

At a conference that annually celebrates–for the most part–the explosion of North American supply, a panel that featured two PDVSA alumni turned into a bleak review of an almost unfathomable crisis gripping the Venezuelan oil industry.

The strife in the streets of Caracas, and the lines of people waiting to buy the basic stuff of life, are almost secondary to the fact that, as the panelists noted, the Venezuelan government has mortgaged the future of its oil industry. Waiting for the country’s rapidly sinking ship of state to be righted by an increase in production, and maybe a boost in prices too, increasingly appears to be a pipe dream.

The two panelists discussing this on day two of the Platts Crude Oil Market-Americas conference in Houston were Alberto Cisnernos Lavalier, CEO and president of Caracas-based Global Business Consultants, and Ramon Espinasa, the lead oil and gas specialist in the Infrastructure and Environment Department at the Interamerican Development Bank.

One of the topics to be discussed at the panel was whether Venezuela was ripe for a “mini-apertura,” an opening into new investment in the country’s oil sector. The initial apertura of the 90′s was squashed by the election of Hugo Chavez as Venezuelan president, and it started the downward spiral of Venezuelan production that sent output down to 2.1 million b/d from 3.6 million b/d at its peak.

After listening to the panelists, one could only conclude that the industry is ripe for total collapse, not a surge in foreign investment.

Cisnernos noted Venezuela’s series of financial deals with China, in which loans from the Asian country are sent to Caracas in exchange for oil. The oil is sold at fixed-price numbers, which don’t look all that bad at first glance, up in the $90-$100 level, but in which the prices are CIF China and Venezuela absorbs the shipping cost. He reviewed the complicated structures of the various deals, ultimately describing them as “mortgaging the future.”

The Venezuela-China deals also violate the market’s “iron law” that usually sees oil marketed regionally, Cisnernos said. Instead, shipments taking 35-45 days to China are replacing one-week voyages into the US, Cisnernos said. And since most of the shipments are of lesser-value heavy oil or fuel oil, the shipping costs are deducting a higher percentage from the final netback than if a higher-value crude was being moved.

Venezuelan shipments to China stood at 66,000 b/d in 2008, Cisnernos said, but had averaged 326,000 b/d through the first eight months of 2013; he said he drew those figures from unofficial–and undisclosed–sources. But they’ve been as high as 488,000 b/d, he added, and “it’s roller-coaster behavior. There is no relation to production.” By contrast, the decline in exports to the US very much tracks Venezuela’s sliding output.

And the debts to China are just one of the obligations facing Venezuela. The joint ventures in the Orinoco belt each need upgraders that cost anywhere from $8 billion to $10 billion each. PDVSA must put up about 60% of the costs. “How in the world are they going to be able to pay for this?” Cisnernos said.

And Espinasa echoed what Platts Oilgram News reported a few weeks ago (and which The Barrel published in this post): financing the required PDVSA contributions to the Orinoco projects have been paid for to some degree by promising future oil shipments that would otherwise have gone to the Venezuelan coffers. “For a number of PDVSA deals they have paid for them with future supply,” he said.

The list of lamentations went on, few of them particularly shocking: the enormous brain drain from PDVSA “which will take a long time to recover,” as Espinasa said; a safety record at PDVSA refineries that could charitably be described as appalling; and a refinery operating rate that may at best top out at 60%, requiring the country to import lots of things it previously had exported, like gasoline blending components.

And with the growing street unrest in the country, forget any chance of ending the subsidy of gasoline prices that keeps retail numbers at less than 10 US cents per gallon, and leads to smuggling of what Espinasa said was about 100,000 b/d of product through Colombia and other parts of the Caribbean. The government had considered it, but given street protests, that move would be—pun clearly intended–like “throwing gasoline on the fire.”

Yet Cisnernos actually showed some optimism. He said that if there was “light at the end of the tunnel”—though why there would be was not clear—then production could be like a “hammock,” continuing to slide now but rebounding by 2020.

Espinasa offered sobering numbers on the task ahead. Twice in its history as an oil producer, Venezuela produced annual average growth rates of 110,000 b/d. The first was in the post World War II period, ending in about 1958; the second was during the Luis Guisti-led apertura of the 90’s. For Venezuela to get back to its peak output of 3.6 million b/d, reached around 1997, it would need to hit that average growth rate and sustain it for at least ten years, maybe more depending on the rates of decline in existing fields.

And he didn’t say this, but that would have to be done while some of the output that would otherwise finance that growth has already been put up as a sort of petroleum dowry to China and the Orinoco partners.

Grim, indeed.

Cheap Gasoline: Why Venezuela Is Doomed To Collapse – Forbes

Cheap Gasoline: Why Venezuela Is Doomed To Collapse – Forbes.

Christopher HelmanChristopher HelmanForbes Staff

Riots in the streets. Killings of protesters. Shortages of consumer staples liketoilet paper and flour. Power outages. Confiscations of private property. Capital flight. Inflation running at more than 50%. The highest murder rate in the world.

The situation in Venezuela has grown so terrible that we could very well be witnessing the waning days of the Chavez-Maduro regime.

But don’t hold your breath. Despots propped up by revenues from natural resources have had a surprisingly robust track record over the past 100 years. Saddam Hussein survived through ruthlessness and handouts to Baath party loyalists. Khadafi perfected the same model in Libya. The Saudis and other Gulf sultanates and emirates have survived by paying off tribe members. Zimbabwe’s Robert Mugabe is still around thanks to his trade in blood diamonds.

In each case, the big boss keeps his head by paying off everyone who matters.

Hugo Chavez appeared to have the same kind of staying power. But with a difference. Rather than just focusing on lining the nests his generals and ministers and doers, Chavez, and Nicolas Maduro after him, found a different way to squander Venezuela’s great oil wealth. They could have created a mechanism by which the people of Venezuela could leverage oil wealth to finance investment and capital formation (like, say, Norway). Instead they’ve simply given it all away.

Indeed, it might not happen this month or this year, but Venezuela is ultimately doomed to collapse because of cheap gasoline.

Befitting Venezuela’s position as holder of the world’s biggest oil reserves, Chavez set the price of gasoline at the official equivalent of 5 U.S. cents per gallon. Using the more realistic black market exchange rate, a gallon of gas in Venezuela costs less than one penny. You can fill up an SUV for less than the price of a candy bar.

It’s one thing for a dictator to curry favor among his subjects by handing out cash. You can trade cash for goods today. You can save it up and buy something bigger tomorrow. And vitally, you can invest cash and create capital. Cash has unsurpassed option value.

But in Venezuela, cheap gasoline doesn’t. Sure, some enterprising Venezuelans would fill up their tanks, drive to Colombia, siphon it out and sell it for a profit. But most just take it for granted, like breathable air. You can’t trade it, can’t sell it, can’t store it up.

Over time, when a government continually gives its people a non-tradable subsidy, they will come to consider it a right, not a privilege. When that happens it will no longer occur to them to be thankful toward their generous president for the handout. When that take-it-for-granted moment occurs, the handout no longer retains any political capital for the ruler who presides over it. On the contrary, once the populous sees the subsidy as a right, it necessarily become a political liability for the leader — tying his hands and preventing the implementation of a more reasonable policy.

Grant people a right and they will thank you, for a little while. Try to take away that right and they will revolt. The last time Venezuela tried to hike gas prices, in 1989, there were riots in the streets.

Cheap gasoline is why the government of President Nicolas Maduro is doomed to collapse. He can’t raise gas prices meaningfully without setting off an even greater populist uprising than the one already wracking the capital. But without change, the Venezuelan economy and its state-run oil company Petroleos Venezuela (PDVSA) cannot last long.

Let’s work through the numbers to see how bad it is:

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Pres. Maduro with PDVSA workers. (Credit: AP)

Venezuela produces about 2.5 million barrels of oil per day, about the same as Iraq.

About 800,000 barrels per day of gasoline and diesel is consumed domestically for which PDVSA doesn’t make a dime. That’s about 290 million barrels per year in subsidy oil.

What’s that cost PDVSA? Oil minister Rafael Ramirez has said that the breakeven cost to supply refined gasoline to the masses is $1.62 per gallon, or about $70 per barrel. But because Venezuela’s refineries can’t even make enough fuel to meet demand, PDVSA also has to import about 80,000 bpd of refined products (for which they must pay the far higher market price in excess of $2.50 per gallon). All told, the subsidized fuel costs PDVSA about $50 billion a year — that’s at least $25 billion a year in fuel subsidies plus another $20 billion or so in foregone revenue that PDVSA desperately needs to reinvest into its oil fields. Even a well managed company would have trouble climbing out of such a big hole.

Deducting that 800,000 bpd of domestic consumption from the 2.5 million bpd total leaves a subtotal of 1.7 million bpd that Venezuela can sell into the world market.

But we have more deductions. In order to finance fuel subsidies and other social spending, PDVSA has borrowed massively. According to PDVSA’s statements, its debt has increased from $15.5 billion in 2008 to $43 billion now. Venezuela’s biggest creditor is China, which has reportedly loaned the country $50 billion since 2007. China is not interested in getting Venezuelan bolivars; it insists on being paid back in oil — about 300,000 bpd worth of oil.

Paying China its oil knocks PDVSA’s saleable supply down to 1.4 million bpd.

We’re not done yet. Chavez was not just generous to his own people. In an effort to make friends with his neighbors, he forged a pact called Petrocaribe, through which PDVSA delivers deeply subsidized oil to the likes of Cuba, Jamaica, Haiti and Nicaragua. Though shipments at peak were more than 200,000 bpd, including 100,000 bpd to Cuba, there’sevidence that PDVSA has cut the volumes. No wonder, when the Dominican Republic has reportedly been paying back PDVSA in black beans. Cuba sends doctors and athletic trainers. (Jamaicaputs its PetroCaribe debt to Venezuela at $2.5 billion.)

As if that weren’t enough, PDVSA, through its U.S. refining arm Citgo has even donated more than $400 million worth of heating oil to poor people in the United States. That’s about 4 million barrels over nine years.

So all that largesse knocks off another 200,000 bpd or so, bringing PDVSA’s marketable supply down to 1.3 million bpd.

Over the course of a year, selling that 1.3 million bpd of oil brings in about $50 billion in hard currency (assuming about $100 per barrel). This contrasts with PDVSA’s reported revenues of $125 billion, most of which is not in dollars, but bolivars, of uncertain worth.

That $50 billion might seem like a tidy sum, but keep in mind that this represents more than 95% of Venezuela’s foreign earnings. And that’s not enough for a country of 40 million to live on.

Because no one in their right mind would want to exchange goods for bolivars, it’s out of this pile of greenbacks that Venezuela has to pay for all its imports as well as about $5 billion a year in dollar-denominated interest payments. Venezuela’s foreign currency reserves have plunged from $30 billion at the end of 2012 to about $20 billion today.

Newspapers have closed because they can’t import paper. Toyota has stoppedmaking cars because it can’t get dollars to import parts. Shortages of sugar, milk and butter are common. The CEO of Empresas Polar, a big food manufacturer, has rejected Maduro’s criticisms that his company is to blame for shortages, insisting that because the government holds all the country’s dollars he can’t get the hard currency he needs to import raw materials.

Venezuela’s official exchange rate stands at about 6 bolivar to the dollar. But on the black market one greenback will fetch 87 bolivars or more.

If you’re an entrepreneur or a business owner in Venezuela, you’re not likely to keep throwing good money after bad there, especially if you’re a retailer like Daka. Last November Maduro ordered soldiers to occupy Daka’s five stores and forced managers to sell electronics at lower prices. In some cases looters just helped themselves.

Reuters reported that Maduro was outraged at a store selling a washing machine for 54,000 bolivars — $8,600 at the official rate. That might seem high until you hear from a business owner: “Because they don’t allow me to buy dollars at the official rate of 6.3, I have to buy goods with black market dollars at about 60 bolivars, so how can I be expected to sell things at a loss? Can my children eat with that?” said the businessman, who asked Reuters not to identify him.

When the president of the country speaks to the merchant class saying, “The ones who have looted Venezuela are you, bourgeois parasites,” that’s a sign to any entrepreneur that it’s time to round up whatever dollars you can and get out.

Venezuela is more likely past the point where it can grow out of its problems. Oil production is believed to have fallen as much as 400,000 bpd in the past year due to natural decline rates from mature fields. PDVSA says it is on track to invest more than $20 billion in its operations this year — but are those official dollars or black market dollars? Western oil companies are wary about putting their capital into the fields, considering that Chavez has famously nationalized assets of ExxonMobil, ConocoPhillips , Harvest National Resources, Exterran and others. PDVSA says it owes oil company partners and contractors $15 billion.

Some partners, like Chevron CVX -1.68%, Repsol, Eni, Rosneft and Total, have pledged to invest in increasing production and even to extend more loans to PDVSA. But like China they want to get paid back in oil. Not much is likely to come of these ventures: 10,000 barrels here and 10,000 barrels there is not going solve the problem. What’s needed is a real plan. The analysts at oil consultancy WoodMackenzie tell me that Venezuela’s best bets for growing production lie in the ultra heavy oil deposits of the Orinoco Basin. There, to increase output by 1.5 million bpd will require investment of $100 billion to drill enough wells and build enough “upgraders” to take the heavy oil and transform it into something readily exportable. So far PDVSA hasn’t gotten any interest in this plan.

The oil is there, but the oil companies are in no hurry to get at it. They have plenty of opportunities to drill in the United States, and are looking forward to the first exploration contracts to be awarded in Mexico. They know someday Venezuela will again become a safe place to invest.

That day may be approaching. Venezuela’s credit default swaps are at five-year highs. According to Reuters, prices for some of its debt issues have fallen to 63 cents on the dollar. Some short term issues are yielding 20%. These are the kind of sovereign yields that presage defaults.

The sad thing for Venezuela is that (barring an explosive rise in oil prices) it’s hard to imagine the situation not getting worse before it gets better. In time the government will simply run out of the dollar reserves it needs to pay its debts and import goods. Trading partners will refuse to ship. Oil companies will refuse to invest. Those tankers of cheap PetroCaribe oil will stop arriving in Havana. Chavez’s daughters will be kicked out of their presidential party palace. And the people of Venezuela will some day be forced to pay more than a dollar to fill up their SUVs.

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