Vacation

I was going to try and post something before I go on vacation, but as you can see that isn't going to happen. I will be in Spain for a couple weeks and won't be posting anything, hopefully when I get back I will feel inspired.

cheers to all.

Cuba better place than Venezuela for doing business?

Yup, apparently Cuba is projected to be a better place to do business over the next five years than Venezuela. Only Angola ranked worse. Click here for the original article in the Economist .



I don't think it is necessary to go into much of a discussion about this, other than to say that it is ironic to see Venezuela nationalizing (buying out) foreign companies and resorting to state controlled development while Cuba under Raul seems to be realizing private ownership of farms and homes is the solution to some of its problems.

Olympic torch should visit Venezuela

After the debacle of the torch run in France and England, today it made a secret and short trip to San Francisco, clearly the Chinese Olympic organizers didn't do their homework because it would have found a much more friendly crowd in Venezuela.

Yesterday the Venezuelan government had a press release supporting the Chinese governments position "against the incessant and systematic campaign against the country during the past few weeks".

The press release calls the demonstrations a "mediatic manipulation of the demonstrations by violent groups in the autonomous region of Tibet", hold on it gets better, "it is formulated in the psychological warfare laboratories of the United States that they use to destabilize countries that don't adhere to the rules of the empire".

The press release goes on to accuse the United States "elite" of orchestrating these events out of jealously because of the "admirable developmental progress China has exhibited".

So... I guess Tibet shouldn't count on Venezuelan support anytime soon. One can only hope Chavez will end up in one of the many realms of hell, preferable one that isn't human.

Venezuelan Forecast

Mar 6th 2008
From the Economist Intelligence Unit
Source: Country Forecast

Outlook for 2008-09

- Hugo Chavez’s defeat in the December 2007 referendum on constitutional reform will give a boost to the beleaguered opposition. However, its internal divisions will prevent a major political realignment in the near term.

- The government will continue to use the state’s wealth of energy resources as leverage to deepen diplomatic and commercial relations with countries it considers“friendly”within and outside the region.

- The government is unlikely to move towards full state control of the economy, but concerns about further nationalisation will curb private-sector investment.

- The central government deficit is forecast to widen in line with falling non-oil revenue, but the true fiscal position will be worse, as an increasing burden of expenditure will be placed on PDVSA and Fonden.

- Deficiencies in the policy environment and a stabilisation of fiscal revenue will combine to produce a deceleration of GDP growth in the forecast period.

- Assuming that oil prices remain high, the authorities are unlikely to devalue the bolivar until 2009. Sales of US dollar-denominated assets will increase, but the gap between the premium and official exchange rates will remain large.

Monthly review

- In January seven opposition parties signed a pact indicating their intention to choose a single candidate for at least the most important posts in the November local elections.

- A dispute between the government and a US oil company, ExxonMobil flared up in early February, with Mr Chavez threatening to halt crude supplies to the US in retaliation for Exxon’s legal actions abroad.

- In February the finance ministry placed a reported US$100m-150m in structured notes (backed by Argentine and Ecuadorian bonds held at Fonden) at 15 local banks in an attempt to drain excess liquidity.

- Following a wage dispute with Sidor, the country’s largest steelmaker, workers went on a series of strikes in late January.

- GDP growth slowed marginally to 8.5% year on year in the fourth quarter of 2007. This brought full-year growth to 8.4%, representing a slowdown from growth of 10.3% in 2006.

- The current-account surplus fell to US$5bn in the fourth quarter of 2007, largely on the back of strong import growth.

Economic data

- Following his victory in the December 2006 presidential election, Hugo Chavez is expected to remain in office throughout the outlook period. He will retain a firm grip on power, owing to his complete control over the legislature and extensive influence over other institutions. However, the opposition has the potential to capitalise on its victory in the December 2007 referendum on constitutional reform. This will keep the political environment polarised, particularly in the context of government policy radicalisation, which also has the potential to intensify conflicts within the broad government alliance. In the medium term, these factors could combine to reduce support for the president and erode political stability and governability.

- The radical economic policy agenda of the government, which is centred on expanding the state-led development model, will exacerbate deficiencies in the business environment, and Venezuela will remain a challenging place in which to invest. Investment in most sectors is unlikely to thrive against a background of distortionary macroeconomic policy (characterised by price and exchange controls), threats to property and contract rights, unpredictable state intervention and a growing bureaucratic burden. Even in the dominant energy sector, foreign investment will be below potential. The burden of oil investment will fall increasingly on the public sector, but here there are questions over efficiency and technical capacity.

- Double-digit GDP growth in 2004-06 will not be sustainable in the outlook period, and growth is forecast to slow towards 3.5% in the medium term, as the fiscal stimulus weakens and the deficiencies of the present policy framework are reflected in a slowdown in private investment. The long-standing structural problems of oil dependency and an inefficient and costly public bureaucracy are unlikely to be tackled. Economic distortions will persist, as exchange controls trap excess liquidity in the economy, resulting in double-digit inflation throughout the outlook period. Forecast annual step devaluations of the fixed exchange rate from 2009 will place further pressure on prices.

- Venezuela is at the peak of another oil-fuelled boom. In the past, these have been followed by spectacular crashes in the wake of oil-price falls. However, with world oil prices expected to remain high for a prolonged period, the economic cycle is likely to prove to be more drawn out. But with little achieved in the way of structural reform and the policy environment increasingly unconducive to private investment, sustainable development of the non-oil economy over the medium term appears unlikely.

Chavez can't control Chavez

To be honest I've been a little out of the loop during the past couple of weeks, since I have been dealing with work, and unfortunately it has nothing to do with the topic of my blog.

Anyways, by now most people are aware of the confrontation going on between Colombia, Ecuador, and Colombia, if not please click on the links on the right. What I think is bizarre about the whole thing is that Chavez on Sunday was ready to declare war on Colombia when in fact this whole issue didn't affect Venezuela. If Chavez were a statesman and truly wanted to be a leader of South America he could have tried to diffuse the situation and ask all parties to keep cool. I'm sure Lula is shaking is head at this moment and will have to try and diffuse the situation. I wonder if Lula ever gets tired of cleaning up Chavez's messes? Note that said Lula and not Insulza the president of the OAS, reports I have read say he is more concerned with running for president in Chile in 2009 than running the OAS.

So what should we make of Chavez sending battalions to the Colombian boarder? eh.. not much we are still waiting for Chavez to stop selling oil to the US.

“This is just another of Chávez’s orders made without thinking, and without any military advice,” said Miguel Aparicio, a retired general and security analyst in Caracas. “We are getting used to his impulsiveness and instability – it is an empty threat.”

In addition, Venezuelan military strength is no match to that of Colombia's.

While Mr Chavez’s order to send tanks and fighter jets to the Colombian border had the aura of a declaration of war, few are taking the threat seriously. Analysts say Venezuela’s army would be no match for an adversary with 254,000 people on active service – more than twice the size of Venezuela’s 115,000-strong force – who have been in permanent training for the past four decades in a war against various insurgent groups.

“Chávez has spent a lot of money on expensive [military] toys, it’s true, but instead of serious training, soldiers seem to spend much of their time carrying out tasks like manning government market stalls,” said Mr Aparicio, in reference to Mr Chávez’s policy of giving the military an increasing role in civil society.

Analysts note that many in the ­Venezuelan army, particularly commanders, would be loath to enter into open conflict with what they consider a “brother” nation.

Probably the thing I find most interesting is how Uribe and Chavez are completely opposite in their personality. While Chavez is used to the Venezuelan opposition getting into a tizzy over any little thing he would says, Uribe is very different. In every verbal conflict that has occurred between the two, Uribe has clearly shown that he knows how to deal with Chavez, mainly by not engaging in his verbal insults, not falling for his provocations, and acting in a calm and coordinated fashion. This might be part of the reason why Uribe is not sending additional troops to the boarder with Ecuador and Venezuela, even though both of these countries are doing this.

It's apparent that this conflict will be around for while especially since Colombia claims to have evidence linking Chavez and Correa to the FARC. Namely the claim that Chavez gave the FARC $300,000 and the FARC giving Chavez $50,000 back during the 1990's.

This claim of money transfer between Chavez and the FARC poses two interesting questions. If in fact Chavez received money in the 1990's I'm sure other people are aware of this say Jose Vicente Rangel, which I'm sure would never say anything. But perhaps Luis Michelena might know more about this. I also wonder if the $300,000 given to the FARC is a business deal, in other words Chavez gets his five or six hostages released making him look like a saviour and a peace maker, and the FARC get $300,000. Not a bad deal from what I can see.

Them crazy white gringos (Ted Kennedy)

Ok, this is to funny to not post:



Apparently someone left the liquor cabinet unlocked :)

Clearly Latinos are becoming an increasingly important demographic group to US politicians, but does Ted Kennedy really have to sing in Spanish. I just hope Obama doesn't lose votes because of it.

Fidel and a short break

After 46 years it looks like the US embargo against Cuba has finally worked, Fidel is finally gone from power. Yes I'm being sarcastic. There was a time when the embargo likely served its purpose but that day has long since passed, I continue to believe that trade and opening up to Cuba is the most effective way to bring about democracy and prosperity to the Cuban people.

On a separate note I have to take a short break (1-2 weeks) since I have to attend to work/career obligations. I will try to sneak in a post or two but who knows. If anyone is interested any short term blogging feel free to contact me :)

Venezuela: Exxon and the media

By now most readers have heard about the court order on Exxon's behalfagainst the Venezuelan oil companies (PDVSA) international assets. What many people including myself were waiting on was how would Chavez respond to this move. Well today we found out during Chavez's Sunday variety show. Below is a youtube clip of todays show.



To be honest there is little to be surprised about it's more of the same rhetoric we have heard over the years, the only difference is that it is directed at Exxon calling them thieves, corrupt, mafia, agents of imperialism that commit genocide, etc...

Chavez also said he would be willing to cut off oil supplies to the US if this economic terrorism continues, ya nothing new here. I'm sure there are more than one person in Washington that would love to call Chavez's bluff and dare him to do it, I know I would like to. Venezuela is in no position to be stop oil exports, due to its dependence on oil exports, and US being the only major viable market, plus oil is a fungible commodity and any price change would impact Venezuela more than the US. Plus the Venezuelan's would likely not be in a mood to tolerate Chavez's wild adventures since basic food items are in short supply as it is.

Below is a short clip of a "documentary" on Exxon that was produced by the state funded public television station VTV.



Whether you like ExxonMobile or not this "documentary" is highly biased and in many cases it lies. But then again when was the government interested in the truth or unbiased media. Of course in the words of the minister of communication Andres Izarra Venezuela and "canal 8 (VTV) is acting in situation of a mediatic war". This must be the reason why they closed RCTV last year and are now turning their sights on Globovision and Unionradio, with the "National Assembly supporting legal actions against Globovision".

If only the Venezuelan government were as efficient and effective in closing media outlets as managing and improving the economy.

Super Tuesday

To be honest I haven't been paying a lot of attention to the intricacies of Venezuelan political news as of late. Instead I have been engrossed in the upcoming US primaries. Most readers I'm sure know that tomorrow is a big day for both republicans and democrats. I think it is safe to say that on the republican side Senator John McCain will be the republican nominee. The big question is who will be the nominee for the democrats, previously I predicted Clinton would be the front runner against McCain, well I would like to change my prediction and say that Obama will win.

The Obama campaign has been on a tear lately raking in some very high profile endorsements including John Kerry, Patrick Leahy, and more recently Ted Kennedy, Caroline Kennedy, and even Maria Shriver (yes, Arnolds wife and also a Kennedy clan member). For those interested I found this link on the NY Times website showing some of the various endorsements all the candidates have received to date

The most recent news I have seen is that Clinton and Obama are in a statistical tie (Obama 49%, Clinton 46% +/- 4.5%). The interesting fact is that with time Obama's numbers trend higher, and since the democratic primary is more drawn out than the republican one this will likely play in Obama's favor.

As for this blogger, I will be casting my presidential primary vote tomorrow, and in case anyone is interested I will be voting for my senator, Barack Obama.


Venezuelan News

Most of the news I have read has been more of the same with Chavez still preoccupied with the FARC and insulting Uribe. Meanwhile, food shortages continue to get worse and of course Chavez's solution is to seize goods and threaten producers. In this link you can see a video of the chaos brought by milk shortages, one can only assume that if this continues the chaos will turn violent leading to riots.

As if the financial future of Venezuela were not more in question by the run up of debt by PDVSA from 2.9 billion in 2006 to 16 billion in 2007, we get this article from Reuters

CARACAS, Feb 2 (Reuters) - Venezuela's state-run oil company PDVSA is seeking a $1 billion up-front payment for several large shipments of fuel oil, El Universal newspaper reported on Saturday, in what may be a new sign of cash flow problems.

Under the deal, Venezuela is selling the fuel relatively cheaply but wants payment next week, the newspaper said.
PDVSA wants to find buyers for eight very large crude carrier cargoes of fuel oil by Feb. 6 and expects payment the following day.

Random news on Venezuela: Politics, Oil, and Dengue

Here are a few things I thought are worth mentioning that have been going on in Venezuela.

Politics

- The opposition political parties (Accion Democratica, Causa R, COPEI, MAS, Premero Justicia, Proyecto Venezuela, and Un Neuvo Tiempo) signed an agreement of unity including a commitment to 10 points. I don't find the 10 points very interesting nor very significant, however I do find their apparent commitment to unity ahead of this years elections very hopeful. In their agreement of unity these parties are prepared to select candidates by consensus either from polling data or primaries. Lets hope the parties can put their differences and cacique mentality behind them.

- The Venezuelan government has called for the apprehension of ex-supreme court justice Luis Velasquez Alvaray on corruption charges. While I would not doubt he was involved in corruption, one shouldn't forget that this man has all sorts of juicy information on former and current Chavistas, including the shady business deals involving Makarem and Valbuena, yes the owners of PetroTulsa and North American Opinion Research.

- In other legal news Attorney General is bring charges against former Minister of Finance Tobias Nobrega on corruption charges. Again like Alvaray these Nobrega is more than likely guilty, but I can't help seeing how the government choses who to prosecute based on if they considered no longer useful or in Chavez's favor.

PDVSA

- Apparently the Venezuelan government is trying to squeeze as much money it can out of Citgo, since they announced that between 500-700 contractors, responsible for maintenance, were let go at the Louisiana refinery. The duties of those contractors will be added to the 150 full time maintenance workers, this is surly very concerning since maintenance will most likely fall putting refinery in danger, but more importantly people and the environment.

What I find interesting is this quote:

"Citgo wants to send 100 percent of what it makes to Venezuela," said a source. "They're only spending what's needed to meet legal and regulatory obligations."

So Venezuela ships oil to the US, refines it, then ships it back to Venezuela to sell for 14 cents a gallon when the market price in the US is ~$3.00. Clearly this is bad for business and is a huge subsidy to Venezuelan motorist.
In other PDVSA news, the state oil company borrowed $12.1 billion dollars in 2007 alone with Citgo borrowing $1 billion to support PDVSA. The current total debt of PDVSA is now $16 billion

In other news

-According to the polling company Datos, Chavez's popularity is at 30%, with the number one issue among voters being insecurity in Venezuela. Something Chavez has never addressed strongly nor been able to control.
Today Chavez hinted that food prices at state run supermarkets "Mercal" will likely have to raise prices since items like milk are "super subsidized". So not only are Venezuelan not able to find milk easily but soon they will shave to pay more for it. I wonder how will the 30% will accept this.

- What has become a daily event Chavez threatened businesses against hoarding food products, stated that if the opposition wins in the regional elections later this year it would be a coup, etc... but wait today we have a new one, today Chavez called on to investigate rumors that an outbreak of a sever form of dengue in Zulia was "created in the laboratory". Thankfully, he hasn't accused the empire, Colombia, or the opposition for the outbreak, yet.... perhaps all three worked together to create this deadly strain? or could it be the a decline sanitation in Venezuela?