Venezuela: The closing "NO" rally

Daniel, FT/Katy, and Miguel have been very busy posting great and up to the date information on the events unfolding in Venezuela. Since I can't compete with their coverage I thought I would try to complement and post on some of the other related news going on in Venezuela.

Since 2000 the opposition and Chavez had been at war as to whose rally is bigger, but it has been difficult to compare since they are often held in different places. This year it is different since both will be at Av. Bolivar. Since I like google map and I thought I would try to make a quick estimate of the rally size aided using pictures. Picture came from Tiburon Uno at Noticiero Digital.



*Note - white line designates the length of the rally in Av. Bolivar

used for crowd estimate:
length = 1,360 meters
width = 25 meters

If we assume there were 4 people per sq meter, I have read estimates of up to 6 which seems a little to high, than there were at least 136,000 people in Av. Bolivar. This of course is an underestimate since people were in side streets and likely beyond Teresa Carreño theater. As far as I remember Chavez has never been able to fill Av. Bolivar although he has come close.

Now for news, today a mayor in the state of Tachira broke ranks with the government and urged people to vote NO on Sunday. I wouldn't say this is particularly significant in of itself, but I do think it shows that some people are willing to gamble assuming Chavez will lose the reform which might lead to all sorts of unknowns. I am sure that many other government officials are taking a wait and see approach, if the NO wins look for massive defections from Chavismo, if the SI wins they will breath a sigh of relief and continue supporting the revolution

Government response

Rather than acknowledge the size of the closing campaign for the No vote, Diosadado Cabello, governor of Miranda, decided to say they did not fill it, that it was fake created by manipulating the cameras which the television station Globovision has a habit of doing.

Then we have Jesse Chacón, Minister of information and telecommunications, who presented to the media a video "showing" that members of the opposition are planning to reject the outcome of Sundays vote if the SI wins. He accuses politicians and the church as being behind the potential destabilizing acts against Chavez.

The NGO reporters for the truth (pro-governemnt) asked the national electoral board to deny reporters from CNN from covering Sundays vote. The claim is CNN is attempting against peace and stability due in part to a mistake (admittedly) when CNN showed a picture of Chavez and Uribe with the question "who killed him?".

Closer to home (my home at least) we have Venezuelan ambassador in Washington, Bernardo Alvarez, complaining that the U.S. media coverage of the constitutional reforms is "terrible". It is hard put a positive spin on a president for life, among 68 other constitutional reforms, that is if you want to retain any respect and unbiasedness in your reporting

I am interested to see the government out in full force tomorrow,but if todays rally in Pto. Ordaz is any indication tomorrows rally won't be a resounding success. Then again Chavez is quite the master at winning elections.

Chavez: Venezuelas Caesar

The German magazine Dar Spiegel recently published an article that I think was able to capture many elements of what is going on in Venezuela.

The article starts by discussing how the once die hard popular street groups, Tupamaros is no longer supporting Chavez and his reforms. Sadly they have been substituted by armed militias, that answer to Chavez, and they keep tabs on the local citizens.

The "23 de Enero" neighborhood was once a bastion of the Tupamaros. But last week the group unexpectedly withdrew its support for the president, angry over the constitutional reforms Chavez wants Venezuelans to vote on in a referendum on Sunday. In response, pro-Chavez militias have driven the Tupamaros out of the city's slums.

Not only have the Tupamaros, the political party Podemos, and Baudel distanced themselves form Chavez but we are also told that one of Chavez's advisors is now distancing himself (Heinz Dieterich). I also find it interesting how Chavez's metal state is now opening being seen and written about.

Chavez has staked his political future on Sunday's referendum. Unless he wins with a significant majority, new elections will be unavoidable, writes Heinz Dieterich, a German-born professor and top advisor to Chavez who is gradually distancing himself from the president. But the narcissistic president -- who considers himself a reincarnation of South American revolutionary hero Simon Bolivar -- is increasingly losing touch with reality. Surrounded by loyal supporters, he no longer permits criticism, while his excessively generous self-image borders on the grotesque.

The article ends discussing that even if Chavez does get his reform it will be a short lived victory since no amount of constitutional reforms and political rhetoric will be able to hid the current economic situation.

The "socialism of the 21st century" he hopes to establish in the new constitution is more likely to fail as a result of the age-old ills of socialist planned economies: corruption and incompetence. Milk has been scarce in Chavez's oil-rich nation for weeks. A liter of milk now sells on the black market for more than a bottle of whiskey in a restaurant. Shoppers stand in line for hours to buy staples like chickens, sugar and meat.

Nevertheless, economist Orlando Ochoa is firmly convinced of one thing: "Economically speaking, there will be a crash by the middle of next year."

Slowly but surely people are realizing that Chavez is not the solution to the countries ills but is instead creating and ignoring them. The only reason he has been in power for 8 years is money, but when the party is over and the people sober up they will find a very big mess, a mess that will take a lot of time and hard work to clean up.

Revised Constitutional reform article 98

I was told were I could find the new articles under reform (hat tip to Daniel) I have translated the new article 98 and incorporated it, also I provided a few more comments. Please see previous post.

Article 98: Patents and the decline of innovation in Venezuela

In May I posted information published by the National Science Foundation (NSF) that discussed science and engineering in Latin America. In it they reported that Brazil, Argentina, and Mexico have been trending upwards in technology development to become "high-tech exporters". Not surprisingly Venezuela ranked the lowest of the countries scored, mainly because: "[it] suffered because it was considered the riskiest or least attractive site for foreign investment". Instead of stimulating foreign and domestic investment and encourage technology development, the Chavez government has made decisions that adversely affect Venezuelans competitiveness and economy while currently they are taking steps to further discourage innovation. Specifically within the constitutional reform, to be voted on December 2nd, a modification to article 98 is planned. The original article states:

Cultural creation is free. This freedom includes the right to invest in, produce and disseminate the creative, scientific, technical and humanistic work, as well as legal protection of the authors rights in his works. The State recognizes and protects intellectual property rights in scientific, literary and artistic works, inventions, innovations, trade names, patents, trademarks and slogans, in accordance with the conditions and exceptions established by law and the international treaties executed and ratified by the Republic in this field.

Modified article 98 - text changes are underlined

Cultural creation is free. This freedom includes the right to cultural diversity pertaining to invention, production and dissemination for creative works, scientific, technological, and humanistic, including the legal protection and rights to the author for their work. The state recognizes the rights of all to participate in the cultural community, enjoy the arts, and participate in scientific technological progress, and enjoy their benefits.

The most concerning aspect of this reform is that it limits protection to cultural diversity, to the exclusion of any protection that may be strictly intellectual or economic. In addition, the term "cultural diversity" is non-specific, how should one define it or interpret it? More than likely the interpretation will be left to the court system which is controlled by Chavez.

A simple interpretation of the new article suggests that most science and technology would not be protected since most do not contribute to cultural diversity. There are countless examples of how this will affect Venezuela, from books to merchants with the sole goal of bringing everything under state. State control has proven to be inefficient and a hindrance on scientific and technological progress, the participation of the private sector and intellectual property protection is essential for it to flourish.

It is clear that the Chavez government is reforming and will interpret the new article in a way that will significantly decrease intellectual property rights and severely limit patent protection. In the words of National Assembly member Carlos Escarra these are economic (i.e. capitalist) rights not cultural rights. Cultural rights constitute art, poetry, and literature whereas "inventions" have economic benefits. Apparently, Escarra fails to realize that art, music, and literature do have economic benefits to the inventor, through the sale of their work.

It is unfortunate that the new reform is designed to decrease patent protection since it is well established that patent protection, along with property rights and decreasing state bureaucracy play key roles in spurring innovation and economic development, ultimately leading to decreased poverty. This is not a new concept, but Chavez seems intent on creating a society based on a barter system and where some of the most important technological advances, such asOrimulsionis being phased out while giving the Chinese the technological knowhow for production while collecting little to no royalties.

The proposed reform to article 98 is simply putting on paper what the Chavez has been doing for years, either directly or indirectly though his actions. To see how Venezuela has declined in technological innovation we can look at the number of U.S. patents awarded to individuals in Venezuela (see graph below).



In the graph we see that Venezuela averaged about 32 patents a year from 1993 to 2002. From 2002 to 2006 the number patents dropped sharply to 15 after hitting a 13 year low of 10 in 2005. The most probably explanation for this sharp drop in patents is Chavez's decision to purge PDVSA of political opponents, particularly those the PhD investigators at PDVSA research institute (INTEVEP), where 66% (108 out of 164) were fired. The loss of highly skilled/educated individuals comes at a huge loss to the State, making it less competitive, reducing innovation and investment, resulting in a less diverse economy and loss of potential revenue. The loss of these investigators is particularly damaging to PDVSA since it accounts for the bulk of the economy and requires technological innovation to stay competitive among the other oil companies. Sadly this loss is long term since the time and investment required to create a highly skilled worker with a PhD is high, approximately 5 years of education and $300,000 not counting the experience needed post PhD. Making the Venezuelan situation worse is that most of these skilled workers have left, and/or have been prevented from working in Venezuela, thus they have emigrated and sought jobs with other petroleum companies taking their knowledge and skills with them. So who loses? Venezuela.

Over the years we have seen how Chavez has made decisions that adversely affect innovation in Venezuela, now the Chavez government is poised to modify article 98 which will further discourage investment and innovation that will not only affect the oil industry but the wider economy. The Venezuelan chamber of franchises has already stated that modification to article 98 will negatively affect that business sector, which has seen significant growth and now accounts for 2.2% of the GDP.

The modification of article 98 is an obvious decision by the Chavez government that will only lead to decreased technological innovation in Venezuela. However, this is only one decision, although a significant one, among many that Chavez has made during the past 10 years that will adversely affect Venezuela for many years.

Venezuela: Chavez the megalomaniac and the constitutional reforms

So much has happened during the past week it's almost to hard to put it all in one post and yet have it be cohesive, but trust me this weeks events are all tied together one way or another.

Probably the biggest headlines come from the king of Spain telling Chavez to "shut up". While not exactly diplomatic in all honestly Chavez had it coming, for years Venezuelans have been forced to watch and listen his variety show which often involves it turing into a tirade against imperialism, etc, etc... In the past year or so, as Chavez has turned his attention to the international scene the rest of the world has now been subjected to his caudillo militaristic style of diplomacy. Most leaders have been slightly amused by Chavez's antics but finally some are starting to get tired of it. After all discussing imperialism, Azner, and other Chavez topics does nothing to build economies or help the poor.

Most outsiders will see this as an isolated spat between leaders, but in actuality I think this is exactly what Dr. Jarrold Post refers to in his psychological profile of Chavez when he says Chavez has a character trait typical of "malignant narcissim" that ultimatly leads Chavez to take "bold actions when felt heady with success; harsh rhetoric confrontational moves and temporary depression when he felt weakened". Most notably we saw Chavez's confrontational mood during his speech in front of the UN after he lost the rotating UN security seat.

It is likely that Chavez'es confrontational manner during the IberoAmerrica summit is a result of his frustration which has been building for the past few months. Chavez saw significant international condemnation after the closure of RCTV, his single political party has not panned out, the church continues to voice it's displeasure and the university students are becoming a bigger thorn in Chavez's side. He is also becoming increasingly frustrated because of inflation and continued protests over insecurity and the lack of food, in short things are becoming uncontrollable. However, it was Baudels announced campaign against the constitutional reforms that probably put Chavez in a sever depression. Readers may recall Chavez canceled his Sunday variety show due to "illness" for the past two weeks. It was also announced that Chavez was not going to attend the meeting in Chile but ended up going at the last minute.

With Baudel campaigning against the constitutional reforms, the political party Podemos also voicing it's displeasure, along with student protests that are becoming more numerous and violent, due to government backers, Chavez is facing significant domestic opposition. Of course the government resorts to its old strategy of calling them coup plotters, traitors, and agents of the CIA.

There are other more subtle signs that the Chavez government is showing signs of trouble. Their campaign rallies are rather lackluster and they have run out of sweet goodies that "help the poor" to win votes. Even those constitutional reforms that are meant to attract voters are not winning people over.

My favorite example of how unimaginative and what trouble the Chavez camp is in is the former VP (Jose Vicente Rangel) saying that the "Yes" to the reforms has 52% favorability based on a recent poll by, what... what... here it comes... North American Opinion Research (NAOR). YES!!! the same "fake" polling agency the government has been resorting to for a few years now. Readers will hopefully remember this is the same polling agency whose owners own the oil cooperative Petrotulsa and a lawfirm. Its owners have extensive ties to the government and other potentially unsavory individuals. You can read more about NAOR by searching on Vcrisis.com or my blog.

Clearly Venezuelans are in for a turbulent month since Chavez wants his reforms, but at what cost will he achieve them. It will be interesting to see if the reforms gets postponed past the December 2nd date. I think there might be a good probability this will happen if the government see the votes are not their. Of course postponing the reforms would be a big blow to Chavez.

Playing catch up on the news - Baudel in the news

So I'm back from the conference and I'm playing catch up on the news. The highlight seems to be the declarations made by former defense minister Baudel. If I remember correctly Baudel did at one time say that if Chavez can be president so can he, interesting statement especially in the context of this weeks statement.

Think what you will of Baudel, and believe me I am no fan, but back in 2002 he did restore constitutional order after the interim government led by Carmon usurped the constitution. Granted the Chavez has violated the constitution countless times and the military has not acted, but then again those violations do not involve the military hence there was likely no constitutional justification for the military to intervene. In short the military has abided by the constitution and maintained its separation from politics.

The constitutional reform is a whole different beast since it redefines all aspects of Venezuela including the military ( Alex has commented on this). This is maybe why Baudel came out this week against it, in addition to his desire to be president which will fade quickly if Chavez gets his reform. The political void left by the opposition and the apparent lack of support for the constitutional reform defiantly play in Baudel's favor.

As much as I dislike saying it, of all the people to challenge Chavez, Buadel may have the best probably of succeeding. The big question and concern is, if successful, will Baudel unite the country and rebuild its democratic institutions, or will it simply change form one autocrat to another.

Gone for a few days

I have been rather busy the past few weeks with work, presenting a talk, and putting together a poster. Currently I am in sunny San Diego at a conference for a few days so I'm not sure how much free time I will have. Hope to be back blogging soon.