Caracas Chronicles

Ever notice how chavismo's instinct, when facing a clear policy failure, is always to see how they can patch it up?

Take SITME - the Central Bank's baroquely controlled alternative to the just-as-baroquely-controlled CADIVI foreign exchange control system. SITME amounts a patch on the old parallel dollar market, which the government tolerated as a patch on the sclerotic CADIVI system which was itself a clumsy patch against inflation pressures. (What was that phrase they used again?...the "Forex Anchor".)

Well, it turns out that SITME - the patch on the patch on the patch on inflation - needs a patch!

The proximate cause is that Venezuela's banks are fast running out of the types of bonds that SITME requires (and whose valuations SITME distorts) in order to transmogrify bolivars into dollars.

I'll start out by admitting that I find SITME - the Central Bank's tightly controlled replacement to the old parallel Forex market - quite confusing. Briefly, SITME allows you to trade bolivars for dollars by asking your bank to take your bolivars, buy Venezuelan (or PDVSA) bonds with them, resell the bonds for dollars, and then credit the dollars to an off-shore account.

The kicker is that your bank has to document every step of that operation to the Central Bank, which is thereby empowered to effectively control the implicit price you pay for each dollar, and the total amounts involved.

That, as I grasp it, is the short version.

Now, it seems very clear to me that this mechanism is bound to distort the market for Venezuela's sovereign debt.

Under the old permuta system, Brokers were also supposed to go through this whole bond-swapping rigamarole. In practice, though, they often didn't. They faked the paperwork and just sold dollars for bolivars - which is why a bunch of them have ended up in trouble with the law.

It had to come to this. The renationalized SIDOR Steelmaker has started hitting up the Central Bank for emergency loans.

The BsF.2 billion bailout announced today is a throwback to the insane economic policies of the 1970s and 80s, when Venezuela dug its own macroeconomic grave by devoting more and more of its scarce oil-revenues to propping up loss-making nationalized companies. This economically senseless scramble was responsible for much of the calamitous collapse in living standards between 1975 and 1995. 

What's tragic is the Institutional Alzheimer's inherent in all this.

Say you're in the middle of a fútbol game when, all of a sudden, one of the members of the other team randomly picks up the ball with both hands and starts running with it, rugby style. You instinctively turn to the ref to ask for a foul but, instead, you get a red card for dissent.

As you see the opposing team running, ball-in-hand, towards your goal, you could be forgiven for concluding that somehow, in the last few minutes, the game you were playing had changed. You may still be wearing soccer uniforms, there may still be 11 of you on a field against 11 on the other side, but irreducible aspects of what it means to play fútbol no longer apply. You are, at best, playing a twisted facsimile of soccer - a bizarroworld iteration that you neither trained for, prepared for, nor can be expected to be competitive at, because the new rules being enforced are intrinsically unfair.

Chavismo, always whoring for a public spectacle, has decided the meeting between the National Assembly and Cardinal Urosa will be held in closed doors. The Cardinal, being the gentleman that he is, has shown up on time, with little fanfare, and without speaking to the press.

Funny how these things work. When you've decided that the spat with the Cardinal is a losing strategy because it reminds voters that we're headed for Communism, and you engender an international crisis to change the topic, the last thing you want to do is to go back to last week's news cycle.

Update: El Universal is tweeting that the Cardinal wanted the hearing to be public because he was attacked publicly, but Cilia Flores has denied his request. Dissident congressman Juan Jose Molina is tweeting the hearings.

Hearing chavistas rant recently, it's easy to see what their strategy is going to be ahead of September's parliamentary elections: talk incessantly about the unemployed. Not the unemployed in general, mind you...just two of them: George W. Bush and (the by-then-to-be-unemployed) Alvaro Uribe.

Chávez or Uribe-Bush? That, in the chavista playbook, is the issue...

Speaking of Oliver Stone...wearing his historian's hat, Larry Rohter of the New York Times offers a devastating critique of Stone, Mark Weisbrot and Tariq Ali, and their specious arguments in defense of Venezuela's indefensible Revolution.  You owe it to yourselves to read it.

It's a follow-up to a previous article in which he bashed Stone's documentary slash love poem to Hugo Chávez. 

Quick, chavistas: what better way is there to spend a lazy Sunday afternoon?

Forget spending time with the family, the only right answer is: going to a swearing-in ceremony for the PSUV in a government-owned stadium, and have the ceremony force-fed to the entire country.

That's what happened yesterday. Hugo Chávez presided over the ceremony - and yes, if "swearing-in" of volunteers sounds a bit, I dunno, Stalinist, then you're right.

The speech itself was unremarkable to someone used to Chávez's rants and abuses of power. But those who believe Venezuela is a Jeffersonian democracy will find themselves with a lot of explaining to do.

It's been brought to my attention that it's really confusing if I write under my real name in some places and under my nickname (Quico) in others. So, to avoid confusion, I've decided to re-brand my byline here as "Francisco Toro".

Just so we're all clear, I'm still me (if that makes sense.)

Reading yesterday's scorching comments section, it seems to me a key component was missing: the creeping Venezuelanization of FARC. In crafting a response, the Venezuelan opposition should treat this, primarily, as a domestic issue. 

Because, from a Venezuelan point of view, what we see on our Western border is a racketeering mob given carte blanche to do its worst.

As Juan Carlos Zapata shows vividly in his under-rated, under-read book on his hometown, Guasdualito, nothing moves in Apure State without FARC's say-so. You don't get a job without FARC's blessing. You don't stay un-kidnapped without kicking up some money to FARC. You know full well that, in case of a problem, the civilian authorities won't be able to help you.

Yet, far from combatting the armed groups running these extortion rackets, the Venezuelan government abets their criminality. Chávez has shown again and again that he's no more interested in cracking down on the choros in Perijá than he is in cracking down on the choros in Petare. That's the message we should be hammering away on. 

You come here for contrarian views, right? So here's one:

I think Colombia did a poor job today, and I think the Venezuelan opposition should come out and blast them for it.

The opposition needs to side with the people, those who live on the border, those who benefit from trade, and those who suffer at the hands of the FARC.

Colombia's escalation today, predictably followed by an intemperate rupture of diplomatic relations, does nothing to advance the cause of Venezuelans in any of those fronts.

It hurts Venezuelans on the border, compromising their security. It hurts our economy, compromising trade. Worst of all, it entrenches chavismo's tacit alliance with FARC, strengthening rather than weakening its position. 

This is the transcript of Venezuelan ambassador to OAS Roy Chaderton's response to Colombia's detailed, extensively documented allegations of Venezuelan collusion with Colombian narco-guerrilla rebel groups:

A chavista tragedy in three acts.

Act 1: 2,046 new school teachers, with a specialization in "Cultural Development" (whatever that is), graduate under a government-sponsored program. Good for them, I guess.

Act 2: Hugo Chávez goes to the graduation and forces all TV and radio stations in the country to carry his speech for several hours, live. In it, he blasts everyone who doesn't agree with him. (more on that in a separate post)

Act 3: The head of the program, a heretofore unknown bureaucrat named Andrés Rodríguez, goes on state-sponsored TV and says that the 2,000 new teachers are a "slap in the face of Venezuelan oligarchy and the church" because "they believe that a university education is only for the few." He went on to say, quite ludicrously, that graduating teachers is something that "can only happen in a revolution."

Caracas' bus drivers must be the most embattled people on the planet.

Imagine having to endure the city's traffic and crime, along with the Venezuelan government's regulations, 12 hours a day, 365 days a year ... as your job.

Nobody deserves a fate like that.

Now, they are beginning to feel the heat of the Communist Revolution. There is now a credible threat that the government will expropriate all private transport - the thousands of camioneticas, jeeps, and ramshackle buses driven by lower-middle class Venezuelans associated in cooperativas, trying to earn a buck, may soon become part of Venezuela's voracious state.

Everyone is feeling the heat. No one is safe.

It takes some doing to make Eva Golinger, doyenne of unembarassedly pro-authoritarian chavista boosterism, look good. But the U.S. State Department is doing just that. By continuing to pour money into Venezuela's beleaguered dissident press, Foggy Bottom just makes it too easy for her - and, in the process, creates many more problems for the opposition's credibility than their funding can solve. 

As I wrote in my Memo to then president-elect Obama, almost two years ago now,

After getting drunk the last few years issuing bonds to borrow from capitalist banks domestic and foreign , the chickens have finally come home to roost: Venezuela's government has a $1.5 billion payment due in August.

This should be no sweat, right? After all, as we have been repeatedly told by "experts", Venezuela has a large piggy bank. 

Well, Veneconomy begs to differ, and so does Victor Salmeron at El Universal. Apparently, the government doesn't really know where they are going to get the money from. Firms such as Barclay's don't really know either, claiming that the only way to pay its debt is ... incurring more debt.

If you haven't yet, you really owe it to yourself to read The Washington Post's groundbreaking investigative series on the U.S.'s sprawling, comically dysfunctional, creepily hyperempowered National Security bureaucracy. It's the kind of journalism that we all need more of: smart, important, scrupulously researched and very very readable.

A few things jump out at you reading this stuff:

Dear Dr. Mier Hoffman,

The next time you decide to float a hare-brained conspiracy theory about an (unnamed) U.S. war ship sailing up the Magdalena River to murder Simón Bolívar to justify exhuming the guy's remains, kindly remember to delete from your website your earlier conspiracy theory about how Bolívar committed suicide, choosing the date for its historical resonance.

Kindly,
La Dirección

So after some consultations with cross-border bloggers, a clearer picture seems to be emerging on Thursday's dramatic and explicit Colombian accusations of Venezuelan connivance with FARC and ELN: what this signals is a serious rift between Uribe and his erstwhile protegé, Juan Manuel Santos. 

The president elect was moving strongly to let bygones be bygones and relaunch the until-recently flourishing trade relationship along Colombia's long border with Venezuela. Uribe, who is a proper hardliner, warned him both privately and publicly against it. When it seemed clear that Santos was going to go ahead anyway, Uribe did what he could to make the move politically difficult for Santos. 

Thinking about the absurdity of last night's seance involving the remains of Bolívar lying in the Panteón Nacional, a minute ago it suddenly hit me: what exactly was the Prosecutor General doing there? 

We saw the pictures of the forensic team apparently taking a sample from the remains of the Liberator. We snickered watching Prosecutor General Ortega, all dressed in white like the villains from E.T., but carelessly forgetting her hair net. We recoiled in pena ajena reading Chávez's over-the-top live tweet of the event.

But only when you stop to think about it does the absurdity of the whole thing really sink in.

It's no secret the motivation behind this whole chou is the fact that Chávez thinks Bolívar was murdered, and so, in his mind the Prosecutor General had to be there. It is a crime scene, after all, right?

It's been a good six hours now since the Colombian government levelled at Venezuela some of the most serious accusations one government can level at another and, from the Venezuelan state media...crickets. VTV is still leading with some non-story about Election observers they don't like. AVN leads with an upbeat piece on the nationalized Banco de Venezuela.

And the massive international crisis brewing right on the border? Bien gracias...

"I don't persecute anyone. Law enforcement persecutes. The law persecutes, but I don't give out orders."

Hugo Chávez a few hours ago, making the case for judicial independence, discussing his total non-involvement in the case against Globovisión owners Zuloaga and Mezerhane.

"A whole mafia; Econoinvest was a den of gangsters. They even stole computers... these guys even held forged ID cards; we found 700 files containing the identification of individuals, all of them with the same address and the same telephone number."

A few weeks ago, filmmaker Oliver Stone embarked on a publicity tour for his bro-mantic, critically-panned documentary on Hugo Chavez. 

Among the many myths that he spread, there was this little exchange from his interview with Larry King:

"KING: -- He (Chávez) s dismissed as a dictator. How do you see him? (Note: good question Mr. King - you should have followed up with "what do you think of George W. Bush?")

 

STONE: Oh, I don't see him as a dictator. He's been elected three times as president. He's having another election coming up in September. It's going to be monitored again by international groups. 15 times he's been elected. ...

 

KING: He comes down tough on free media, though. You wouldn't call this an absolute democracy, would you?

 

Comin' at you, fast and furious.

The fat man yesterday, in a vain attempt to run away from his best friends:

"We love Cuba very much, but Cuba is Cuba, and Venezuela is Venezuela. What we are building is socialism with Venezuelan characteristics."

The key thing to grasp about the Two Tweeters facing 11 year jail sentences in Bolívar state  is that these people had zero influence. Luis Enrique Acosta seems to have had fewer than 50 followers on his Twitter account at the time he published his Banned Thought, and Carmen Cecilia Nares may have had less than 10. (It's still not clear what, if anything, she wrote.)