Caracas Chronicles

Correspondence with a California Lefty…

> Francisco,

>

> Read your latest pieces, and I’ve got more questions for you (no doubt a bit naive to you, perhaps) but

> bear with me!

Paul,

I’d have to write a book to answer your email fully (which I intend to, some day!) but for now I’ll answer in broad strokes.

> First, what about all those Chavistas, all those people who came out to support him during the “not-a-

> coup”? Is it true they are getting much-needed and reform from him?

I’ll tell you one thing, Paul, I was outside the main military fort in Caracas with a camera crew on April 13th during the coup – it’s ok to call it that, I mean, lets get real. What I saw was a highly emotional crowd of maybe 2,000 people there. I have the footage to prove it. This was supposed to be one of the main hotspots of the massive “people’s uprising” that, according to chavista lore, brought out SEVEN MILLION people to demand his return. Sure, there was a small crowd there, and they were very brave to go, given the circumstances. And I heard there were a few more people outside the presidential palace, maybe 4 blocks full, no more than 20,000-30,000 people or so. That’s significant, but, like so much else you’ve been reading about Venezuela in the lefty press up north, the supposed mass-scale uprising with millions of people on the streets demanding his return is a myth, a figment of the narcissistic mind.

But beyond that, one thing that must be extraordinarily hard for foreign lefties to quite grasp is just to what extent the chavista revolution exists only in words, in rhetoric. From a first-world idealist’s point of view, the guy’s talk is so pleasing, so on message, that it must seem inconceivable to you all that it could be entirely hollow, just totally unhinged from the facts.

But it is.

I think it’s great that you bring up land reform, a subject I’ve tracked over the last couple of years, because it really illustrates the point. Chávez has been talking up his land reform plans in near apocalyptic terms for years now, using incredibly incendiary language that has raised tensions in the countryside to levels we hadn’t seen since the 1940s, if not the 1840s (when we had our last major civil war, and precisely on this issue.) Chavez has scared the hell out of commercial farmers by threatening them with Mugabe-style tactics while raising the expectations of landpoor and landless peasants to incredible heights. His rhetoric has spread the cold-civil-war atmosphere to dangerous levels in the countryside.

OK, that was not nice of him, but at least he distributed some land to people who need it, right?

At last count, out of the several hundred thousand landless or landpoor families in the country, the government has adjudicated new farmland to about 700. That number could have risen somewhat since I checked, but can’t be more than a couple of thousand now. The government doesn’t have the administrative resources to manage mass-scale redistribution, and doesn’t have the financial resources to expropriate all the land it wants to. It’s a tragedy, because land distribution is a serious problem. A serious problem in need of a serious solution. But the narcissist isn’t interested in serious solutions. He’s interested in talk, high sounding talk that bolsters his self-image as an avenging crusader of the poor. Thing is, that kind of talk often makes things worse. That kind of talk stirs up fear and conflict where mediation and conflict-resolution are needed.

Because there is plenty of farmland to go around in this country. Venezuela is not El Salvador, this is a big, mostly urban country, with a relatively underpopulated countryside. Plenty of land remains in government hands, a holdover from an earlier, never-completed land redistribution drive in the 60s, just waiting to be distributed. Put in a bit of irrigation and some roads and lots of land that now sits idle could be farmed. All it would take is a bit of pragmatism. A pragmatist could have helped those hundreds of thousands of families that Chávez has no answer for without increasing the tensions between them and the comercial farmers – who would have to become their partners, suppliers and/or purchasers in any serious land redistribution scheme, and who the new farmers therefore have an interest in keeping more or less good relations with.

All it would’ve taken is a few itinerant teams of local mediators to work out detailed agreements in the various regions that balanced off the needs of the landless with the interests of commercial farmers. That kind of approach wouldn’t have been quick or flashy, but it probably would work. That, however, is obviously too unglamorous, tedious and pedestrian for a pathological narcissist.

All that Chávez’ incendiary rhetoric has done is to further poison relations in the countryside without bringing any real solutions to the problems poor rural people here have. Their lives are worse because of it, not better.

I could rattle off similar stories on 10 other subjects, urban housing, education, etc. etc.

Teodoro Petkoff – a real old-time leftist, 60s guerrilla leader, with 50 X more social reformer cred than the narcissist – quips that with his rhetoric, Chávez has achieved something thought impossible until now: he’s created a counterrevolution in a country where there is no revolution. The revolution is all talk. The fear it inspires in the people it targets for abuse is real. So you have a middle class that’s increasingly paranoid, mobilized, alarmed, radicalized and militant – a classic counterrevolution – despite the fact that you haven’t actually done anything to alter the fundamental structures of power in the country.

The 30-35% of Venezuelans who still support Chávez have been – there’s no other word for this – swindled, swindled into supporting a set of delirious promises that have much more to do with Chávez’s fantasy mindscape than with any serious plan to remake the country. Chávez is a powerful orator, for sure, and his rhetoric can still mobilize a lot of people in this country – just under half of poor Venezuelans still back him. But the other half, not to mention almost all of the middle class (a good portion of which voted for him in 98) have learned to understand the catastrophic scale of the gap between the talk and the walk, the danger he poses to a pluralist, democratic system of governance, and they want him out, insist that he gets out. Now.

> Second, does the oil company really keep most of its profits and distribute them amongst

> its own managersand workers? And wouldn’t privatizing it further, as I’ve read in the NYT

> (I think it was) that the managers want to do, prevent the state from having more of the profits.

There’s a huge amount of disinformation about this out there – much of it willfully planted by the government. A superficial look will tell you that PDVSA, the state oil company, does indeed make less money per barrel than it did in 1976 when it was nationalized. But there are sound technical reasons for that – largely having to do with the fact that, as oil wells age and reserves deplete, it becomes ever more technically challenging and costly to get the remaining oil out of them, you need to drill harder and deeper and invest more and more to keep well pressure adequate and all of that costs money. In the last 25 years, many of Venezuela’s most profitable wells have become more and more depleted – most of the “easy oil” is gone, and the “hard oil” is much more expensive to get at.

So the 76 vs. now comparison is willfully misleading. The government has used it maliciously again and again to make the current PDVSA look bad. People who go through the numbers in good faith usually conclude that, while PDVSA could clearly make some improvements in the way it does business, that it’s still one of the most efficient oil companies in the world – more than competitive with the Shells and BPs and ExxonMobil’s of the world, to say nothing of the Pemexes and the SaudiAramcos. Hell, the government doesn’t get half its budget out of them for nothing.

There is a very sound financial argument to be made that the state would make much more money if there was more private participation in the oil industry here, particularly if they relied more on foreign companies to expand production capacity and operate old, expensive-to-keep-in-production fields. Nobody wants to privatize PDVSA’s existing prime capacity, aside from a few isolated far-right kooks. The line about how the old managers just want willy-nilly privatization is, I’m afraid, another chavista lie.

It’s important to understand the terms of the relationship between Venezuela and the foreign oil companies, because a lot of lefties in the first world still operate under this notion of foreign oil as a neocolonialist front that sucks the country dry. That was mostly true in Venezuela in 1938 or in Iran in 1966, but a very silly distortion for Venezuela today.

When a foreign oil company wants to operate here, they have to do so under the rules of the game laid down by Venezuelan law. The basics are that they have to pay a 33% royalty rate on the oil they pump out (that’s on gross sales, not net,) plus a 50% corporate profit tax. Those are huge numbers. I mean, work it out: if they sell a barrel for $36, a third of that automatically goes to the government, $12. Of the other $24, about $10 or so will be production costs, profits will be about $14. They have to split those $14 down the middle with the government. So on top of the $12 in royalties, they get $7 in taxes. All in, the government pockets $19. The company walks away with $7, and the rest is costs.

(It’s an even better deal for Venezuela than that suggests, because a big chunk of the $10 in costs will stay in the local economy in the form of wages to Venezuelan workers, service contracts with Venezuelan companies, payments to Venezuelan suppliers, etc.)

Most importantly though, the foreign firms have access to capital on a scale and on terms that Venezuela doesn’t have. Any dollar Venezuela invests in expanding oil production is a dollar it can’t use to pay a teacher’s salary, or a hospital’s construction costs. While any dollar Shell invests here is a dollar that otherwise would’ve ended up in Texas, or Norway, or Saudi Arabia. Shell has a AAA credit rating, Venezuela a CC+, so Shell can raise the capital much more cheaply. Shell has technology we don’t have, which we can force them to share with us in the investment contract.

Overall, foreign-led expansion is an incredible bargain for the Venezuelan tax payer. It’s not just the tax structure and the fact that they put in all the capital, it’s that they bear ALL the risk. What they get, usually, are usually rights to “explore at their own risk.” That means that they get adjudicated a bunch of land or some off-shore area, and they have to go out and look for the oil. They finance it. They carry out all the seismic and geological studies, put out the rigs and pay for the exploration. If it doesn’t pan out, Venezuela don’t lose a penny for it. But if it does pan out and they find profitable deposits, we get a third of the gross and half the net. It’s an incredible deal!

But there’s more, the bloody foreigners actually pay us a nice fat fee for the privilege of risking their money on our lousy little tinpot republic, in the form of tender auction fees at the start of the process, when they’re trying to get the exploration rights.

Does this look like neocolonialism to you?…the terms of these deals are so ridiculously tilted in favor of the republic that the only real puzzle is that the foreign companies still want in.

So the financial arithmetic for using foreign companies to expand the Venezuelan oil industry is straightforward. Chávez isn’t interested in financial arithmetic. He’s interested in oil as power, oil as nationalist symbol. If you see oil as a means to an end, with the end being to expand the state’s revenue as quickly as possible, then the case for foreign led expansion is almost self-evident. If you’re interested in oil as a nationalist symbol, then no amount of financial arithmetic will sway you.

> Third, if any country in the world had a private media that was so anti-Government as the

> private media inVenezuela seems to be, don’t you think legal and (in some cases) extra-

> legal methods would be found toshut it down? NPR in the USA used to allow a fair amount

> of liberal to left comment, and then theRepublicans in Congress in about 1994 threatened to

> shut off all funding unless it became “morebalanced”. NPR has changed dramatically since

> then! CNN was told it was no longer going to be allowed to broadcast in Israel because it was

> too “pro-Palestinian”. I think – though I’m not sure about this – they fired their correspondent there,

> but I’m pretty sure they’ve changed their coverage since. (Robert Fisk, the British Independent

> newspaper commentator wrote about this). And yet Chavez has tolerated this, it seems. As you

> say, the private TV stations have used their power to run anti-government propaganda for

> years. I think that either speaks well of the government’s tolerance or of their inefficiency!

Well, I’ve been very strong in criticizing the Venezuelan press in the past, and I won’t rehash that here. But I’ll just add that for all their evident, inexcusable bias, in a situation where every part of the state has been hijacked by the government, they are our last means of defense, our final bulwark against an autocratically oriented government that accepts no oversight from anyone. I shudder to think what Chávez might do if the independent media was shut down. I’d much rather have a flawed, biased spotlight on the government’s authoritarian excess than no spotlight at all.

…and that’s without even getting into 1st ammendment type considerations, which are also relevant here…

> And, finally, I’ve got to go back to your characterization of Chavez as somehow clinically

> incapable of being in office because of his Narcissistic Personality Disorder. Really, Thatcher

> in the UK had many of those traits, and no doubt still does. She made no secret of comparing

> herself to Churchill, for instance. Reagan was in a total dream world. I remember talking once

> to the Time reporter who followed Reagan for the 1980 election, and he says in interviews it

> was clear that Reagan didn’t know reality from fiction. On one occassion, to highlight his

> sympathy for Veterans, he recounted an episode he said he’d seen of a flyer trying to get out

> of his crashing plane over the Pacific in World War 2… but he was actually recounting

> an episode from a film he’d been in So, what IF Chavez is narcissitic?

I would just point out that having a kooky leader in a country with more or less mature, more or less stable institutions is far less dangerous than having a kooky leader in a country with a disastrously weak institutional structure, where nearly every institution in the state is in the hands of active supporters of the narcissist’s cult of personality. Chávez, on his own, would merely be a bad president. But Chávez in autocratic control of the courts, the legislature, the AG’s office, the Comptroller’s office, the military, the Ombudsman’s office, etc., that’s a disaster, a clear and present threat to democracy as we know it.

> Okay, one final question. How do you know that the situation Venezuela is in isn’t less

> like Czechoslovakia in 1989 but more like Chile in 1973? I think that’s why a lot of

> leftists, liberals and plain centrist folks up here find it hard to believe what’s going on

> is that it’s strikingly similar (in their eyes). Okay, I know that Allende was no Chavez,

> but was a comparitively quiet spoken intellectual, but the strikes, the destabilization,

> the anti-government media, etc. are all very similar.

This is something I worry about a lot, and I won’t deny the obvious, that parts of the opposition are creepy and authoritarian and just plain nasty. Most of it, though, is made up of people with genuine democratic ideals, worried about inclusion, worried about well-functioning institutions, the separation of powers, etc. etc. (I think it’s “most” of it, anyway.) By and large our tactics are the protest march and the signature-gathering drive, such softie tactics that the rightwing loonies sometimes deride us as “comeflores” – Flower-Eaters!

I can’t guarantee that the creepy side of the opposition won’t come out on top, though I work hard every day to try to prevent it. I can tell you one thing, though: every time an opposition march gets shot up and the perpetrators get away scotch free, every time the government shits all over the separation of powers, every time Chávez threatens us, calls us fascists for gathering signatures, and threatens to shut down a TV channel because it dares question him, every time something like that happens the comeflor position is made to look pathetic, silly, weak, out of place, naïve, too naïve to deal with a threat as acute as Chávez’s. Every time the government turns its authoritarianism up a notch, those of us who believe in negotiations and elections as the way out of the crisis see our position undermined. It’s very worrying. But again, (and I hate to sound like a broken record, but it’s true) the primary responsibility for this is Chávez’s.

> And I’ve certainly heard the view, no doubt appalling to your ears, that many of the shootings could

> have been carried out by conspiratorial opposition figures (I think I read that in the UK press

> somewhere).

No, not appalling at all, it actually serves to make an important point. I don’t discount that opposition provocateurs could have taken part in the shootings here. Like I said, there are definitely some pretty unsavoury characters mixed in with the decent folk in the opposition. It seems unlikely to me that they would go as far as to set up random murders just to make the government look bad, but hell, I dunno. I don’t have powers of omniscience. So, y’know, it could be.

Thankfully, though, we have reams of video and photographic evidence, which is already in the public sphere, that makes several of the gunmen easily identifiable. If they are opposition activists then that’s all the more incentive for the government to go and nab them. It’s an open and shut case, legally speaking. It’s not even that you have a “smoking gun,” you actually have video of the guns being shot. So go and grab them, man, it’s straightforward as straightforward can be, in terms of police work.

The fact that the ONLY shooter in jail right now was grabbed by an opposition municipal cop, that the central government hasn’t moved on ANY of the other shooters is suspicious to say the least. The fact that they’re now shifting cops to the provinces in retaliation for them going off message and trying to do some actual police work and make some actual arrests on these cases, that stinks to high heaven in my book. (A journalist friend of mine who covers the Judicial Police says this latest case is anything but isolated, that most of her better sources inside the Judicial Police have ended up getting sent to hardship posts in the middle of nowhere for similar reasons.)

Are the gunmen opposition provocateurs? I doubt it, but maybe. But whoever they are, they ought to be in jail, there’s no excuse for them not to be in jail, and the government really places itself well beyond the pale when it goes out of its way to make sure they’re not held accountable.

I don’t know if you can quite wrap your mind around what a corrosive effect shit like that has on people’s faith in their institutions here, on people’s sense that they’re living in something like a rule-of-law based country. The feeling we have, and this is very widespread in the opposition, is that we live in a mobocracy, an outlaw state where people who support the government have carte blanche to do anything they feel like at all up to and including murder, and we have no institutional means to restrain them at all.

It’s really intolerable, Paul. You wouldn’t tolerate it for a second if it happened in San Francisco. You’d be out marching too.

> Okay, I’m done! Keep up the reporting. Hope you’re safe!

Thanks man.

OK, enough for now…I need to go to work!

ft