Monday, May 06, 2002
VENEZUELA
The real Chávez: The Hugo Chávez who returned to power advocating conciliation and national dialogue is beginning to disappear. The new Hugo Chávez appears to be pointing out enemies as a way of laying the basis for authoritarianism.
Exhibit A is an item from the May 4 Washington Post in which Chávez describes without proof, a nebulous plot by the United States. He begins saying that the April 11 march "was the culmination of a plot hatched last year with the help of foreign sponsors to end his three-year presidency." He goes on:As evidence, the president talked for the first time about an alleged plan to assassinate him. Chavez said he was vacationing with his family in Barinas province in western Venezuela when he received a phone call from his foreign minister, Luis Alfonso Davila, on Jan. 1 telling him to return to Caracas immediately. When he arrived, Chavez said, Davila told him that a man from a Central American country had appeared at the Venezuelan Embassy in San Jose, Costa Rica. Chavez said the man told Venezuelan officials that he was a mercenary who had been training with perhaps a dozen other men in a Central American country for a mission scheduled for this year. The men had gathered in San Jose to await an American member of the team, who over drinks on New Year's Eve said, "Chavez is done. He doesn't know what's coming." "This was when the guy discovered what mission he was a part of," Chavez said. "And this mission had all the parts we saw on that day [April 11] -- sharpshooters, street violence. This guy said that the plan was to take advantage of public protests, to draw blood and end my presidency." Chavez refused to provide further details of the alleged assassination plot, including what country the informant was from or where he is now. He said he did not know whether the American was a government official or a private mercenary. In the Post article Chávez also raises again (without actually making) the charge that there were military ships and planes off the Venezuelan coast during his short-lived removal. These and other charges against the administration will be reviewed in upcoming U.S. Senate hearings, conducted by Sen. Christopher Dodd (D.-Conn.), who is hostile to the administration's Latin American policy and especially its point man, Otto Reich, who earned Dodd's enmity by supporting the the Nicaraguan Contras against the Sandanistas in the 1980s. It is probable that something close to the truth will emerge from hearings, and that the truth will be that the U.S. did not help or encourage the removal of Hugo Chávez. This need not disturb Chávez, however. He can be sure his supporters will judge the American process as they do their own national political bodies and believe what they want to believe.
Exhibit B is the testimony of the ex-Minister of the Interior and Justice Ramón Rodríguez Chacín before the National Assembly's investigative commission, as reported in El Nacional. He...accused Venezuelan "owners of great fortunes related to the international bank," members of Opus Dei and political parties, of having been the intellectual authors of the coup de etat against President Chávez. The ex-minister indicated that these actors continue conspiringsince "they did not go out of public view" April 11 ...acusó a venezolanos "dueños de grandes fortunas relacionados con la banca internacional," miembros del Opus Dei y de partidos políticos, de haber sido los autores intelectuales del golpe de Estado contra el presidente Chávez. El ex ministro sostiene que estos actores siguen conspirando pues "no salieron a la luz pública" el 11 abril. The primary reference here is to Gustavo Cisneros, billionaire owner of the Cisneros Group of Companies, a media empire that includes the Venevision TV channel. Newsweek, prominently, has suggested Cisneros' involvement in planning to turn the April 11 demonstration into the pretext for a coup. The company takes the charge seriously enough to respond by linking to a half-dozen items disputing the charge on the Cisneros Group of Companies website. Again, while the truth matters, the charge--true or not--also matters. An article on Rodríguez Chacín's testimony also appears in El Universal.
The obvious purpose of all this is to create fear--of prosecution, assault, expropriation--in his opponents and to energize his supporters. Chávez no longer has a popular majority among Venezuelans; a poll published in El Universal, showing that only 21 per cent of Venezuelans have confidence in Chávez, was reported El Sur April 24. The intensity and anger of Chávez's supporters can compensate for the fact that they are a minority, especially if the majority can be simultaneously intimidated. Still, Chávez has a very big problem that this strategy cannot overcome. That is this: Ultimately Chávez's statist, populist policies will deliver frustration, not growth, employment and prosperity. Adding political intimidation doesn't improve Venezuela's prospects.
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COLOMBIA
FARC kills 100+, U.N. blames government: The death toll in from the FARC attack on a church filled with people fleeing fighting between the FARC communist guerillas and the AUC rightist militia in Bojayá, Colombia, has reached 110, reports Yahoo! News - AP.
As far as the United Nations is concerned it's all the fault of the Colombian government. U.N. officials said they warned the government that a tragedy was about to occur before the fighting started. "It's lamentable that the government authorities ignored the early warning," the United Nations said in a prepared statement. The U.N. statement doesn't say what exactly the government was supposed to do with the warning. Bojayá is remote and reachable only by air or river. It took Colombian army units hours to get there after the incident. Even had the army arrived beforehand, it's not certain that a third armed force in the neighborhood would have helped. Moreover, the single fact that needs to be kept in mind is that it was the FARC that fired a gas tank loaded with high explosives into a church in which civilians had sought refuge.
To the U.N. these are details. What's really important is to maintain that there are "no enemies to the left."
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COLOMBIA
Editorial comment on Europe and the FARC:
From El Tiempo:The European countries ought to help close the fence around the FARC and the ELN (another leftist guerilla army), instead of contributing to loosening it. Los países europeos deberían ayudar a cerrar el cerco sobre las Farc y el Eln, en lugar de contribuir a aflojarlo. The debatable decision, assessed in Brussles as a lamentable diplomatic gaffe, has put in evidence the division that exists in the EU over terrorism. France and Sweden put an obstacle in front of the proposal of Belgium and Spain to include in the black list the FARC and ELN, with the argument that the inclusion would put an obstacle in the way of future political negotiations with these groups, which prevented arrival at consensus. This is something very debatable if one considers that the label (terrorist) assigned by the State Department to the FARC, already hung on them in 1999, did not impede the abortive process of the Caguán with this group. Behind the European position there are at times pragmatic motivations, such as the purchase of a kind of security against the kidnapping of their citizens or the maintenance of channels in order "to negotiate" for kidnap victims, a practice that the NGO Pax Christi has condemned because of its results, in an attempt to pressure to the leaders of this continent to make the payment of ransoms illegal. La discutible decisión, calificada en Bruselas como un lamentable gaffe diplomático, ha puesto en evidencia la división que existe en la UE frente al terrorismo. A la propuesta de Bélgica y España de incluir en la lista negra a las Farc y el Eln se le atravesaron Francia y Suecia, que impidieron que se llegara a un consenso con el argumento de que la inclusión podría obstaculizar una futura negociación política con esos grupos. Algo muy discutible si se considera que el rótulo asignado por el Departamento de Estado a las Farc, que ya lo colgaban en 1999, no impidió el malogrado proceso del Caguán con este grupo. Detrás de la posición europea hay tal vez motivaciones pragmáticas, como la compra de una especie de seguro contra el secuestro de sus ciudadanos o el mantenimiento de canales para 'negociar' secuestros, una práctica que por sus consecuencias ha condenado la conocida ONG Pax Christi, en busca de presionar a los gobiernos de ese continente para hacer ilegal el pago de rescates. But there is even more behind it, what appears to prevail in the EU is resistance to aligning with the United States in foreign policy. This was, with the exception of Spain, the European position with respect to Plan Colombia, which did not receive the support of the EU because it has United States sponsorship. Pero aún más que lo anterior, lo que parece prevalecer en la UE es la resistencia a alinearse así no más con Estados Unidos en su política exterior. Esa fue, con excepción de España, la posición europea respecto del Plan Colombia, que no recibió el respaldo de la UE por tener el auspicio estadounidense. Note that, in addition to Sweden, France was involved in keeping the FARC from being named as terrorists.
From Diario La Libertad (Barranquilla):The non-inclusion of the FARC on the part of the European Union on its list of terrorist groups shook the foundations of this democratic country, especially when its previous violence and disrespect for human rights have been repeated on an infinity of occasions by this subersive organization, the same as the other extremist associations that operate in Colombia. The government and other social sectors are right to have spoken about such an exception, forgetting the pain of thousands of compatriots that have been made victims of the criminal action of these groups acting at the margin of the law. Conmovió los cimientos del país democrático la no inclusión de las Farc por parte de la Unión Europea en su lista de grupos terroristas internacionales, máxime cuando los antecedentes violentos y de irrespeto a los derechos humanos ha sido reiterativo en infinidad de ocasiones por esta organización subversiva, al igual que las otras asociaciones extremistas que operan en Colombia. Tienen razón el gobierno y demás sectores sociales que se han pronunciado en torno a tal excepción, olvidando el dolor de miles de compatriotas que han resultado víctimas del accionar criminal de estos grupos actuantes al margen de la ley. Well good, faced with such a political circumstance, the world can observe today the grateful response that the FARC has given for the classification of the EU, with its confrontation against the autodefense forces in the area of Chocó, with one payment of more than 60 deaths, the majority of them members of the civilian population, who facing a crossfire were attacked when they took refuge in the church of Bojayá. If to this is added the use of cylinder bombs, cadavers filled with explosives, links with the narcotics traffic, incursions into neighboring countries, one can collect more proofs of what the terrorists are about. As long as there is no international solidarity with the Colombian government in this sense, there will be more conceits and incentive for the army of terrorism. Pues bien, ante tal circunstancia política, el mundo puede observar hoy estupefacto la respuesta de agradecimiento que las Farc le está dando a la calificación de la UE, con su enfrentamiento contra las autodefensas en una zona del Chocó, con un saldo que supera los 60 muertos, la mayoría de ellos miembros de la población civil, quienes ante el fuego cruzado fueron atacados cuando se refugiaban en la iglesia de Bojayá. Si a ello se le agrega la utilización de cilindros-bomba, cadáveres cargados con explosivos, nexos con el narcotráfico, incursiones hacia los países vecinos, se puede colegir que más pruebas de su finalidad terrorista sobran. Mientras no haya solidaridad internacional con el gobierno colombiano en este sentido, habrá más ínfulas e incentivo para el ejercicio del terrorismo.
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VENEZUELA
Cabinet changes: President Hugo Chávez made four changes in the upper reaches of his government over the weekend. Together they indicate the direction Chávez intends to take as he attempts to recover from his brief dismissal. That is to press ahead with the populist measures that got him into trouble in the first place. The Financial Times details the changes:Appointed planning minister was economics professor Felipe Pérez, who is "likely to represent a continuation of key elements of economic policy," says The Financial Times. Appointed as finance minister was Tobías Nóbrega, "a competent economist who favours tighter controls on the banking sector" in the paper's words. Neither of these appointments represents any break with the past. Both will try to reconcile the rising expectations of Chávez supporters, emboldened by their hero's victory, and slow but progressive economic deterioration, evidenced by slowing growth, capital flight, a large budget deficit and increasingly skittish foreign investors.
In a different way, the other two appointments also reinforce the notion that any change in direction is rhetorical only. Appointed minister of the interior and justice was Diosdado Cabello. Cabello is a fierce Chávez loyalist and until recently was vice president. So, at first blush, he seems to be taking a demotion. But, in his new post he will be in charge of the federal police. This obviously will be a critical post in the next crisis, and their will be a next crisis, since Chávez term lasts until 2007 while the economy won't. Appointed defense minister was armed forces chief General Lucas Rincón. The Rincón is interesting because it was Rincón who, in the early hours of April 12, told the nation that Chávez had resigned. El Sur has a brief excerpt from Rincón's testimony before the National Assembly committee investigating the April 11-13 period in which he explains his role. El Sur also has excerpts of El Nacional's summary tape of made of Chávez in captivity, in which Rincón's name comes up in an ambiguous context. So what's going on here? Odds are Chávez is kicking Rincón upstairs, acting on the maxim "keep your friends close and you enemies closer."
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Sunday, May 05, 2002
COLOMBIA
Another FARC attack: El Universal (Caracas, Ve.) reports on a FARC assault on Rovira, a municipality in the Department of Tolima, Colombia. Their goal--bank robbery.The FARC attacked our village with the intention of robbing one of the banks of the municipality and caused all sorts of destruction during the more than eight hours of the incursion. Lamentably, a police officer was killed and two civilians were hurt during the events," declared the mayor of Rovira, Rubén Andrade, according to AFP. "Las FARC atacaron nuestro pueblo con la intención de robar uno de los bancos del municipio y causaron toda clase de destrozos durante las más de ocho horas de incursión. Lamentablemente un policía murió y dos civiles fueron heridos en los hechos," declaró el alcalde de Rovira, Rubén Andrade, citó AFP. Just one example. These occur every day. Always the FARC. Who are not terrorists, according to the European Union.
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COLOMBIA
U.S. press evenhanded between murders and victims:
Here's the U.S. perspective:
"60 in Colombia Are Said to Die During Battles," New York Times (requires sign up).
"38 Children Among Victims in Colombia, Latin America: As many as 98 civilians were killed in battle between rebels and paramilitaries. Los Angeles Times.
Here's the Colombian:
"Genocido en Chocó," Diario el Pais (Cali).
"Civiles no murieron por enfrentamiento, fue una masacre dice Pastrana," El Colombiano (Medellin)
"45 niños entre víctimas de masacre de Bojayá," El Espectador (Bogata).
Meanwhile, there's no hesitation in the U.S. press to call a terrorist whoever is putting bombs in mailboxes in the Midwest.
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COLOMBIA
Alvaro Uribe Vélez profiled: Amidst all the mayhem, Colombia is conducting a presidential campaign; the election will be held May 26. The Colombian frontrunner is profiled in today's Miami Herald: Leftist rebels want to kill him, and they've already tried. Why do rebels want Uribe dead? The same reason most Colombians want him to be president--because he pledges to boost the military, double the size of the police force, and bring an authoritarian stance to bear against the Revolutionary Armed Forces of Colombia (FARC), leftist guerrillas who have waged war here for 38 of Uribe's 49 years. He says he will fund the new and improved armed forces by launching his own offenses against government corruption, superfluous spending and tax dodging. And after three years of peace talks during which Colombians watched the FARC boost its troops, arsenal, drug stash and horde of kidnapping victims, surveys show Colombians think Uribe is the answer. He is the antithesis of current president Andrés Pastrana, whose relentless negotiations with the guerrillas ended abruptly Feb. 20. Colombians are tired of peace talks. They want action against the wave of bombings and killings plaguing their coffee- and coca-rich nation. For now, it seems they want Uribe, a hard-liner with a history of championing both social programs and civilian security squads. Uribe is a life-long politician and dissident Liberal Party member whose own father was murdered in 1983--allegedly in a botched FARC kidnapping attempt. In April polling, Uribe approached the 50 per cent needed to avoid a run-off and lead his nearest opponent by more than 20 points. When he's elected, the Swedes will no doubt want him declared the terrorist.
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COLOMBIA
It's the Swedes: According to El Tiempo, it's mainly the Swedes who were behind the European Union's refusal to call the FARC what it is, a terrorist organization.Another source reconfirmed that the original plan was to include the FARC as well as the paramilitaries (AUC). The majority of the European foreign ministries considered that the guerilla group is primarily responsible for the collapse of the peace process with the Pastrana administration. And facts like the kidnapping of Ingred Betancourt--among other attacks on the civil population--have weakened its image in the Old World, including among the ONG that before defended them "tooth and nail." Nevertheless, this all was ruined when reserves were expressed about the effect classifying the FARC as a terrorist group would have on the essence of the doctrine of the European Union in relation with Colombia, which can be summarized as: "the unique possbile end to the conflict is dialogue and political negotiation, and Europe will do everything possible to help produce that and overcome all difficulties. Sweden has been one of the countries most active in the recent peace process, in its territory it functions as the agency of notice to the FARC (Anncol) and significant sectors of opinion consider that the fight of the FARC is not terrorist but of liberation (emphasis added). Otra fuente reconfirmó que el plan original era incluir tanto a las Farc como a los paramilitares. La mayoría de las cancillerías europeas considera que el grupo guerrillero es el gran responsable del fracaso del proceso de paz con la administración Pastrana. Y hechos como el secuestro de Ingrid Betancourt--entre otros ataques a la población civil--han debilitado enormemente su imagen en el Viejo Continente, incluso entre las ONG que antes los defendían a "capa y espada." Sin embargo, todo se hundió cuando expresó sus reservas sobre el efecto que podría tener el calificar a las Farc de grupo terrorista sobre la esencia de la doctrina de la Unión Europea en relación con Colombia, y que se puede resumir así: "la única salida posible al conflicto es el diálogo y la negociación política, y Europa hará todo lo posible para ayudar a que este se produzca y llegue a buen puerto." Suecia ha sido uno de los países más activos en el reciente proceso de paz, en su territorio funciona la agencia de noticias de las Farc (Anncol) y sectores significativos de opinión consideran que la lucha de las Farc no es terrorista sino de liberación. This irresponsible and dishonest decision has received far to little coverage in the press outside of Colombia. Probably because most editors and reporters share the fundamental world view behind it: "no enemies to the left."
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COLOMBIA
FARC kills 45 children: The death toll in the FARC bombing in Bojayá, Chocó, Colombia has reached 108, reports El Espectador. Of the dead 45 were children, killed in a church. El Tiempo has a photo of a grieving family.
To repeat: The European Union just last week refused to include the FARC on a list of terrorist organization.
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VENEZUELA
Lucas Rincón testifies: General Lucas Rincón testified before the National Assembly's commissionn reviewing the events of April 11-13. It was Rincón who announced that Chávez had resigned. A report is in El Universal.
Essentially, Rincón's story is that he was not himself plotting to remove Chávez, but acted against Chávez to avoid a four-way civil war among his military and civilian allies and opponents."I am convinced that what was the fundamental was to avoid the spilling of blood, and more, a civil war," said the commander in chief explaining why, in the early morning of April 12, he announced to the country that the President Chávez had agreed to resign. "Estoy convencido de que fui factor fundamental para evitar el derramamiento de sangre y, a lo mejor, una guerra civil," dijo el comandante en jefe al explicar por qué, la madrugada del 12 de abril, le anunció al país que el presidente Chávez había aceptado la renuncia. Rincón suggests that he mediated some sort of agreement between Chávez and his military opponents, which permitted a conditioned resignation, and announced it, but that both sides later backed out.I told him (Chávez) that if what was materializing did occur there would be a confrontation and we could not imagine the consequences. Mr. President told me "I don't want bloodshed, not even one drop." We had information that there was a machine gun at Miraflores and that tanks would arrive. Then I gave him an approach to calming the situation. What we have here is a coup and it will not be a confrontation between military units but among civilians as well. I spoke of the resignation that was asked of him. This was in order to see if it quieted the situation. The President told be that he would always examine such a request and when it conformed with the Constitution and they complied with certain guarantees.....Afterward, I called again. The situation is worse. The officials gestured to me and asked me "when are you going to speak?" Then I told him that I would take the liberty of announcing the request...At this time, the coup plotters (golpistas() had accepted Chávez's conditions....I permitted myself to draft with my own hand the text that announced it with all responsibility in order to avoid a confrontation...It was a moral approach....After my conversation, the coup plotters denied the conditions and Mr. President he refused to resign." Le dije que si esto se materializa iba a haber un enfrentamiento y nos podemos imaginar las consecuencias. El señor Presidente me dijo 'no quiero derramamiento de sangre, ni siquiera una gota'. Teníamos información de que iban a ametrallar Miraflores y llevarían tanques. Entonces le hice el planteamiento para calmar la situación. Aquí lo que hay es un golpe y no será un enfrentamiento entre militares sino entre civiles también. Le hablé de la renuncia que se le solicitaba. Eso era para ver si se tranquilizaba la situación. El Presidente me dijo que estudiaría esa solicitud siempre y cuando estuviera apegada a la Constitución y se cumplieran ciertas garantías... Después volví a llamar. La situación está peor. Los oficiales me manoteaban y me preguntaban '¿cuándo va a hablar?'. Entonces le dije que me tomaría la libertad de anunciar la solicitud... En ese momento, los golpistas habían aceptado las condiciones de Chávez... Me permití redactar a mano el texto que anuncié con toda responsabilidad para evitar el enfrentamiento... Fue un planteamiento moral... Posteriormente a mi conversación, los golpistas negaron las condiciones y el señor Presidente se negó a renunciar." The questions of opposition legislators were directed at showing that Chávez initiated his ouster when he activated Plan Avila, El Universal says.
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Saturday, May 04, 2002
ARGENTINA
"Argentina's albatross is Péron?s legacy." So says blogger treasaigh, in a beautiful short editorial that ends this way:The man that has the will and the political clout to undo the wrongs that have been perpetrated on it has yet to step forward. Until he (or she) does the IMF and other world bodies are correct in not giving the corrupt and inefficient rulers of this country another cent.
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Friday, May 03, 2002
ARGENTINA
Duhalde in trouble: Last week President Eduardo Duhalde spent several days finding a new economy minister, getting the provincial governors to agree to a 14-point plan, containing items needed before the IMF will even consider aid, and--not least--saved his presidency. One week later, things look almost as tough as before.
1. The cabinet reshuffle didn't work. Reviewing the new members, two with union backgrounds, the English language Buenos Aires Herald says:Duhalde's new ministers neither offer a younger or more federal Cabinet nor even help to guarantee the 14 points agreed with provincial governors only 10 days ago. Yet none of the above seems to matter to Duhalde--his main aim was to boost government influence over a Congress holding back on the laws needed to coax from the International Monetary Fund (IMF) a few billion dollars which this wealthy country apparently cannot earn for itself. Yet there is every reason to fear that with these latest Cabinet changes Duhalde will alarm the establishment even further while gaining little ground in Congress, trade union circles or anywhere. Since Cabinet Chief Alfredo Atanasof, Interior Minister Jorge Matzkin and (Labour Minister Graciela) Camaño have 32 years in Congress between them, Duhalde might imagine himself closer to the heart of Congress but he is only more its hostage--the rise of trade unionists only brings him nearer to wage-push inflation. In short, the kind of step forward which can send him over the cliff. 2. As to the unions, a dissident faction of the CGT has already called a one-day strike and mobilization for May 14, reports La Nacion. The action was approved unanimously at a congress of the militant faction (fracción combativa) of the CGT.In the meeting, which met in a climate of open opposition to the Duhalde administration, the CGT rebels ratified their refusal to accept Argentina's "submission" to the demands of the International Monetary Fund (IMF). The congress decided moreover "to reject" the 14-point accord signed by the president and the provincial governors for betraying "an undignified and irresponsible attitude that compromises the future of the country." En el cónclave, que sesionó en un clima de abierta oposición a la administración duhaldista, la CGT rebelde ratificó el rechazo que hace al "sometimiento" de la Argentina a las exigencias del Fondo Monetario Internacional (FMI). El Congreso dispuso además "rechazar" el acuerdo de 14 puntos firmados por el presidente y los gobernadores provinciales por tratarse de "una actitud indigna e irresponsable que compromete el futuro del país." The demonstration will include a march on the Plaza de Mayo, site of demonstrations that toppled Duhalde's immediate predecessors Fernando de la Rúa and Adolfo Rodríguez Saá.
3. Duhalde's new economy minister, Roberto Lavagna, is in a public spat with the consumer and competition secretary (secretario de Defensa de la Competencia y del Consumidor) Pablo Challú, reports Télam. It matters for two reasons--Lavagna's important and the subject over which the two are battling is important. Lavagna provided the Duhalde government with needed credibility, when he was appointed to replace Jorge Remes Lenicov. He still does, and will, so long as his own credibility isn't sucessfully assaulted by secondary figures. What the two ministers are fighting over is price controls; Challú's for them, Lavagna opposed. Lavagna has apparently suggested Challú resign:Asked if Lavagna had in effect asked for his resignatio Challún indicated that "we had a conversation along these lines." Consultado sobre si efectivamente Lavagna le pidió la renuncia, Challú señaló que "tuvimos una conversación en ese sentido." But, Challú told Télam, he was appointed by the president and would only resign at his request.
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COLOMBIA
Non-terrorists kill 100+: The Fuerzas Armadas Revolucionarias de Colombia (FARC), which the European Union just this week declined to label as "terrorist" killed more than 100 people at Bojayá, report El Espectador (Bogata) and El Pais (Cali).
The EU's decision to deny the obvious truth about the FARC was noted in El Sur yesterday.
The victims were among hundreds of people attending a religious ceremony in the central square of Bojayá, which is in the department of Chocó, when a tank of gas stuffed with dynamite was detonated."The information that we have is that all were civilians," indicated the official (Jorge Caicedo, secretary of the government of Chocó) and added that thirteen of those injuries were grave and that the injured ought to be transferred to more advanced medical centers. "La información que tenemos es que todos son civiles," señaló el funcionario y añadió que trece de los heridos son graves y que los lesionados deben ser trasladados a centros médicos más avanzados. "The situation is very critical. We have made a call to the national government to ask them to please give us a hand in this situation. We need humanitarian help," affirmed Caicedo. "La situación es bastante crítica. Hacemos un llamado al Gobierno nacional para que por favor nos den la mano frente a esta situación. Necesitamos ayuda humanitaria", afirmó Caicedo.
Possibly the European Union might lend a hand.
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CHILE
Unemployment concern: Unemployment is a growing concern in Chile, reports the Chilean business paper Estrategia. Economists project that the rate, currently at 8.8 per cent for the January-March quarter, could reach 9.8 per cent by the end of August. Year-to-year comparisons look a bit better than the more recent record. In addition, the problem appears not to be so much one of fewer jobs as one of more workers, though jobs have indeed been lost.While, in relation to the same period of 2001, the number of people working increased by 2.2 per cent (115,990 people). Thus, it was the increase in 12 months of the work force by 2.1 per cent (123,500) that explained the continuation of unemployment at elevated levels. Mientras, en relación a igual lapso de 2001, la cantidad de personas ocupadas aumentó en 2,2% (115.990 personas). Así, fue el avance en doce meses de la fuerza de trabajo en 2,1% (123.500) el que explicó la mantención de la desocupación en niveles elevados. La Tercera notes other projections suggesting double-digit unemployment later in the year.Last year the government intended to brake without success the rising trajectory of the unemployment rate in the months of winter with an injection of about 155,000 emergency employment posts. This year, the effort will be at similar levels (some 160,000), but the focus will be different: prioritized will be the subsidy of the hiring of manpower, where the private sector will be an important participant in the creation of jobs. El año pasado el gobierno intentó frenar sin éxito la trayectoria alcista de la tasa de desempleo en los meses de invierno con la inyección de alrededor de 155 mil empleos de emergencia. Este año, el esfuerzo será de niveles similares (unos 160 mil), pero la orientación será distinta: se priorizará el subsidio a la contratación de mano de obra, donde el sector privado será un actor más importante en la creación de empleo. Chile is the success story for "neo-liberal" policies in Latin America. Its successes and its problems both have huge implications for Latin American development.
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ARGENTINA
Deterioration: An item from Bloomberg shows the country's continued economic decline. April tax revenue fell 18.5 per cent from a year earlier. The week-long "bank holiday" was one factor.
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Thursday, May 02, 2002
VENEZUELA
Carmona testifies: Pedro Carmona Estanga, Venezuela's interim president during the brief departure from power of Hugo Chávez, testified before the National Assembly commission that is investigating the events of April 11-13. Carmona's testimony is reported in El Universal."I did not conspire, there was no coup, there was no rebellion." "No conspiré, no hubo golpe, no hubo rebelión." Carmona insisted that what was produced was a "power vacuum" after the inspector general of the national armed forces, general Lucas Rincón Romero, indicated publicly to the country that the high command had solicited the resignation of the President Hugo Chávez and that the leader had accepted. Carmona sostuvo que lo que se produjo fue un ''vacío de poder'' luego de que el inspector general de la Fuerza Armada Armada Nacional, general en jefe Lucas Rincón Romero, señalara públicamente al país que el Alto Mando había solicitado la renuncia del presidente Hugo Chávez y que el mandatario la había aceptado. "The authorities abandoned office before the announcement of the resignation of the President," he indicated. "I have been an opponent, but a conspirator never," he insisted. "Never was the resignation of the president in my hands," I accepted much later. ''Las autoridades abandonaron el poder ante el anuncio de la renuncia del Presidente,'' indicó. ''He sido opositor, pero conspirador nunca,'' insistió. "Nunca tuve la renuncia del presidente en mis manos," aceptó más tarde. Carmona did not reveal the identity of the person that called him the early morning of the 12th of April to ask him to assume the interim presidency in the absence of the president nor who granted the office in the meeting that was held with the general staff of the armed forces at the army command and that preceeded the pronouncement that was made at five in the morning the same day. Carmona no reveló la identidad de la persona que le llamó la madrugada del 12 de abril para pedirle que asumiera la presidencia interina ante la ausencia del presidente ni quien le otorgó el cargo en la reunión que sostuvo con el el generalato de la Fuerza Armada en la Comandancia del Ejército y que precedió el pronunciamiento que hiciera a las cinco de la mañana de ese mismo día. Carmono always spoke instead of a "collective" of persons, El Universal reports. Carmona would also not reveal the author of the decree of the interim government that, among other things, dissolved the National Assembly and most of the country's other political offices, and was much criticized for it. He also denied having contact with the previous president, Carlos Andrés Pérez, who is in exile in the Dominican Republic. Finally,Carmona rejected completely any the participation of foreign groups or governments in the events of the 11th of April. He said that he did not receive demonstrations of support from foreign governments, as these "were evaluating the situation," before pronouncing themselves on it. Carmona negó de forma Carmona negó de forma sistemática la participación de grupos o gobierno extranjeros en los sucesos del 11 de abril. Dijo que no recibió manifestaciones de apoyo de gobiernos extranjeros, pues estos "estaban evaluando la situación" antes de pronunciarse.
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EUROPE AND LATIN AMERICA
No enemies to the left: The European Union has inserted itself into Colombia's guerilla war, reports El Tiempo, on the side of the guerillas. Putting together its list of terrorist organizations, the EU chose not to include the Fuerzas Armadas Revolucionarias de Colombia (FARC), despite the fact that FARC is the aggressor, and uses kidnapping (including of a presidential candidate), bombing (including of a presidential candidate) and assassination as everyday tactics. The EU did include the Autodefensas Unidas de Colombia (AUC), which was formed in response to the depredations of the FARC. The EU did leave open the possibility of declaring the FARC to be a terrorist organization at a later date. Right.
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VENEZUELA
Taped! El Nacional and El Universal both give accounts of a video tape of Hugo Chávez while in custody on April 13. The tape was obtained and broadcast by Globovisión.
On the tape:
1. Chávez acknowledges activating Plan Avila, a plan to defend the presidential palace against popular insurrection with troops and armor. This practice has been very controversial since the military fired on demonstrators during street protests in 1989. But, he says, his military chiefs were very reluctant to activate the plan. From El Universal:I ordered Plan Avila in the morning. I ordered (General Manuel) Rosendo and he hid from me. I told (General) Lucas (Rincón) and he told me: one must think about it. One must think about what?, I said to him." "Yo ordené en la mañana el Plan Avila. Le ordené a Rosendo y se me escondió. Se lo dije a Lucas y me dijo: hay que pensarlo. ¿Hay que pensar qué?, le dije" The opposition has repeatedly cited the activation of Plan Avila as evidence that Chávez planned a violent crack down on the opposition's April 11 demonstration.
2. Chávez justifies ordering Plan Avila, because, as he sees it, the demonstration is cover for a coup. From El Nacional:"I have the authority to do it, when I was informed by the intelligence agencies of the armed forces and the DISIP (police intelligence) of the plan of insurrection that was in progress... ?Yo tengo potestad para hacerlo, cuando me enteré por órganos de inteligencia de la misma Fuerza Armada y de la Disip, el plan de insurrección que estaba en marcha... 3. Chávez discusses what will happen and where he will go, possibly to Cuba. From El Nacional:The colonel explains to him what he must do and gives assurances that he will be taken overseas, to which Chávez responds: "I have a fear...I, if I am going to Cuba or where I decide, for security. Cuba would be a possibility. Here many people have not understood that no longer am I (thinking about) myself, it is (about) the people. I proposed this night, decided it and the general (Raúl) Baduell told me "you did not give yourself up," and all the leadership betrayed me. Cowards and traitors!" El coronel le explica lo que tiene que hacer y después asegura que lo llevarán al exterior a lo que Chávez responde: ?Tengo un temor...yo sí me voy a Cuba o a donde yo decida, por seguridad Cuba sería una posibilidad. Aquí mucha gente no ha entendido que ya no soy yo, es el pueblo. Yo propuse esa noche, lo decidí y el general Baduell me dijo ?no te rindas? y todo el Alto Mando me traicionó. ¡Cobardes y desleales!? 4. Chávez has maintained that at no point did he resign. Conversation caught on this tape backs him up. From El Nacional's summary: One time the colonel reiterated to Chávez what he would have to do, the chief of state answered that he could refuse to obey, since it is clear, he would continue being the constitutional president. "Just leave me here seated. I am going to meditate, and good, if I am imprisoned, it's OK. I stay imprisoned here but I am not obligated to go away..." Una vez que el coronel le repitió a Chávez lo que debía hacer, el jefe de Estado le respondió que podría haberse negado a obedecerlo, pues según deja en claro, seguía siendo el Presidente constitucionalmente.
?Sencillamente déjame aquí sentado. Voy a meditar, y bueno, si estoy preso; está bien. Yo sigo preso aquí y no estoy obligado a irme..." Please excuse the translation. It is of a summary of a tape of conversations.
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Wednesday, May 01, 2002
ARGENTINA
Duhalde denies he will resign: La Nacion and Clarin both report that Duhalde is upset at criticism from some leaders of his Peronist party "who explain on television 'how in four days they did big things,' but 'bolted like rats when the Argentine situation pressured them'" ("quienes explican por televisión 'cómo en cuatro días hicieron grandes cosas' pero 'dispararon como ratas cuando la situación argentina los apremió.'" He added that he will not resign"I will not abandon Argentina in the same way that I would not abandon a child of mine that has problems. No abandonaré a la Argentina de la misma manera que no abandonaría a un hijo mío que tiene problemas. Duhalde spoke at a union May Day event. The papers said his comments were in response to remarks made by his immediate predecessor, Adolfo Rodríguez Saá, who left office after two weeks amidst violent demonstrations (which some allege were part of what amounted to a coup).
Need it be said: Anyone who finds it necessary to reject the idea resigning, is either considering resigning or believes others are considering it for him. Otherwise, why would the idea even cross his mind?
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VENEZUELA
Rival demonstrations big and peaceful: Competing May Day demonstrations have been organized by the pro-Chávez Bolivarian Workers Front (Frente Bolivariano de Trabajadores) and the opposition Venezuelan Workers Confederation (Confederación de Trabajadores de Venezuela). According to the commissioner of the metropolitan police, Henry Vivas, "as of this moment all is developing without any kind of problem..." ("hasta el momento todo se está desarrollando sin ningún tipo de problema..." reports El Nacional.
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VENEZUELA
Unreconciled and absent: Returning to power, Hugo Chávez promised a kinder, gentler government. For one thing, he created a presidential commission to promote and coordinate a national dialogue. Not everyone invited has been willing to participate, reports El Nacional.Among the 40 members that compose the commission, in the Salón Ayacucho of the Miraflores Palace, there were not leaders of Fedecámaras (the business organization whose president served as interim president) the CTV (national labor union), political parties nor communications media directors. Entre los 40 miembros que integran la comisión, en el Salón Ayacucho del palacio de Miraflores no estuvieron los dirigentes de Fedecámaras, la CTV, los partidos políticos ni directivos de los medios de comunicación. Speaking for a few minutes at the opening session, Chávez expressed his displeasure at the absences, reports El Universal.The chief of government denounced those sectors of the opposition that reject the national dialogue and don't stop insisting on a unconstitutional end. "There are disturbing elements. They are actors that are capable of thinking of insisting on an extra constitutional ending." El jefe del Gobierno denunció que sectores de la oposición se niegan al diálogo nacional y no dejan de insistir en una salida inconstitucional. "Hay factores de perturbación. Son actores que podrían estar pensando en insistir en una salida extraconstitucional." Although Chávez has called for reconciliation and dialogue and has made a few gestures in this direction--including this commission--there is little evidence that he plans to modify his statist, populist policies in any significant way. Unconvinced of his sincerity, the opposition is unwilling to lend credibility to feel-good events that serve mainly to rehabilitate Chávez. They clearly prefer to test their strength on the streets today, instead. And in Venezuela's current situation, head counts from the street are more important than talking heads in Miraflores.
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VENEZUELA
Competing marches: Opposition to President Hugo Chávez will be publicly tested for the first time since the failed coup of April 11-14. The measure of the opposition's strength will be the turnout at today's May Day march, called by the national labor union, the Confederación de Trabajadores de Venezuela (CTV), reports Bloomberg.Chavez's opponents called on Venezuelans to join the traditional May Day march by the country's largest labor organization as a protest against Chavez and his government's policies. The government is also organizing a march and rally that will pass just blocks away from the route of its rival. Leaders at the Confederation of Venezuelan Workers, who say they represent 1 million workers, expect at least 100,000 people onto the streets Many civic groups opposed to Chavez are expected to participate, with leaders calling on their followers to wear black armbands in memory of 12 protesters who were killed in the April 11 protest march that preceded the coup. The march followed a nationwide strike spearheaded by the CTV.
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ARGENTINA
Rural view: Agricultural organizations suspended a week-long strike, planned for this week, ostensibly out of respect for the country's new economy minister, Roberto Lavagna. But they are not happy, reports the AgReport website for April 26. The site quotes the Argentine Rural Society (SRA), as follows:The legal system in general and democracy in particular are violated. The elemental principles of a pacific and civilized coexistence are sacrificed day to day. Private property is no longer respected and is increasingly desecrated. Personal security experiments a progressive deterioration. Acquired rights and legal guarantees are constantly dishonored. The National Constitution is dead. Taxes are increasingly confiscatory. Anarchy demolishes the social order. The waste of limited public resources is an insult to intelligence. Political ethics are lacking. Legal arbitrariness multiplies our doubts and worsens our uncertainties.
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ARGENTINA
Optimism Returns: The Argentine press has taken on an optimistic tone this week. The crisis, they seem to think, is over.
La Razon, for example, headlines one story: "New signals of support come from the United States," and "Washintgon again praises the transition of the Duhalde government and reasserts its predisposition to help." ("Llegan nuevas señales de apoyo desde EE.UU."and"Washington volvió a elogiar los últimos pasos del gobierno de Duhalde y ratificó su predisposición a ayudar.") The story reports U.S. Treasure Secretary Paul O'Neill's comments on Argentina last night on NBC.
La Nacion, meanwhile, seems almost celebratory, headlining one item: "The dollar closes below $3. ("El dólar cerró por debajo de los $ 3.) Never mind the fact that this is a third of what the peso was worth at the beginning of the year.
In fact, the situation last week was not as bad as it looked. And the situation this week is not as good as the local press seems to believe.
Last week's crisis was touched off when Jorge Remes Lenicov finally burned out. First Duhalde rejected his plan to slow the bleeding of deposits from banks by requiring savers to negotiate the entire appeals process before banks could be forced to honor court-ordered withdrawls. (See El Sur.) Then Duhalde's substitute Bonex plan--converting savings to bonds--was rejected by national legislature. This, combined with the refusal of Canada's Bank of Nova Scotia to inject new money into its Argentine subsidiary, forced the government to close the banks for a week. (See El Sur and El Sur.) At about the same time, Duhalde began talking about re-establishing a fixed exchange rate. Finally, Remes Lenicov heard nothing but complaint about all this from the IMF and the USA, he resigned. (See El Sur.)
Remes Lenicov's resignation touched off the crisis. Duhalde met with legislators and Peronist state governors to come up with a plan and interviewed several candidates for to replace Remes Lenicov, finally selecting Roberto Lavagna. (See El Sur.) Lavagna promptly, recommended--and Duhalde promptly accepted--essentially the measures proposed by Remes Lenicov and that led to his resignation when they were not accepted. (See El Sur.)
In short, Argentina is back where it was two weeks ago, before the crisis blew up. The only change for the better is that Argentina now has economy minister with fresh energy. The country is still out of money and still counting on a foreign bailout.
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Tuesday, April 30, 2002
VENEZUELA
New economic minister Apparently moving to make promised changes to his cabinet, Hugo Chávez is ready to name a new economic team, reports El Mundo, quoting official sources. To be named finance minister is economist Francisco Rodríguez, whose negative view of the country's financial situation was noted yesterday in El Sur. Among other things Rodríguez said the Venezuelan state is "broke."
Others to be named are Felipe Pérez Martí as planning minister and businessman Miguel Pérez Abad as minister of production and commerce. El Mundo says "the new ministerial team...will have the challenge of facing a difficult fiscal situation and restoring confidence in the Venezuelan economy" ("del nuevo equipo ministerial...tendrá el reto de afrontar la difícil situación fiscal y rescatar la confianza en la economía venezolana").
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CHILE
Chile-U.S. free trade: The Financial Times wonders: Will the just signed free-trade agreement between Chile and the European Union spur efforts to complete a treaty between Chile and the U.S.?The Chile agreement, which is likely to be the first bilateral free trade deal concluded by the Bush administration, is being considered by the US Congress as the template for a host of future trade agreements, including a planned Free Trade Area of the Americas. As a result, it has become embroiled in divisive congressional fights over how labour rights and environmental standards should be incorporated into trade agreements, and whether private companies should have free rein to sue governments for restricting trade. Tom Daschle, Democratic majority leader in the Senate, and Max Baucus, chairman of the Senate finance committee, warned last month that failure to write labour and environmental standards into the Chilean agreement would jeopardise congressional support for Mr Bush's coveted fast-track trade negotiating authority. The problem here is U.S. politics. The labor, environmental and anti-globo left, which effectively controls Democratic Party, insists on labor and environmental conditions that make a free-trade treaty impossible in practice. The Bush administration has been unwilling propose labor and environmental provisions because they know they can't negotiate, ratify and implement a treaty containing them with Chile. At the proposal stage, Chile would almost certainly view such conditions as unreasonable assertions of U.S. extraterritoriality, and so deal-breakers. In the unlikely event such conditions did make it into a draft treaty they would either 1) cause its defeat in the U.S. Senate (if the conditions were cosmetic), or 2) render it impossible to implement (if the conditions had teeth). The Bush administration is equally unwilling to propose a treaty without such conditions, because if it did so it would start a very big, very public fight with the Democrats, something the administration is determined to avoid.
The risks of the Bush administration's strategy are put forward in a column by Andres Oppenheimer in Sunday's Miami Herald.In recent weeks, I have heard growing numbers of top Latin American officials--including some of President Bush's best friends in the hemisphere--complain about the U.S. failure to offer carrots to bankrupt countries such as Argentina or to help more promising nations such as Mexico and Chile become role models for the rest of the region. (Ignore the very bad idea delaying reform in Argentina by again subsidizing its bad habits.) The U.S. paralysis in Latin America -- which is as much the fault of the Bush administration as of the Democratic-controlled Senate--could hardly come at a worse time. After more than two decades of relative stability, several political and economic crises are rocking the region. These are Colombia's worsening guerilla war, Venezuela's increasing polarization and Argentina's financial self-immolation. At a lesser level of crisis, Oppenheimer says, is the perceived failure Vicente Fox's special relationship with George W. Bush to bring concrete results.And Latin America as a whole is wondering whether Bush will succeed in convincing the Senate to pass a ''fast-track'' bill to expedite a 34-nation agreement to launch a hemisphere-wide free trade area by 2005. A Senate vote on the issue could come as early as Tuesday and, if approved, the bill would go to the full Congress. Sure, the Bush administration says it remains fully committed to the region-wide free trade agreement and is pressing Senate Democrats to pass it. But skeptics wonder--rightly--why a U.S. president with a 75 percent approval rating has not spent more of his political capital on an issue that he has defined as a top priority of his foreign policy agenda. The answer to that is U.S. midterm politics, as briefly described above. Time will tell whether the Bush administration's strategic decision to duck fights with the Democrats is a wise one. It all depends....Do the Republicans do well in the November elections, winning back the Senate especially?...Does everything, meanwhile, more or less stay together in Latin America (and other now-backburner areas) until the elections are over? All unknowable today.
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VENEZUELA
Army in charge? President Hugo Chávez has begun reshuffling high-level posts in his government. For example, Vice President Diosdado Cabello, an organizer of the "Bolivarian circles" street gangs, has been replaced with Defense Minister Jose Vicente Rangel. Although Rangel too is a Chávez loyalist, the government is attempting to portray the changes as gestures of conciliation directed at the regime's many opponents. An analysis by the Financial Times suggests something else entirely.Mr Rangel's move from the defence ministry to the vice-presidency suggests sectors within the military high command are now calling the shots behind President Chavez, according to analysts. The armed forces supported Mr Chávez's return to power two days after he was unseated by a military coup, but laid down conditions for their help. The Financial Times suggests that the real purpose of the change is to rid the military of Rangel, a civilian, whose appointment a year ago was resisted in the military, because of "his alleged sympathies towards Colombia's leftwing guerrilla groups, his antipathy towards the US, and his accusations of corruption in the military during his previous career as a journalist."
The paper hints that Cabello is being moved to another post in the government to lower the profile of the "Bolivarian circles."
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ARGENTINA
High interest:Argentina's central bank paid a record 95 percent interest rate to sell 61 million pesos ($20.7 million) of 15-day bills yesterday to help shore up the currency, reports Bloomberg.com. The auctions are aimed at soaking up some of the currency the country is printing to finance a budget deficit and prop up banks. The last time Argentina did a couple weeks ago the rate was 75 per cent.
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Monday, April 29, 2002
VENEZUELA
Money low: The National Assembly's economic advisor, economist Francisco Rodríguez, says that the Venezuelan treasury is bankrupt (quebrado) and that the government should turn to multinational organizations to refloat the economy, reports El Universal.'"The Venezuelan state has no money, it is broke. The treasury is at 14 per cent of its normal level, extremely low (a level)," declared Rodríguez to the station Unión Radio. "El Estado venezolano no tiene dinero, está quebrado. La tesorería está a un 14 por ciento de sus niveles normales, (un nivel) sumamente bajo," declaró Rodríguez a la emisora Unión Radio. The country's deficit is at a historic high, reaching seven per cent of gross domestic product (Producto Interno Bruto or PIB). The article continues: Rodríguez classified as socially dangerous the government's strategy of delaying the payment of its obligations in order to control the deficit, citing the fact that there are regional governments that "have not received money in two months, and that in almost a year the universities and national museums have not received even one bolivar." Rodríguez calificó de socialmente peligrosa la estrategia gubernamental de retrasar el pago de sus obligaciones para enfrentar el déficit, al citar que hay gobiernos regionales que ''no han recibido dinero en dos meses, y que en lo que va de año las universidades y museos nacionales ha no recibido ni un bolívar." "This situation is unsustainable for the state," argued the economist, and he repeated that of the "few alternatives" that the country has to meet the crisis, the most convenient is "to sit down to speak with the multilateral organizations, like the International Monetary Fund," something that the government has not contemplated until now. "Esta situación es insostenible para el Estado," agregó el economista, y reiteró que de las "pocas alternativas" que tiene el país para enfrentar la crisis, la más conveniente es "sentarse a hablar con los organismos multilaterales, como el Fondo Monetario Internacional," algo que el gobierno no ha contemplado hasta ahora. This cannot be advice Chávez wants to hear. Any agreement with the IMF will require Chávez to curb the populism that helps him maintain support among the nation's poor. Still, doing nothing is only an option if Chávez wants to preside over a domestic depression. Obviously, the Venezuelan treasury's cash shortage does insure that Venezuela will maintain, if not increase, oil production.
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DOLLARIZATION
Panama shows the way: "Dollarization," is when a country's only currency is the U.S. dollar. It's close cousin is the "currency board," which is when a country keeps its own currency, but backs it with dollars, one-to-one. These measures have been recommended as ways to quiet the financial chaos that plagues many developing countries, especially in Latin America. They are also highly controversial.
Now, proof of their efficacy appears in an item in the Latin Business Chronicle. The article isn't about dollarization or currency boards, it is about the Milken Institute's Capital Access Index, which measures availibility of capital to entrepreneurs around the world. But the item shows the value of dollarization, nonetheless.
In Latin America, Chile is at the top (29th worldwide) of the index, as expected. But just behind it is Panama (34th worldwide), a big surprise, until one considers the following: Thanks largely to only using the U.S. dollar during its entire 99-year history, Panama has been able to maintain one of the lowest inflation rates in Latin America and one that often has been lower than that of the United States itself. In addition to hosting one of Latin America's top international banking centers, Pamama also boasts a relatively large number of domestic banks. And since the dollar is the legal currency, the country's central bank has limited authority, it neither prints money nor owns or bail outs local banks. The part in that last sentence, about how the state can't print money or bail out banks in a dollarized economy, explains why dollarization remains deeply unpopular among Latin American political elites and has been installed only when they've completely discredited themselves. Dollarization limits what political leaders can do, and they don't like it. Argentina's Eduardo Duhalde, for example, has said he would resign before he dollarizes the economy. On the other hand, the public generally approves, since one primary effect of dollarization is to protect the savings of people who don't have the wherewithall to spirit them to Miami. Argentina's public loved that country's (modified) currency board system, which was blown apart at the end of last year.
Two of dollarization's most important advocates are economists Kurt Schuler and Steven Hanke. Their work, some of which focuses specifically on Argentina, is available at the Currency Boards and Dollarization website.
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VENEZUELA
Bolivarianism = Peronism: Did Hugo Chávez spend his two days out of the office studying Argentine economics? It's beginning to look that way.
In the most recent broadcast of his radio program, ¡Aló, Presidente!, El Universal reports, Chávez annnounced that, in conjunction with the previously announced increase in the minimum wage, the government will decree a 60-day ban on discharging employees (inamovilidad laboral). The wage increase and firing freeze apply to government and private business. (The article in El Universal contains estimates of the cost to each). Small business and rural employers can meet the increase in two steps.
1. While the decree pretends to stop firings, it will instead stop hirings. Employers hire only reluctantly when hiring means a lifetime commitment.
2. So much for the supposedly chastened, cooperative, willing to compromise Chávez who was returned to office two weeks ago. This is left-wing populism pure and simple.
3. Though initiated before the failed coup, this measure will be seen as rewarding the Bolivarian circles and other Chávez loyalists. It will undoubtedly increase Chávez's popularity short-term, especially among his lower ncome supporters. But, short-term is the operative phrase. As with most such populist measures, the immediate fix will be followed by an hangover. And, as noted here before, Chávez has five long years left in his term. So he (in addition to the Venezuelan people) will pay for this excess.
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Sunday, April 28, 2002
CHILE
Good News! One country that infrequently appears in the news (and in El Sur) is Chile. That is because, in comparison with its South American neighbors, Chile is successful, prosperous and untroubled. As a result, it doesn't make much news foreigners would find interesting. Now it has.
According to Bloomberg, Chile has signed a trade agreement with the European Union.Chile has spent 15 years opening markets abroad for wine, fruit, commodities and other goods and government officials are betting on free trade agreements to rekindle an economic expansion that's slowed in the last four years. The EU hopes the agreement will accelerate free-trade talks with Latin America's biggest trade bloc, Mercosur, which includes Brazil, Argentina, Uruguay and Paraguay.
"I would like to think that this agreement with Chile will be the first step toward other agreements that we have to make as a region with Europe,'' Chilean President Ricardo Lagos said.
Best of all, it will be more difficult for the protectionists in both U.S. parities and the anti-globo leftists who lead the Democrats around by the nose to block free trade with Latin America. The U.S. will have to deal to remain competitive. The Bloomberg piece continues:Chile expects in the next few months to reach a free-trade agreement with the U.S., its second-largest trading partner after the EU, helping boost exports that account for 42 percent of the country's $69 billion economy. Once that deal is signed, Chile plans to start free-trade talks with Singapore and other Asian countries, Lagos said in a news conference. Chile's El Mercurio, meanwhile, reports that Chilean President Ricardo Lagos' is confident the agreement will be approved by the legislature. The biggest problem with the accord from a Chilean perspective appears to be the sections on fishing, reports El Mercurio.
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ARGENTINA
Does this really still work?: Hilda González de Duhalde knows well what she wants. It what she wants is to enter history as the woman capable of advancing what few governments achieved since Perón: effective social assistance for the most necessary sectors. Hilda Hilda González de Duhalde sabe bien lo que quiere. Y lo que quiere es pasar a la historia como la mujer capaz de llevar adelante lo que pocos gobiernos lograron desde Perón: una efectiva asistencia social para los sectores más necesitados. The article in La Nacion goes on in this vein, fawning over this low-rent Evita. But Chiche, as she's called, doesn't like this comparison. (Yeah, right.)The feminine cabinet, in exchange, is made up of the women of various states that control everything that carries the adjective social. Of course: the first lady does not like to be compared, herself or her collaborators, with the mythic Eva Perón. "This was another political and historical moment. More than the practice of giving assistance, we concentrate on education and health," she said, when people probe about the parallel. El gabinete femenino, en cambio, esta integrado en su totalidad por mujeres de variadas edades que controlan todo lo que lleve el adjetivo de social. Eso sí: a la primera dama no le gusta que la comparen, ni a ella ni a sus colaboradoras, con la mítica Eva Perón. "Ese era otro momento político e histórico. Más que asistencialismo, nosotras nos concentramos en la educación y la salud", dice, cuando la tientan con el paralelismo. Amazing.
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Saturday, April 27, 2002
ARGENTINA
New man, old plan (sorta): - Pagina12/WEB describes the new economy minister's plans. These are to limit the peso's free-float against the dollar and convert savings into bonds. It was the legislature's failure last week to pass a law converting savings into bonds (the Bonex plan) that stimulated the last economy minister's resignation.
Though neither of these initiatives is new, there are wrinkles. On convertability, the government will not fix a peso-dollar ratio, but will establish upper and lower boundaries between which the currencies can float. As to Bonex, the plan apparently is to give them a coupon that will make them worth holding.
It is doubtful that either of these will work. For example, what happens if the dollar rises beyond the band? Who will sell dollars to bring it down? The central bank? They may say so now, but in the event, very unlikely. In theory there should be an interest rate high enough to induce individuals to hold the Bonex bonds. In practice, given constant government's decrees repudiating its own contracts, and allowing others to repudiate theirs, there may not be. The answer to this question will be known quickly. Last week demonstrators scared the senate out of even considering it.
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ARGENTINA
The problem in a paragraph: Here is one paragraph from Friday's Wall Street Journal (International section, no link). The story is no big deal, just a report on the (at the time rumored) appointment of Roberto Lavagna as economic minister and the possible reintroduction of a dollar-peso link, but this one paragraph reveals everything you always wanted to know about Argentina's problems.Argentines widely supported the previous currency peg, known as convertibility. But the current government lacks the credibility to make such a system stick, economists said. Additionally, under convertibility, the Central Bank was barred from printing money to finance the government and was required to stash away one dollar in hard-currenty reserves for every peso in circulation. Any move to readopt a pegged exchange rate wouldn't incorporate those two conditions, the aide (to President Eduardo Duhalde) said. That's not convertibility, it's fantasy. How can they possibly expect a three-to-one dollar-peso ratio to hold while the government prints pesos as it sees fit? Who is going to sell people one dollar for three pesos? Does the central bank plan on throwing its reserves away that way?
If Duhalde and his new, supposedly sophisticated economic minister actually go ahead with this, there is only one possible outcome: First, there certainly will very soon be an unofficial price for the dollar, set by the market, that has nothing to do with three pesos. Second, there may be a few central bank sales at three-to-one, but only for purposes and to people the government deems vital to the national interest--importers of critical materials, cronies, relatives.
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Friday, April 26, 2002
COLOMBIA
Uribe drops, still leads in poll: The Colombian candidate most committed to combatting the FARC guerillas lost supprt in the most recent poll of voters, according to El Tiempo. But, Alvaro Uribe Vélez's support, at 47.7 per cent, is still good for a 20 point lead over his nearest opponent, Horacio Serpa, who received 27.3 per cent. Uribe has lost more than 10 points since the last poll in February. The gains corresponding to Uribe's losses were spread out among opponents.
Under Colombia's electoral system, a candidate needs 50 per cent or more to avoid a run off. The poll tested Uribe's support in a run off against his opponents and found him winning easily against all.
The poll of 1400 voters was conducted for El Tiempo, the review Semana, and RCN radio and television.
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ARGENTINA
Banks open, sorta: Yahoo! News - Reuters reports that Argentina's banks are opening on a limited basis.Banks reopened for five hours Friday afternoon -- but only for bill payments and deposits from anyone who retains faith in the mostly foreign-owned banks, which have hemorrhaged deposits and notched up billions of dollars in losses for their owners. Bet they got lots of deposits.
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VENEZUELA
Interesting slant: A story from Yahoo! News - AP points to a little remarked, but important, element in the Venezuelan conflict: race."They (the opposition) don't like Chavez because he's black, he's Indian, and they're white and beautiful," said Hugo Salvador, a 60-year-old advertising employee. He stood amid a jostling crowd of fellow "Bolivarian Circle" members who shouted, "We're the poor, the ones who have always been kicked around." Most Venezuelans find the "Bolivarian" rhetoric offensive, given the relatively easy coexistence--outside of politics--among the nation's mixed-blood population. But supporters of Chavez's 3-year-old administration like his speeches demanding better distribution of Venezuela's oil wealth. "The children of recent immigrants have gotten rich, formed exclusive white ghettos, and have a certain feeling of disgust for the rest of the population," said Guillermo Garcia Ponce, who holds the title of Director of the Political Command of the Revolution in Chavez's government. Venezuela did indeed attract a large immigration from Italy and Spain in the 1950s, when Spain was stagnant, Italy in turmoil, and Venezuela enjoying the fruits of an oil revenue boom. Wealth from mineral extraction is always a problem; it lends itself to income and social extremes (see examples as various as 19th Century West Virginia and "modern" Saudi Arabia). Chávez could leave no worse legacy than race consciousness where none existed before. Garcia Ponce insisted that "there is nothing in our ideology that would lead to socialism," despite Chavez's close ties with Cuba's Fidel Castro and his tacit support for leftist guerrillas in neighboring Colombia. Note how Yahoo! News - AP's easily accepts as fact an allegation that Chávez himself vehemently denies. "This is not some imported ideology. It's something we invented here. It's Biblical-Bolivarian thought," said circle member Romulo Mendez, 46. The spread of what is called "Bolivarian thought"--which blurs the distinction between Chavez's Fifth Republic Movement party and the government--worries many. Before the coup, Chavez proposed allowing circle committees to inspect schools and fire teachers at will. "Bolivarian thought" is being taught at "Bolivarian schools." It is important to recall that Chávez is not popular in Venezuela, as is shown by a recent poll noted in El Sur two days ago. His loyalist core, in fact, is about 3 per cent of the population, according to the poll. It is this part of the population from which the "Bolivarian circles" are drawn.Leopoldo Puchi, whose small leftist party broke with Chavez because of Chavez's intolerance, said the president chose Bolivar to give a non-Marxist, nationalist face to his own ideas. Chavez's political machine "has achieved very few concrete economic proposals, so all its energy has been channeled into the accumulation of power," Puchi said. The low intellectual level of Bolivarianism will limit his appeal, as is indicated by the reaction of Leopoldo Puchi, just above. It also limits his appeal among North American sandalistas.
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ARGENTINA
IMF part of the problem: Mary Anastasia O'Grady, in The Wall Street Journal's "Americas" column examines Argentina's future under, and perhaps after, late-Peronism. She is firmly in the camp of those who believe that only complete collapse of the "generations-old corporatist economic model" that is "deeply embedded in Argentine culture and reflected in its politics" will permit the "intense national soul-searching" that is needed if reform is to take deep root. So,It's too bad the IMF won't just stay out of Argentina. Without IMF meddling or hovering in the wings, the highly capable Argentine people would find a way to reconcile their fiscal accounts. They'd also be forced to design trade, labor and regulatory policies that encourage the creation of wealth. IMF interference--whether it's the lure of a deep pocket safety-net, or bad advice--will only distrot domestic politics and make such reform more difficult. That is just the bottom line. The whole piece is excellent. Unfortunately, it is not on the Net.
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ARGENTINA
Last chance Peronist party leaders believe they have just one more chance before elections will have to be called, reports La Nacion.This is the reason why no (state) governor accepted a post in the (national) government and only supported a 90-day plan, the success of which is not asssured. Es ésa la razón por la que ningún gobernador aceptó un cargo en el Gobierno y sólo lo respaldaron en un plan de 90 días, sobre el que no se animan a asegurar que tendrá éxito. Although no governor called for Duhalde's resignation,The chief of state believes that to leave his office will only mean that the country is jumping into the void, according to what he told La Nacion last night... El jefe del Estado cree que dejar su cargo sólo significará que el país dé un salto al vacío, según le dijo anoche a LA NACION... In the end, 72 hours of meetings between Duhalde and the Peronist governors resulted in the appointment of Roberto Lavagna, an economist and current ambassador to the Eurpoean Union, as Economic Minister, replacing Jorge Remes Lenicov. La Nacion reports this entire series of meetings somewhat breathlessly and in unnecessary detail. The only real news emerging from this mafia summit is that Duhalde is nearing the end and few of his associates want to be with him when he gets there.
If there are elections, the next government is likely to be far left.
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ARGENTINA
Still stealing?: Dead Dictator Juan Perón's last wife is in trouble in Spain, reports La Nacion. María Estela Martínez de Perón was brought into court in Spain by the Fundación por la Paz y la Amistad de los Pueblos, which "accuses her of improperly retaining more than $6 million dollars." ("la acusa de retener indebidamente más de 6 millones de dólares.") The fight is over the former dictator's inheritance.
FUNPAZ says everything Perón left belongs to it, under his will and with her agreement in writing. However, FUNPAZ claims, she received and kept money given her during the presidency of Peronist Carlos Menem, in settlement of a claim against Argentina. Making the foundation's claim is its founder, Mario Rotundo, who happens to be ex-secretary to Mrs. Perón ("Isabelita," as she was known, in imitation of her more famous predecessor "Evita"), which suggests this is something of a family fight dressed up as charity. Any why not? Imitation is the sincerest form of flattery.
Mrs. Perón, who was her husband's vice president during his second term, 1972-1974, assumed the presidency of Argentina upon his death in and held it for two catastrophic years, until she was overthrown in 1976 by the military, who proceeded to create a catastrophe of their very own. She spent five years in prison in Argentina, before removing permanently to Spain in 1981.
And who's the thief here? Whichever one wins the court case.
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Thursday, April 25, 2002
ARGENTINA
View from the country: Reading all the news reports detailing the plans and decrees handed down by President Eduardo Duhalde and his Peronist pals, it's easy to forget that these things affect real people in the real world. A small window into the damage these politically driven, practically ignorant impositions can do is provided by the AgReport website for April 19.The most important harvest is about to be cropped, but Argentina is going through a shortage of diesel fuel, and producers observe with concern the possible answers that the government will offer to oil companies. Meanwhile, this week, transporters are on strike as a protest for the high prices they must pay for fuel, that is if they can get a hold of any. The request by agricultural producers and transporters seems quite basic, but the current national crisis continues to tumble even the most elemental suppositions.
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ARGENTINA
U-Turn x 2:
U-Turn #1: Last week, resigned Economic Minister Jorge Remes Lenicov proposed to slow the flow of funds out of frozen savings accounts by requiring that court orders releasing funds not be operative until all appeals by banks are exhausted. Duhalde rejected this proposal then, in favor of the Bonex plan to convert savings into five- and 10-year bonds. Then Bonex failed and Remes Lenicov resigned.
Today, reports Bloomberg, the national legislature passed the required-appeal legislation Remes Lenicov wanted last week."This law is vital; it won't fix Argentina's tragedy, but it at least allows banks to exist,'' said Dario Lewkowicz, a fund manager with Exprinter Administradora in Buenos Aires who managed $35 million before the government defaulted on debt and devalued in January. He wouldn't say how much he manages now. "This law should not be interpreted as a definitive solution for the problem of leakage of funds from the banks, but rather as a stop-gap measure,'' ABN Amro analysts Fernando Losada and Claudio Maulhardt said in a research note. The government closed banks Friday as cash reserves were being depleted after depositors used court injunctions to pull as much as 350 million pesos ($112 million) a day. And that's the little U-Turn. Here's the BIG one:
U-Turn # 2: One of the first things Eduardo Duhalde did on assuming office in January was to cut the one-to-one, dollar-peso link. The currencies had been linked for some 12 years; when first made, the link tamed run-away inflation and set the stage for nearly a decade of growth. Now, Duhalde is considering re-linking the dollar and peso, this time at three pesos per dollar.
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ARGENTINA
Commentary:
1. Political Analyst Rosendo Fraga in La Razón:Immediately, Duhalde will try to reorganize his cabinet, but he will find it difficult to achieve this in a form that ends the crisis. In a climate of strong economic uncertainty and growing social conflict, the current administration only has the capacity to prolong the agony not to resolve the crisis. En lo inmediato, Duhalde intentará reorganizar su gabinete, pero difícilmente logre hacerlo de forma de revertir la crisis. En un clima de fuertísima incertidumbre económica y creciente conflicto social, la actual administración sólo tiene capacidad para prolongar la agonía pero no para resolver la crisis. Fraga believes Duhalde will soon be obliged to call a new presidential election.
2. Economic analysis by Juan Alemann, also in La Razón: When Remes Lenicov returned from Washington empty-handed and the Argentine Senate refused to accept his plan to keep savers' funds locked in banks, he was finished, says Alemann.It is understandable that Argentina does not now enjoy much sympathy in the world. The declaration of default, as if it was a great triumph, applauded with fervor by the Congress, is a grave event. It is also the violation of contracts with public service businesses based in the countries from which it asks help, that the government put in an insolvent condition, by means of high debts in dollars and tariffs frozen in pesos.
Es comprensible que la Argentina no goce actualmente de mucha simpatía en el mundo. La declaración del default, como si fuera un triunfo, aplaudido con fervor por el Congreso, es un hecho grave. Lo es también la violación de contratos con empresas de servicios públicos originarias de los países a los que se pide ayuda, a las que el Gobierno colocó en situación de insolvencia, por altas deudas en dólares y tarifas congeladas en pesos. 3. From blogger T.L. Wilson, an American in the Paris of South America, in his treasaigh.com.Things are bad and the people in charge are corrupt and incompetent. It is impossible to see how, staring into the abyss as this country is, the national government can not come to agreement with the provinces or with the unions or the other sundry groups that represent some sub-sector of society or the other. It is the actions of the leaders of this country which show what is wrong here... and it is them. 4. From the English-language Buenos Aires Herald:Anything could happen and nothing is happening as chaos deepens. But what can be expected without any new economy minister in sight and with a president who boasts of his ignorance of economics? President Eduardo Duhalde seems ready to consider any ministerial candidate and any economic policy although he seems at a loss when it comes to deciding which. The only course he does not seem ready to contemplate (despite some hints from senators yesterday) is calling for immediate elections. Duhalde is very welcome to prove us wrong but there is no indication that he has the least clue of how to hold things together. In a scenario where the lack of confidence is so much more decisive than any tangible or material asset, elections would have the virtue of forcing a shattered leadership and a people devoured by systematic suspicion into a relationship of trust with each other.
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Wednesday, April 24, 2002
VENEZUELA
Chávez support falls: A new poll reveals that only 21% of Venezuelans have confidence in the leadership of President Hugo Chávez. El Universal contains a complete report.
El Universal also has a Chart showing the country's declining confidence in Chávez. The poll classifies Venezualans into four groups, according to their attitudes toward the president: antichavista, 37.5%; decepcianados (the deceived), 31%; chavista tolerante, 18.5%, and talibán (get it?), 13%.
Asked to assess how things are going in the country, Venezuelans generally responded negatively.Only 22.3% of Venezuelans believe that things are going well in the country. This number last year was about 30.4%. Sólo 22,3% de los venezolanos cree que las cosas están yendo bien dentro del país. Esta cifra el año pasado se ubicaba en 30,4%. According to the poll, the country's biggest problem is unemployment. The public has confidence in the universities, the church and the media (which Chávez has often attacked).
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VENEZUELA
Was Chávez prepared to have troops fire on public? There is no question that President Hugo Chávez ordered ordered implementation of "Plan Ávila," the military's plan to protect the government if public order breaks down despite the efforts of the police and national guard, during the big April 11 demonstration. There are tapes to prove it, reports Reuters. The question is, what did he want the to do?Opponents of the left-wing former paratrooper, including military officers who staged a short-lived coup against him this month, said the tapes indicated Chavez had been prepared to use military force against civilian demonstrators. "In which other country, and in what kind of mind, is it conceivable that a peaceful demonstration by citizens would be quelled with weapons of war, with tanks?" National Guard Gen. Luis Camacho Kairuz told reporters. But Chavez's current armed forces chief Gen. Lucas Rincon denied this had been the intention, saying the troops and tanks deployed had not acted against the demonstrators but were called out to prevent sabotage and guarantee public order. According to El Universal:Nevertheless, Lucas Rincon assured that "Plan Ávila is not to maltreat or repress the population" but to guarantee security,prevent sabotage and the disturbance of public order," he informed Venpres. No obstante, Lucas Rincon aseguró que ''el Plan Ávila no es para maltratar o reprimir a la población'' sino para garantizar la seguridad, prevenir saboteos y la alteración del orden público'', informó Venpres. The tapes, which have been played over Venezuelan media, record Chavez ordering the military out of the barracks and into the streets. But, they do not appear to contain a, shall we say, smoking gun.
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ARGENTINA
Farther to fall, say Uruguayan economists: El Pais interviews Uruguayan economists and finds them unanimously believeing that Argentina has farther to fall and that the fundamental problem is political, not economic."It is clear that the coalition that is now governing cannot take the country forward because they are partly responsible for the current disaster. Argentina needs to fall one or two rungs more, because it needs to begin at zero in many aspects," he (Michele Santo) said. "Es claro que la coalición que está gobernando actualmente no puede sacar el país adelante porque son responsables de parte del descalabro actual. Argentina necesita caer uno o dos escalones más, porque necesita empezar de cero en muchos aspectos", opinó. "What exists in Argentina is an institutional and political crisis, not a question of the person that is the head of the Economic Ministry. For example, an agreement with the provinces to reduce their fiscal deficit is a political question," she (Mercedes Rial of KPMG) indicated. "Lo que se vive en Argentina es una crisis institucional y política, no se trata de la persona que esté al frente del Ministerio de Economía. Por ejemplo, un acuerdo con las provincias para reducir su déficit fiscal es una cuestión política", señaló. Gabriel Oddone, investigator for the Center of Economic Investigations (CINVE), said that the fall of the Argentine minister reveals that "the political system cannot trace a clear and coherent direction in order the leave the crisis. This is an enormous political problem." Gabriel Oddone, investigador del Centro de Investigaciones Económicas (Cinve), expresó que la caída del ministro argentino revela que "el sistema político no puede trazar un rumbo claro y coherente para salir de la crisis. Este es un problema político mayúsculo." These read as epitaphs for the Duhalde regime.
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ARGENTINA
Full circle: Clarin quotes government spokesman Aníbal Fernández saying that President Eduardo Duhalde intends to replace resigned Economic Minister Jorge Remes Lenicov and to reveal a new fixed-rate financial plan today.The official confirmed moreover that the dollar will be "anchored" in a fixed value, that would be between 3 and 3.50 pesos, and that the bank freeze will continue until the Senate approves a new law covering the corralito. He insisted moreover that for now the only resignation Duhalde had accepted, from
the members of the cabinet, was that of Jorge Remes Lenicov. El funcionario confirmó además que el dólar será "anclado" en un valor fijo, que estaría entre los 3 y 3,50 pesos, y el feriado bancario continuará hasta que el Senado apruebe una nueva ley contra el corralito. Aseguró además que hasta ahora la única renuncia que Duhalde aceptó, de los miembros del Gabinete, fue la de Jorge Remes Lenicov. Just three months ago this same government held that a floating exchange rate was the way out of the country's problems.
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COLOMBIA
War: The public face of the Irish Republican Army, Gerry Adams, is refusing to testify in the U.S. Congress about links between the Irish terrorist group and the Colombian terrorist group FARC. His lame excuse, reports Reuters: "he refused in the interests of Northern Ireland's peace process." For its part, the congressional committee that wants him to talk, is not mincing words: In a preview of its findings after a nine-month investigation, the House of Representatives Committee on International Relations said on Tuesday the IRA had operated as part of an international terror network that trained Marxist FARC guerrillas in southern Colombia. The House committee launched the investigation after three suspected IRA members were arrested in Bogota on August 11 and charged with training rebels of the Revolutionary Armed Forces of Colombia (FARC). Traveling with false passports, they allegedly spent weeks in an enclave controlled by the FARC. In its preview, the House committee said the IRA, along with Iranians, Cubans and possibly members of the ETA Basque separatist group, had been training the rebels, said to be deeply involved in the drugs trade. To this, the IRA's own Sergeant Schultz says "I know nothing, nothing."Adams said he had been on holiday when the IRA members were arrested and "didn't even receive the news about their arrests for three or four days afterwards." Sandalistas: IRA terrorists aren't the only foreigners doing their best to make Colombia's already daunting problems worse. The country also seems to be facing a plague of peaceniks. AP (via The Las Vegas Sun) reports on one such adventure.American college professor and peace activist Bernard Lafayette came to Colombia hoping to meet with Colombian rebels. He got his wish--and almost wound up being kidnapped by them. Lafayette, along with a state governor and several Colombian priests, was leading a march of almost 1,000 peace activists to an embattled mountain village when they were stopped Sunday by rebels of the Revolutionary Armed Forces of Colombia, or FARC. Knowing the idiot they'd kidnapped is a useful idiot, the FARC let him go.But the FARC continue to hold Antioquia state Gov. Guillermo Gaviria, and former Defense Minister Gilberto Echeverri, who were spirited deep into the mountains on horseback. Echeverri serves as the governor's peace adviser. In addition to the two last named, the FARC continues to hold presidential candidate Ingrid Betancourt, a dozen state legislators, five members of the national parliament, about 40 government troops and a former Cabinet member, Fernando Araujo.
Upon being freed, Lafayette proceeded Medellin to lead a conference on nonviolence. With him at the conference, Nobel Peace Prize laureate Mairead Corrigan Maguire of Ireland. It looks like the heroes of the struggle for peace in Ireland, like the heroes of the struggle for Ireland, are looking to foreign fields now that the home conflict appears on the way to settlement.
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Tuesday, April 23, 2002
ARGENTINA
Production falls: Industrial production continued to fall in March, reports La Nacion.Industrial production in March fell 19.7 per cent with respect to the same month last year and 7.1 per cent from February, in the seasonally adjusted measurement, according to the National Institute of Statistics and Census (INDEC) today. La producción industrial en marzo cayó 19,7 por ciento respecto a igual mes del año pasado y 7,1 por ciento contra febrero, en la medición estacionalizada, según confirmó hoy el Instituto Nacional de Estadística y Censo (Indec). How could it be otherwise with a government that refuses to respect private property rights and steals every loose dollar. Customers can't buy with cash, because their funds are tied up in the account freeze. They can't buy with credit, because no one's extending it (repayment not being enforced). Companies can't import parts, because their foreign suppliers can't be sure of getting paid. Foreign banks won't reliquify their subsidiaries, because anything they put in will be grabbed. If Argentines want a functioning economy they need to get a government and legal system that respects property and enforces contracts, even those in the other guy's favor.
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ARGENTINA
Fatalism: Today's Pagina/12WEB contains this quote from President Eduardo Duhalde:
If the situation arrives in which the legislators evade the wishes of the executive, "the banks will open all the same and what will be is what God wants," said the chief of state, in perfect harmony with the demand of the banks. Llegado el caso de que los legisladores eludan los deseos del Ejecutivo, "los bancos igual abrirán, y que sea lo que Dios quiera," dijo el jefe de Estado, en perfecta sintonía con el reclamo de los bancos. Pagina12 is a leftist paper. Here's where they're coming from: Amidst an economic earthquake, the big banks have declared war. En medio del terremoto económico, los principales bancos se declararon la guerra.
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ARGENTINA
Big news: It's overall strategy coming undone, the Duhalde government is in danger of collapse. To review: That strategy was to make cosmetic changes and whatever promises it took to get the IMF to turn on the cash spigot.
With IMF funding seemingly no closer than when Duhalde took over in January, and temporizing measures like the account freeze (installed by the previous government, it must be said), pesification and devaluation reaching their inevitable dead ends, Duhalde seems out of ideas and out of time.
Evidence he's out of ideas is that his latest scheme to keep savers' cash in the banks is a repeat of a much hated scheme from the 1980s (called Bonex) to turn savers cash into "bonds." Evidence he's out of time is that his government has begun resigning.
Economic Minister Jorge Remes Lenicov resigned first, La Nacion reports. (Last week, when the minister wasn't getting his way on solutions to the banking crisis, El Sur said: "The question is, is Remes Lenicov considering resigning?" Today he did.) The resignation came after the Argentine Senate refused to consider the Bonex plan this afternoon.
Later in the day, reports Clarin, the Chief of Cabinet, Jorge Capitanich, and the Minister of Production, José Ignacio de Mendiguren, also resigned.There are still no names of possible successors for the officials, whose resignations were presented with an indeclinable character. Todavía no hay nombres de los posibles reemplazantes para los funcionarios, cuyas renuncias fueron presentadas con carácter indeclinable. Meanwhile, La Nacion reports, Duhalde met with provincial governors, legislators and others on the crisis. La Nacion also reports that Duhalde himself has no plans to resign, according to his spokesman Eduardo Amadeo.
Reuters reports includes the following comment:"The only thing helping Duhalde here is that no one else wants his job. On the one hand, nobody wants Duhalde to do anything, but nobody wants him to leave, either," said Christian Stracke, emerging market debt strategist at Commerzbank.
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VENEZUELA
Compromise: Recent announcements and actions suggest that things are simmering down in Venezuela. Two questions: Are real compromises being reached? Or, compromises apparent and temporary only, until Chávez obtains complete control? Answers should emerge relatively quickly in two critical areas. The answers from these two will likely provide the answer to the above questions.
1. April 11 shooting deaths: Reuters reports that Chávez has ordered a probe into the killings of April 11. Tape reportedly exists that shows one instance in which Chávez partisans shot into the anti-Chávez demonstration. Witnesses report other instances by known Chávez associates. While promising an investigation, Chávez continues to claim that it was his side that was victimized: Chavez has already denied any responsibility in the killings. "Me, a murderer?" he asked at a news conference one day after he was restored to power. His ministers say pro-Chavez militants were among those killed. In short, it remains to be seen whether the investigation will be fair and place the blame where it belongs, wherever that is, even if that is, as evidence so far suggests, on Chávez partisans.
2. State oil company control: One of the first things Chávez did upon his return was remove the chief executive and directors of Petroleos de Venezuela SA (PDVSA), whom he had just appointed, helping trigger the nationwide lockout/strike of April 9. The executives and employees of the state oil company considered them cronies, without the qualifications necessary to run the company. He has since appointed as company president (and board member) Ali Rodriguez, currently OPEC secretary general and formerly Venezuelan energy minister. Rodriguez was reportedly accepted by PDVSA staff because he is an expert. Now, reports Bloomberg News, Chávez has appointed the remaining board members. They are: Jorge Kamkoff, a PDVSA vice-president (held over from the prior board); Jose Rafael Paz, president of PDVSA's petrochemical subsidiary; Ludoviko Niklas, executive director of exploration, production and refining;Nelson Nava, president of PDVSA's natural gas unit; Clara Cloro, an adviser to Energy Minister Alvaro Silva; Arnoldo Rodriguez Ochoa, a retired Army general (held over from the prior board); andHugo Hernandez Rafalli, president of Venezuela's Petroleum Chamber. Clearly this is an insider group. To that extent, the victory would seem to have gone to the PDVSA demonstrators. Still, it remains to be seen what, if anything, they had to agree to get the deal. And, as noted in El Sur last week, PDVSA's leaders have agreed to abide by Venezuela's OPEC-mandated production quota and the hyrdrocarbon law, which restricts investment and is widely credited with sending foreign oil companies elsewhere.
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VENEZUELA
Opposition wants more than talk: Since his return to power, President Hugo Chávez has talked reconciliation between his government and the opposition. Now, reports The Financial Times, the opposition is demanding concrete steps to back up his words with deeds."One of the things President Chávez has to sort out for the nation to really believe he is sincere in his call for dialogue and national unity is that he must dismantle most, if not all, of his Cabinet," said anti-Chávez union leader Manuel Cova. Another diehard foe of Chávez, Caracas Mayor Alfredo Pena, called on him to form a new "national salvation" Cabinet and give priority to relations with the United States, the main buyer of Venezuelan oil.
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ARGENTINA
No reform, no aid: A column in Latin Business Chronicle by Ana Eiras, Latin America Policy Analyst in the Center for International Trade and Economics at The Heritage Foundation, urges no international aid for Argentina until that country's government reforms. Only profound reforms of Argentina's economy, political system, and judiciary can begin to restore the people's trust and set the country on the path to recovery. Eiras says the newest aid-getting strategy of the government of President Eduardo Duhalde is raise fears that a lawless Argentina might become a terrorist haven.This new strategy is politically smart but economically unwise. It reveals, however, how far Argentine authorities will go to avoid reform. The column links to a Heritage Foundation Briefing Paper on Argentina, in PDF format.
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Monday, April 22, 2002
ARGENTINA
Bank run stops banks running: Argentina's financial crisis has reached a new stage. The government of President Eduardo Duhalde has closed the country's banks until further notice. The bank "holiday" is intended to stop further court-ordered withdrawls of funds from the banks, until the government can gain legislative approval of a plan to convert savings in frozen bank accounts into 5-year (peso) or 10-year (dollar) bonds. This is very unpopular. Today's Wall Street Journal (no link) has a front-page article on the crisis and the "Bonex" solution, as its called.The announcement Friday night capped a chaotic week in which renewed outflows from Argentina's battered banks, many owned by European and U.S. parent companies, heightened fears that Latin America's third-largest economy would be unable to avoid a wholesale collapse of its financial system. What's really going on here is a slow-motion bank run. As savers carrying court orders have retrieved millions of dollars daily from their banks, the government has sought measures to stop the withdrawls. Last week, Duhalde rejected a proposed law that would have permitted banks to appeal such court orders.
On Friday, a crisis point was reached. Scotiabank Quilmes SA ran out of money and was closed when the parent company, Bank of Nova Scotia, refused to recapitalize it.Friday afternoon at the headquarters of Scotiabank Quilmes...dozens of desperate depositors--stepping around leaflets dropped by a bank employees' union saying, "Canada, Fork Over the Money"--formed long lines in hopes of retrieving funds. Scotiabank blamed its problems on the government's currency devaluation and refusal to provide emergency funds.A spokeswoman indicated the bank had no interest in pumping money into its Argentine unit until the government dealt with the larger crisis. "We are not able to entertain any capital injection until there are clear rules for the system," said spokeswoman Diance Flanagan. And that is the problem in Argentina. No clear rules. No rules any government of Argentina feels bound to obey. Even the IMF doesn't believe them anymore."The IMF has no faith in the Duhalde regime--zero," said Walter Molano, head of research at BCP Securities in Greenwich, Conn. "What the IMF is doing is saying, 'We'll just wait you out.'" From the beginning, the Duhalde government's strategy has been to promise what they had to to get the money, then to meet their commitments, or not, as convenient. Early on it looked as if that might work. Now that's not so clear. Increasingly it appears that the IMF is stringing Duhalde and company along, never granting assistance, never denying it, always demanding a few more reforms that would be ever more difficult to make--if Duhalde had any intention of honoring an agreement. At first, Duhalde promised Argentines an agreement and cash infusion in February. Then it was March; then it was April (when the IMF's Anoop Singh visited); now it's May. But, just this weekend, according to The Journal article, rather than accept a national government promise to limit local spending, the IMF has begun to insist that every province sign an accord in which they agree to limit it. Needless to say obtaining these signatures will be very difficult. Even the asking will be an unpleasant exercise for the Duhalde government.
The Journal notes that the Bonex plan is likely to be taken to court as well.Economist Aldo Abrain of the consulting firm Exante termed the plan unconstitutional. He added, "I think the likelihood that this government won't complete its term is growing."
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Sunday, April 21, 2002
ARGENTINA
A successful coup II? Now it's Domingo Cavallo who is saying the President Fernando De la Rúa was pushed out of office last December in a coup, according to a report of his courtroom testimony in La Razón. De la Rúa himself had made that charge in testimony reported by La Nacion and Clarin on April 15 (and noted in El Sur). Essentially, the allegation is that conspirators in both the then-governing Radical Party and the now-governing Peronist party encouraged on-going demonstrations against the De la Rúa government to turn violent then allowed, until De la Rúa quit.
Cavallo also told the court that he is certain that De la Rúa's successor, Adolfo Rodríguez Saá was the victim of a coup. Rodríguez Saá resigned after a week in office facing almost constant violent protests and riots. And he named names:He said that those most guilty of the taking down the ex-leaders were "the president of the Radical Party, the governor of Chacao Angel Rozas, and the Radical Deputies Leopoldo Moreau and Jesús Rodríguez." Dijo que los principales culpables de las caídas de los ex mandatarios fueron "el presidente del radicalismo, el gobernador chaqueño Angel Rozas, y los diputados radicales Leopoldo Moreau y Jesús Rodríguez." It is interesting that he names only Radicals; is he curring favor with the current Peronist government by exculpating it even as he attempts to establish that there was a coup, revenging himself on Radical opponents? Cavallo's wife, Sonia Abrazian, has also testified to this effect. Former President Carlos Menem previously made similar charges to Chilean newspapers.
Domingo Cavallo was the last Economic Minister in De la Rúa's government and had previously held that office under former President Carlos Menem. Cavallo's work under Menem was celebrated; by the end of his service with De la Rúa he was widely reviled.
As to the truth of the allegation: First, this would not be out of character for Argentina politics. Second, while demonstrations have continued since Duhalde took office, none has had the scale, purposefulness or violence of those that toppled De la Rúa and Adolfo Rodríguez Saá, this despite the fact that the Duhalde has presided over continued failure and decline. So, yes, it's entirely possible that these allegations are true.
. . .
LATIN AMERICA AND THE U.S.
Protectionism No! Latin American countries attending the IMF conference in Washington formally asked the developed countries to end protectionism, reports El Universal (Bogata).
Pedro Pablo Kuczynski, Peru's economic minister, spoke for Argentina, Bolivia, Chile, Paraguay, Perú and Uruguay at the meeting. He particularly focused on subsidies by developed countries' governments to their agricultural sectors. Kuczynski said that the countries he was representing are convinced that access to the markets of the rich countries is the "most effective" way to achieve development, but that until now this has not been possible becaure of protectionist measures. "The support to agriculture in the developed countries is concentrated in a small number of operatons. It costs $350 billion a year, or six times the total amount of assistance" from the industrialized world for the developing world, he said. Kuczynski dijo que los países en cuya representación habló están convencidos de que el acceso al mercado de los países ricos es la manera "más efectiva" de lograr el desarrollo, pero que hasta ahora esto no ha sido posible por medidas proteccionistas. "El apoyo a la agricultura en los países desarrollados está concentrado mayormente en un pequeño número de agricultores. Cuesta 350 mil millones de dólares al año, o seis veces el monto total de la asistencia" del mundo industrializado para el mundo en desarrollo, señaló. Protectionism in the U.S. and Europe is a big barrier to development in the world's poorer countries. Protectionism makes it difficult for the developed countries to credibly excoriate Argentina, for example, for failing to reform.
In one of the most ominous developments to emerge from the 1990s, protectionism is no longer the sole province of companies seeking to protect domestic markets and labor unions seeking to protect domestic jobs. The cause has been taken over by western leftists, environmentalists and anti-globos, none of whom wants to see poorer countries prosper by following the capitalist or new-liberal model. These groups are extremely influential in U.S.'s Democratic Party, which controls U.S. Senate, through which any free-trade legislation and treaties must go. It is hard to see how significant trade liberalization can occur while these political conditions exist in the U.S.
This is a scandal.
. . .
Saturday, April 20, 2002
VENEZUELA
Unbeaten, unbowed: Opponents of President Hugo Chávez are surprisingly determined and aggressive after the failure of the April 9-12 demonstrations to lead to his removal from office.
1. Top military officers arrested in after the interim government collapsed strongly defended their actions in court, resports Yahoo! News - AP."We still consider this to be an illegitimate government," said Rear Admiral Carlos Molina Tamayo as he was whisked away by military police. "The armed forces are very beaten down and divided." Tamayo had denounced Chavez in February. Asked if Chavez was reorganizing the military to his liking, Molina Tamayo replied: "Maybe. But he can't remake the country to his liking." Army Gen. Nestor Gonzalez has defended the coup as "a humanitarian act meant to avoid having the army attack the people and produce a massacre." Gonzalez said generals balked at Chavez's order to activate "Plan Avila," calling out troops to defend the palace by any means necessary during the march by hundreds of thousands of civilians. 2. In El Universal the Mayor of Baruta, Henrique Capriles charged pro-Chávez activists with operating "a laboratory to falisfy scenes of violence" ("laboratorio para falsificar escenas de violenciaThe official commented that he has received confidential information according to which various deputies, among them Juan Barreto, discovered editing some films in order to blame opposition groups. El funcionario comentó que le han llegado informaciones confidenciales según las cuales varios diputados oficialistas, entre ellos Juan Barreto, se encuentran editando algunas filmaciones para inculpar a los grupos opositores. 3. El Nacional reports that the Confederación de Trabajadores de Venezuela (CTV) intends to stage another march on May 1. In his first public appearance after the events of April 11, the union's leader Carlos Ortega also said he is willing to meet with President Chávez."If it is to resolve the things we are disposed to meet even with the devil," he indicated. "Si es para solucionar las cosas estamos dispuestos a reunirnos hasta con el demonio," indicó. 4. Also according to El Nacional, the head of the Organización de Periodistas Iberoamericanos (OPI) wrote Chávez asking compensation for the family of the news photographer assassinated on April 11.In a letter directed to Chávez, the president of the OPI, Alvaro Julio Martinez, asked the chief of estate to take all measures necessary to insure that the killer of (Jorge) Tortosa does not remain immune and those responsible for the crime are carried before justice. En una carta dirigida a Chávez, el presidente de la OPI, Alvaro Julio Martínez, le solicita al Jefe de Estado que tome las medidas necesarias para que la muerte de Tortosa no quede en la impunidad y los responsables del crimen sean llevados ante la justicia. Why is this?
First, while Chávez's opponents made mistakes, his supporters committed crimes. There is at least one video showing "Bolivarian circle" members shooting at the crowd. There are witnesses. Pro-Chávez crowds mobbed newspapers and TV stations. (See El Sur.) All of this creates a problem of legitimacy, without which there is only force. For Chávez this is a dilemma. If he fails to protect his Bolivarian shooters, he defeats the purpose of the organization. The circles are the street-fighting arm of the MVR (Fifth Republic Movement); when circle members shot demonstrators and mobbed the media, they were doing what they wer designed to do. If he protects the Bolivarian shooters--the likely course--he loses legitimacy. (The Organization of American States, human rights organizations and press-protection organizations are all watching.) Legitimacy is a problem because there is no Soviet Bloc into which Chávez can take the country anymore.
Second, nothing fundamental has changed. Chávez has some five years still to go into his term and already he is unpopular enough to be beseiged. His economy is stagnant. Oil revenues are capped, now by his voluntary acceptance of Venezuela's OPEC quota, in a few years by capacity (see El Sur). There isn't the slightest prospect conditions in the country will improve enough to lift his popularity. Sometime between now and 2007 there will be another crisis just like this.
Third, if Chávez decides to meet his next crisis with force, who can he trust? According to the picture of events that has emerged, Chávez lost the support of the military on April 11 when he tried to call the military out into the streets to head off the demonstrations. This can't give him confidence the military will fight the public for him next time. A post-restoration shake-up will let Chávez raise up a new, military hierarchy, of course. This new handpicked leadeship should be more loyal, except that Chávez had appointed the old leadership, which, in the crunch, turned out not to be.
Fourth, at the heart of Chávez's "Bolivarianin Revolution" and "Fifth Republic Movement" are absolutely nothing. Bolivarism is entirely contentless. It consists of populist solganeering and local pride (Simon Bolivar came from the part of Great Colombia that is now Venezuela). This was enough when the country was focused on the wholy negative task of ousting the previous, corrupt government. But it is not something like Scientific Socialism or Islamism, that can be studied, believed and committed to. For Venezuelans well-enough placed to not be particularly moved by generalized appeals to envy--indeed well-enough placed to be threatened by Chávez's verbal assaults on the relatively well off (which includes the officer corp)--it has little intrinsic appeal. Since there's nothing to Bolivarism except appeals to lower-class envy, the attachment of MVR officials officials is largely opportunistic. This is not the foundation for loyalty.
Chávez is reported to have said on his return something to the effect that, while under guard, he always believed he would return, just not so soon. For him, sooner almost certainly was not better. Chávez would have a much brighter future if it was Pedro Carmona dealing with Venezuela's problems, amidst the uproar from Chávez partisans, returning himself in triumph later, perhaps even winning another term as president. Instead, it is Chávez who is dealing with the country's problems amidst an anti-Chávez uproar. Though it's too soon to be sure, the officers who stripped Chávez of power probably did him a better turn than those who restored him to it.
. . .
Friday, April 19, 2002
VENEZUELA
Post-coup positioning: An eyewitness report in El Nacional says that Hugo Chávez did indeed resign. Attorney and Army Colonel Julio Rodríguez Salas, who drew up the decree that attempted to formalize the resignation of President Hugo Chávez and was present in La Orchila when the lieutenant colonel drew up the manuscript by means of which it was announced to the country that he had abandoned his office, gave assurance that "Hugo Chávez resigned from the presidency in the early morning of Friday and because of this the High Military Command announced it..." El abogado y coronel del Ejército Julio Rodríguez Salas, quien redactó el decreto que pretendió formalizar la renuncia del presidente Hugo Chávez y estuvo presente en La Orchila cuando el teniente coronel redactó el manuscrito mediante el cual anunciaba al país su abandono del cargo, asegura que "Hugo Chávez sí renunció a la presidencia en la madrugada del viernes y por eso el Alto Mando Militar lo anunció..." Academic? Perhaps. But if Chávez did resign, the coup would not be a coup, the countercoup might be a coup and many acts taken by many people during interim government might suddenly become legal.
Meanwhile,Chávez, who earlier this week said of the coup, "the root is here," as noted in El Sur, is now coyly hinting that it was in fact, made in USA. According to El Nacional:The president of the republic, Hugo Chávez admitted this Friday that he hopes that it is false all the information that links Washington with the brief coup de etat against him on Friday, April 12. El presidente de la República, Hugo Chávez admitió este viernes que las relaciones con Estados Unidos han estado perturbadas, pero que espera que sean falsas todas las informaciones en que se vincula a Washington con el fugaz golpe de Estado en su contra del viernes 12 de abril.
. . .
VENEZUELA
Economic problems mount: Money's legendary timidity is on display again in Venezuela.As Venezuela has descended into something resembling a class war, capital flight from the wealthy and erratic policy making by the government have set the economy up for a bruising fall, reports The Wall Street Journal (International Section, no link).The IMF now projects Venezuela's economy will contract .8 per cent; an economist at Andrés Bello Catholic University, in Caracas, Orlando Ochoa, projects a two- to three-per cent fall.Economists say the growing political and social tensions made raw by the coup and swift countercoup are certain to increase jitters among moneyed Venezuelans, who have already shipped $3 billion out of the country this year. Chávez's relentless attacks on Venezuela's middle class and well-to-do people have been one of the major causes of Chávez's strong emotional appear to the country's poorer people. Now appearing is the price of this populism, in the form of economic stagnation.Staggering interest rates, currently running around 50% for short-term transactions, are making it nearly impossible for domestic industries to expand demand. The steep rates are needed to keep the currency, the bolivar, from entering into a free-fall and to keep the flow of capital at least partly under control. Bank reserves are falling, leading to fears of a bank run. If this appears imminent, the next step could be exchange controls. And exchange controls are uncomfortably close to the frozen bank accounts that are such a plague in Argentina today.
. . .
VENEZUELA
Bolivarian circles: El Sur recently noted the investigaton of sniper shootings of anti-Chávez demonstrators April 11, which apparently were the immediate catalyst for the military's short-lived ouster of Hugo Chávez. Now, reports Yahoo! News - AP, police have linked the circles to the snipers.Authorities say some of the shooters belonged to pro-Chavez neighborhood groups known as "Bolivarian Circles," and the violence has brought new criticism of what Chavez's foes call Cuban-style snoops and enforcers. It's unknown exactly who fired into a massive opposition march April 11, killing at least 16 that day and wounding dozens, if not hundreds. Globovision television captured horrific images of snipers and gunmen firing repeatedly into the throng. Chavez supporters insist opposition gunmen fired, too. Others blame police and troops. But Caracas police, who have arrested at least three people, say some of the shooters belonged to the circles--neighborhood committees that were created after Cuban President Fidel Castro urged Chavez's followers to organize themselves to defend Chavez's leftist revolution. Castro made the appeal during a 2000 visit. The circles--named after South American liberator Simon Bolivar--bear similarities to Cuba's Committees for the Defense of the Revolution, who watch over their neighborhoods and maintain socialist principles. This is a nice way of describing groups that are nests of informers, whose primary jobs is to create a list of "enemies of the people."Chavez says he formed the circles to improve their communities. Despite their country's oil riches, 80 percent of Venezuela's 24 million people live in poverty. Circle members say Chavez is the first leader in memory to show concern for the poor. In fact, however, Chavez's supporters have led "countermarches" to successfully halt demonstrations by the president's opponents. They have clashed with students in Caracas and warned newspaper vendors in eastern Venezuela they will burn kiosks unless they stop selling a newspaper, Correo del Caroni, that is critical of the government.
. . .
Thursday, April 18, 2002
ARGENTINA
Another try at keeping people from their money: Chile's El Mercurio explains the Duhalde government's newest plan to prevent depositers from getting their money out of frozen bank accounts. As El Sur noted yesterday, Economy Minister Jorge Remes Lenicov's plan to let banks appeal court orders ordering banks to return depositers money fell apart when President Duhalde wouldn't sign the decree. Now Duhalde has a plan--give them have scrip, called "bonds."The Minister (of the economy Jorge Remes Lenicov) said: "It is probable," emphasized the source consulted about the possibility that the deposits will be converted to bonds. "El ministro (de Economía Jorge Remes Lenicov) dijo: "Es probable," destacó la fuente al ser consultada sobre la posibilidad de que los depósitos sean convertidos a bonos. The measure responds to the fear of the Economy Minister that the collapse of the financial system could follow a series of judicial decisions that permit savers to withdraw some 50 millions of dollars daily from the banks in spite of the freeze imposed in December by the government. La medida responde al temor del Ministerio de Economía de que colapse el sistema financiero debido a una serie de fallos judiciales que permiten a ahorristas retirar unos 50 millones de dólares diarios de las entidades a pesar del congelamiento impuesto en diciembre por el gobierno. There is no doubt that the problem is acute:According to sources at the Association of Banks of Argentina, some banks in the interior of the country had to close their doors some days because it was impossible to return in cash and in dollars deposits to clients that have succeeded in obtaining favorable judicial decisions. "There is no more liquidity in the system," affirmed the secretary general to the presidency, Aníbal Fernández. Según fuentes de la Asociación de Bancos de la Argentina, algunos bancos del interior del país debieron cerrar sus puertas algunos días ante la imposibilidad de devolver en efectivo y en dólares los depósitos a los clientes que habían logrado fallos judiciales favorables.
"No aguanta más el sistema", afirmó el secretario general de la Presidencia, Aníbal Fernández. But is more funny money really the solution?
Meanwhile, unrest continues. Reports, like this in Clarin, appear almost daily.
And, also as reported by Clarin, the IMF projects that Argentina's economy will contract by 10 to 15 per cent this year. "Internal demand probably will fall significantly this year due to the impact of the growth of unemployment, the lack of public confidence, the freezing of the bank deposits and other negative pressures over revenue and spending," added the text (of the report). "La demanda interna probablemente caerá mucho este año dado el impacto del creciente desempleo, la desconfianza pública, la congelación de los depósitos bancarios y otras presiones a la baja sobre el ingreso y el gasto", añadió el texto. Which takes us full circle.
. . .
VENEZUELA
Whatcha gonna do when the well runs dry? It should be clear, in the wake of last week's coup/countercoup, that Hugo Chávez has two sources of support, the military and much of the lower class.
Chávez must know now that the military is unreliable; before some of them restored him others of them deposed him. He will make efforts to identify and remove disloyal officers and replace them with loyal ones, but in the absence of an overarching ideology that he and they share--communism, say--this is an uncertain process at best. With few exceptions, every political leader who's overthrown by the military is overthrown by military men he thought were loyal when he appointed them.
So, Chávez is left to rely on the lowest third or so of the population, and their "vanguard," the "Bolivarian circles." These certainly served him well during Saturday's counter-demonstrations and riots. Part of this group's loyalty is in response to Chávez's bullying; Caracas slum dwellers and rural campesinos absolutely love to see him do--out loud on TV--what they wish they had the power to do, tell off their richer, lighter "betters." But this goes just so far, and Chávez seems to have toned down his rhetoric, post-coup, at least temporarily. The problem is that, for all the theatrics, Chávez can lose their has to deliver the goods to the poorer segments of society, in terms of money, jobs and services. He can't afford a failing economy, yet that's where his populist, statist economic choices leade.
Case in point: Today's Wall Street Journal (International section, no link) reports on how Chávez is harming the state oil company, Petroleos de Venezuela SA (PDVSA).Venezuela is the only major member of the Orgaqnization of Petroleum Exporting Countries whose output is declining markedly. Luis Giusti, a former PDVSA chief executive replaced by Mr. Chávez in 1999, says Venezuela's capacity has fallen to around three million barrels a day from 3.7 million barrels three years ago. Production is expected to fall this year by an additional 200,000 barrels a day (bpd), bringing the country close to the point where the 2.7 million bpd OPEC production limitation it now observes voluntarily will be an involuntary capacity restriction. The reason is lack of investment, and the reasons for that are decisions made by President Hugo Chávez and his government.Former officials of Venezuela's energy establishment reckon PDVSA needs to invest as much as $4 billion annually just to keep output capacity steady..."I don't think PDVSA is going to get the cash it needs from the government," says Mr. Giusti, who was instrumental in the strong buildup of Venezuela's output capacity in the 1990s...Mr. Chávez "doesn't have a free hand now," Mr. Giusti added, implying that the president may be so committed to using oil money for social spending that he won't have any to arrest the erosion of output capacity. Meanwhile, large-scale foreign investment seems unlikely to come unless President Chávez bakctracks on a controversial hydrocarbons law he decreed in November. The focus of widespread protests by both business and labor, the law could deter foreign investment because it raises government royalties on most new projects to 30 % from 16.7%. It also requires that PDVSA hold a majority interest in new joint ventures with foreign companies, effectively making the ventures state-owned companies. The hydrocarbon law is one of more than 40 expanding government control of the economy passed by the Chávez-dominated National Assembly at his request.
. . .
VENEZUELA
Fighting moves indoors: Though the popular demonstrations are over for now, the political representatives of Venezuela's pro- and anti-Chávez publics continue to fight.
A Yahoo! News - AP story entitled "Offensive Against Chavez Resumes" describes conflict in the National Assembly, still dominated by members of Chávez's MVR (Fifth Republic Movement) elected when he was popular.During a stormy parliamentary debate Wednesday, most opposition parties insisted Chavez resign and presidential elections be held. Short of that, many proposed the National Assembly call a referendum to decide whether Chavez should stay. The existing constitution would allow such a vote in 2004. Chavez's term runs to 2006. "It's not enough to talk," said Liliana Hernandez, whose Justice First party also proposed that the entire National Assembly resign. "Fascist!" shouted ruling party legislators after Hernandez spoke. At the same time, Yahoo! News - AP reports, Chávez partisans have launched an assault on the media, which they say encouraged efforts to overthrow the president last week. Two government investigations have been announced. Jesse Chacon, president of Venezuela's telecommunications agency, is heading one of them. Chacon had previously drafted media regulations that were condemned by the Inter-American Press Association as an attack on press freedoms. Reporters have been under attack in Venezuela almost since Chávez was elected.A bomb damaged the offices of Asi Es La Noticia newspaper earlier this year. Two prominent reporters received multiple death threats. Chavistas blockaded El Nacional newspaper about the same time, threatening journalists. At least one publisher in eastern Venezuela reported that Chavistas were threatening to burn newsstands that sold his paper. The situation has worsened as the country has polarized. Chávez supporters claim the media, mostly welcoming his ouster, refused to cover pro-Chávez demonstrations. Media representatives say they believed their reporters would not have been safe.
Both the Organization of American States and independent media groups, such as the New York-based Committee to Protect Journalists, have called on the Venezuelan government to protect freedom of the press."We remain deeply concerned for the safety of Venezuelan journalists," Ann Cooper, the executive director of the group, said in a written statement.
. . .
Wednesday, April 17, 2002
VENEZUELA
Another post mortem: José Rodríguez Iturbe, the foreign affairs minister in the short-lived Pedro Carmona government gives his not very flattering impressions of its military arm to El MundoHe (Rodríguez Iturbe) adds that in Fuerte Tiuna (Caracas' military headquarters), Carmona found friction among those who aspired to direct the ministry of defense, the hierarchy and the commandos. "Problems that were pygmies in comparison to the urgent situation that they had ahead of them." Añade que en Fuerte Tiuna, Carmona halló roces entre quienes aspiraban dirigir el ministerio de la Defensa, la jerarquía y los comandos. "Problemas que eran pigmeos en comparación a la situación apremiante que tenían frente a sí." No question Rodríguez Iturbe faults the military for the government's failure. But, he also believes Chávez cannot rest easily:He insists that the offers of reconciliation by Hugo Chávez are not to be trusted and that the political base of the president reposes in the firepower of the forces that are loyal to him. "Napoleón said that the bayonets served all except those that sit down on them. I don't know if Chávez intends to sit on them. But already, they were with him, ceased being with him, and can cease being with him again. I know that he is convinced of this." Rodríguez Iturbe concludes with an affirmation. "Today Chávez ought to know that he doesn't have all the weapons, all the tanks, all the guns and if they were with him and they stopped being with him and returned to be with him, possibly a moment will arrive in which the military also tells him definitively 'we don't follow you.'" Precisa que las ofertas de reconciliación de Hugo Chávez no son de fiar y que la base política del Presidente reposa en el poder de fuego de las fuerzas que le sean leales. "Napoleón decía que las bayonetas sirven para todo menos para sentarse en ellas. No sé si Chávez está intentando sentarse en ellas. Pero ya estuvieron con él, dejaron de estar con él y pueden volver a dejar de estar con él. Sé que él tiene esa convicción." Rodríguez Iturbe concluye con una afirmación. "Hoy Chávez debe saber que no tiene todas las armas, todos los tanques, todos los fusiles y que si estuvieron con él, dejaron de hacerlo y volvieron con él, posiblemente llegue un momento en que los militares también le digan definitivamente, no seguimos con usted." El Mundo is relatively favorable to Chávez and Rodríguez Iturbe may have some designs of his own... But, its revealing, nevertheless.
Update: Another thought. Chávez is a populist, not a Communist. This is important. Communism was a religion, with its own Holy Book, authoritative commentaries, and Vatican and curia in Moscow. Because they shared a faith, a Communist leader could trust his subordinates, if not in in-fighting, certainly when it came to dealing with non-believers; Communist military officers did not rebel against party leaders. Populism is half political strategy, half emotional identification with el pueblo (the people, the nation)--which is why it slides so easily toward fascism (see Peron). A populist can follow almost any policy, so long as it has a soak-the-rich component. Beyond that it is utterly without content. Since populism is so individual--protestant one might say--literally anyone who can sieze power can declare himself the people's representative and his regime the embodiment of the nation. That includes elected presidents, the officers who overthrow them and the officers who overthrow them. Chávez can't be anointed by the Soviet Union because it no longer exists; his friend Castro is too old and Cuba is too poor to offer the service. That is why, in the end, Chávez is served only by bayonets.
. . .
ARGENTINA
Trouble in paradise: As noted yesterday in El Sur, the government had prepared for President Eduardo Duhalde's signature a decree authorizing banks to appeal court orders permitting people to get their money out of frozen accounts. Today, reports La Razón, Duhalde has refused to sign the decree, apparently upsetting Economic Minister Jorge Remes Lenicov, who postponed a trip to the United States to deal with the issue. The question is, is Remes Lenicov considering resigning?This morning, according to Radio Continental, Duhalde said that the minister "is not bothered" by the situation and that "he had not thought of resigning." But Economy already had to reverse several times in recent days. For example, in the negotiation over light and gas prices (finally had to accept an increase) and on the subject of salaries (Monday Remes said that "he was not able to speak now about the increases" and yesterday the government winked at the unions). Esta mañana, por Radio Continental, Duhalde dijo que el ministro "no está molesto" por la situación y que "no pensó en renunciar". Pero Economía ya tuvo que dar marcha atrás varias veces en los últimos días. Por ejemplo, en la negociación por las tarifas de luz y gas (finalmente debieron aceptar el aumento) y en el tema salarios (el lunes Remes dijo que "no se puede hablar ahora de aumentos" y ayer en Gobierno le dieron un guiño a los sindicalistas). Pagina12/Web also has a story on this subject, titled "Battle in the government to close the corralito" ("Batalla en el Gobierno por cerrar el corralito") that ascribes Duhalde's decision to "motivos políticos." Pagina12/Web explains why Remes Lenicov's is unhappy:On separate occasions, (central bank chief Mario) Blejer advised that the constant opening of the corralito could result in hyperinflation. Moreover, it is calculated that a great part of the pesos that leave the banks are destined for sale for dollars. En distintas ocasiones, Blejer advirtió que la constante apertura del corralito podría desembocar en una hiperinflación. Además, se calcula que una gran parte de los pesos que salen de los bancos se destina a la compra de dólares. Duhalde and Remes Lenicov are close. When Duhalde was governor of Buenos Aires province, Remes Lenicov was his finance minister.
Meanwhile, Clarin reports that industrial activity fell 18.1 per cent in March, compared with a year ago, and fell 3.1 per cent compared with February.
. . .
VENEZUELA
Business view: The Latin Business Chronicle characterizes the removal and restoration of Hugo Chávez as "one step forward, two steps back."We share the concern about ousting a democratically-elected president. Latin America has had enough coups. However, the fact is that the situation in Venezuela had grown so bad that ousting Chávez simply became the lesser of two evils. Chávez' mandate doesn't run out until early 2007. If three years of Chávez rule had resulted in growing street protests, economic free fall and relations hitting an all-time low point with the United States and Colombia, what would another five years be like? Some would say that Chávez' return means that nothing has changed. That's wrong. Everything has changed. Any short-term hope of Chávez leaving or moderating his course is now gone. Two points in dissent:
1. Noting the ineptitude Pedro Carmona's government demonstrated in its short tenure, its success was by no means assured. It's failure would have turned Chávez into a latter day Peron, an exiled hero whose spectre haunted every succeeding government long years after he was in his grave. As it stands, Chávez is warned, back, and responsible for his fate, with, as the Chronicle notes, five long years to discredit himself.
2. The populist-to-military-to-populist-to-military cycle in Latin American politics has not been a beneficial one. Its main product has been the infantilization of both the politicians and the public, allowing everyone to believe that they could indulge in excess, secure in the knowledge that, should things go too far, the army would step in to restore order. If the result of Venezuela's recent experience is make military intervention less likely, then its result is also to encourage the maturation of democratic politics.
. . .
VENEZUELA
Sniper investigations: El Universal reports on the investigation of rooftop sniper attacks on the anti-Chávez demonstrators on April 11. Evidence suggests the shooters were Chávezistas, among them members of the "Bolivarian circles." The question is: will these investigations be pursued? It is important to find out who shot at whom when. The shootings were the fulcrum on which anti-Chávez coup was leveraged. Unaddressed, they have the potential to become a symbol around which permanent grievance and recrimination can grow, "the April massacre," say.
. . .
VENEZUELA
Even more polarized, if that's possible: Despite the failure of their demonstrations to bring about the permanent departure of Hugo Chávez, his foes remain determined to oust him, reports The Miami Herald. The article notes that Chávez has made some conciliatory moves, most prominently sending his vice-president to find some compromise with directors and managers of PDVSA, the state oil company.But in a sign of the continuing political bitterness, the million member Venezuelan Confederation of Workers said it will still push for a referendum on shortening Chávez's presidential term, due to end in 2006. The small Justice First party said it wants Chávez and his whole government to resign but would support a referendum or a move by the 165-seat National Assembly, controlled by Chávez supporters, to shorten his term. Most opposition lawmakers boycotted the first meeting of the Assembly since the coup attempt and a lawmaker from Chávez's party, the Fifth Republic Movement, Ernesto Alvarenga, announced he had defected to the opposition. Sergio Omar Calderón of COPEI (Christian Democrat Party), along with Democratic Action Venezuela's traditionally strongest but now shattered parties, said his party had no regrets about the coup attempt. ''This is a government that has been violating the constitution for three years,'' he said, accusing the Chávez-controlled Supreme Court of repeatedly issuing politically-biased rulings. Much the same picture emerges in this report from Yahoo! News - AP. The headline reads "Venezuelans Try to Heal Coup Rift" but the story quickly states that "so far, there seemed to be as much bitterness as forgiveness."
This is a striking result. One would think Chávez's opponents would be cowed. It's difficult to think of a similar situation in which the losiing side so immediately returned to the fray. In part this reflects the near-run nature of the demonstration/coup, counterdemonstration/countercoup sequence. It also suggests not just that the two sides are polarized--all agree this is so--but also that the people, not just the leaders, are deeply engaged in this struggle.
. . .
VENEZUELA
Chávez learns: Who says Hugo Chávez hasn't learned anything from his political near-death experience. Today's Wall Street Journal (International section, no link) shows that he's mastered the art of appearing above the fray while his henchmen do his dirty work.
While he is himself nothing but conciliatoryIn the aftermath of last week's short-lived coup against President Hugo Chávez, the alleged favoritism of powerful Venezuelan news-media groups toward anti-Chávez forces is subjecting the media to wrath on the streets and scrutiny in Congress. In concialiatory remarks toward the opposition on Monday, Mr. Chávez made a public appeal for a halt to attacks on TV journalists, who had complained of being stoned and threatened by Mr. Chávez's supporters on the streets in recent days. Nevertheless, Mr. Chávez's chief communications regulator and congressional followers said they would investigate whether the media, especially Caracas's four principal TV stations, played a role in fomenting last week's frustrated effort to oust Mr. Chávez. The inquiry would be "more to establish responsibility and give recommendations than to punish," said Juan Barreto, a member of Mr. Chávez's party who heads the congressional media commission. What they might recommend is something Chávez started working on even before last week's events,a "contents law" to regulate the quality and truthfulness of television and radio programming. The draft law, assailed by the news media as a potential form of censorship, is undergoing public review and comment before being sent to Venezuela's National Assembly. Latin American press freedom groups have been complaining about Chávez's bullying of the media for months.
. . .
Tuesday, April 16, 2002
ARGENTINA
New ways to keep people from their money: La Nacion reports that President Eduardo Duhalde will sign a new emergency decree to permit banks to appeal judicial decisions requiring them to release funds held in frozen accounts (the corralitos). All across the country individual savers have asked for and received court orders requiring banks to return their funds. In the opinion of the Vice-Minister, Jorge Todesca, nearly 40 per cent of the withdrawls from the bank system are the product of judicial orders. The daily departure of money reached in an average of $104 million in March, according to data from the Banco Ciudad. En opinión del viceministro, Jorge Todesca, cerca del 40% de los retiros del sistema bancario es producto de amparos judiciales. La salida diaria de dinero alcanzó en marzo un promedio de $ 104 millones, según datos del Banco Ciudad. The measure's purpose is to make it harder to withdraw assets from banks, reducing the money available for conversion to dollars and ultimately for removal to safer climes. At the very least, the decree will delay people's access to money in their accounts.
La Nacion quotes the government as estimating this "capital flight" from Argentina at about $8.3 billion since January.
The economic ignorance of Duhalde's government is monumental. There is no way to prevent money from leaving the country. Think about it. The $8.3 billion cited above is a net figure--the result of subtracting money exported from money imported. Even if this decree keeps some money from crossing the Rio de la Plata to Uruguay, it will also discourage the investment and repatriation of money into Argentina, and there's nothing the Duhalde government can do about that (except beg that perennial sucker the IMF). So, the country's net gain from controls won't be as great as hoped, if it exists at all. It isn't even certain that that these controls will actually reduce "capital flight," because the techniques of evasion will improve in step with restrictions (think the drug war). Moreover, as restrictions on financial institutions tighten, the incentive to hide money in cash, in country increases. Dollars stuffed in mattresses in Buenos Aires or Córdoba do no more for Argentina's economy than dollars stored in banks in Montevideo or Miami.
. . .
VENEZUELA
"Coup" homegrown: Yahoo! News - AP says that President Hugo Chávez' dismissed suggestions that the U.S. was involved in last weekend's failed attempt to overthrow him.Chavez took pains Monday to speak well of the United States, even saying that he saluted the U.S. government with "love and affection." When a reporter asked him if the United States may have been involved in the coup, he responded: "The root is here." Or course this won't satisfy the anti-CIA/School of the Americas, crowd, who will see it as proof of the really deep influence of the U.S.
. . .
MEXICO AND CUBA
Censure vote: For the first time since Fidel Castro took control of Cuba in 1959, Mexico will support a United Nations Human Rights Commission resolution censuring the tropical gulag for its human rights record, reports Yahoo! News - AP."I think it's a huge departure from past policy and I think it's one that going to generate a firestorm of controversy in Mexico," said M. Delal Baer, a Mexico specialist at the Center for Strategic and International Studies in Washington. It remains to be seen whether the resolution passes. This is the U.N. agency from which the U.S. was ousted in favor of such human rights exemplars as Syria and Sudan.
. . .
Monday, April 15, 2002
ARGENTINA
A successful coup? That's the accusation being made by former President Fernando de la Rúa, according to La Nacion. Under investigation himself for the "repression" of the riots that led to his resignation on Dec. 20, 2001, de la Rúa is asserting that the riots (and related deaths) were the result of a conspiricy to oust him from office.De la Rúa confirmed to the judge that his belief was that there existed "a plan" to throw him from the presidency and, although he did not impute it to any person, he mentioned among others Carlos Ruckauf, Diego Guelar y Jorge Casanovas, according to his lawyers. De la Rúa confirmó a la Justicia su idea de que existió "un plan" para que echarlo de la presidencia y, aunque no imputó a ninguna persona, mencionó entre otros a Carlos Ruckauf, Diego Guelar y Jorge Casanovas, según informaron sus abogados. Carlos Ruckauf is a former state governor and current chancellor. Diego Guelar is a former Buenos Aires official and current ambassador to the United States. Casanovas is a former Buenos Aires judge and current a National Assembly deputy. Also mentioned by de la Rúa were union leaders Hugo Moyano and Luis Barrionuevo, and Senator Jorge Busti. All are members of or support the current Peronist government of Eduardo Duhalde. De la Rúa is a member of the opposition Radical Party. (Obviously the politics cuts both ways; the Peronists had motive to depose de la Rúa; he has motive to implicate them in the riots.)
De la Rúa also noted in court that former President Carlos Menem (a Peronist also, but a Dualde opponent, despite the fact that Duhalde was Menem's vice-president) had told the press of "the existence of groups of people involved in a campaign of discreditation and in a conspiratory climate" ("la existencia de grupos de personas involucradas en una campaña de desprestigio y en un clima conspirativo.")
The article in La Nacion relates detailed claims of meetings and conversations among these and other individuals. In one case, for example, de la Rúa maintained that on December 15 the Justicalist (i.e. Personist) deputy Casanovas, in a meeting with "various judges of this capital," anticipated the violent incidents that would ensue between the 17th and 20th of December, "with photographic precision." sostuvo que el 15 de diciembre el hoy diputado justicialista Casanovas, en una reunión a "varios jueces de esta capital", anticipó los sucesos violentos que sobrevendrían del 17 al 20 de diciembre "con precisión fotográfica." The paper says the investigation was begun on the complaint of a Radical politician from Bahía Blanca, Carlos Enrique Irigoyen, whose complaint demands "the nullification of all (government) acts from from last December 20 to date" ("la nulidad de todo lo actuado desde el 20 de diciembre último a la fecha"). The paper ends promising supporting testimony tomorrow.
Clarin also has a report.
. . .
CUBA AND U.S.
Historical footnote: It would have been big news two years ago. The Miami Herald reports that there was early interest inside the Immigration and Naturalization Service in granting asylum to Elián González, if they could show that the Cuban government was pressuring his father to seek his return. Some INS officers believed was the case. Now the memo that brings this information to light is evidence in a lawsuit by an employee against the service.
. . .
VENEZUELA
On-scene report: Portland IndyMedia Center has a lengthy report from an American in Venezuela. This is the view from the left. It agrees, in all but rooting interest, with views from the right. The author, Gregory Wilpert, believes that Chávez is a good man with good plans, but shortcomings, most notable a confrontational style.Right now, however, it is too early to see if he really is going to change his ways, so that he becomes more productive in achieving the goals he has set for Venezuela. While Chávez' many progressive achievements should not be forgotten, neither should his failures be overlooked, most of which have important lessons for progressives everywhere. The first lesson is to keep the eyes on the prize. Chávez has become so bogged-down with small day-to-day conflicts that many people are no longer sure if he remembers his original platform, which was to abolish corruption and to make Venezuelan society more egalitarian. While greater social equality is extremely difficult to achieve in a capitalist society, it is fair to say that Chávez' plans have not had enough time to bear fruit. He has a six-year social and economic development plan for 2001-2007, of which only a small fraction has so far been implemented. On the corruption front, he has fallen seriously behind. The second lesson is that the neglect of one's social base, which provides the cultural underpinnings for desired changes, will provide an opening for opponents to redefine the situation and to make policy implementation nearly impossible. By not involving his natural base, the progressive and grassroots civil society, Chávez allowed the conservative civil society, the conservative unions, the business sector, the church, and the media to determine the discourse as to what the "Bolivarian revolution" was really all about. The third lesson is that a good program alone is not good enough if one does not have the skillful means for implementing it. Chávez has some terrific plans, but through his incendiary rhetoric he manages to draw all attention away from his actual proposals and focuses attention on how he presents them or how he cuts his critics down to size. Finally, while it is tempting to streamline policy-implementation by working only with individuals who will not criticize the program, creates a dangerous ideological monoculture, which will not be able to resist the diverse challenges even the best plans eventually have to face. Chávez has consistently dismissed from his inner circle those who criticized him, making his leadership base, which used to be quite broad, smaller and smaller. Such a narrow leadership base made it much easier for the opposition to challenge Chávez and to mount the coup.
. . .
VENEZUELA
Chain of errors: "Cadena de errores" is the phrase the Colombian paper El Espectador uses to describe the political death and resurrection of President Hugo Chávez and the rise and fall of interim President Petro Carmona.As Chávez's support in the military leadership seems to have retreated, the biggest in the chain of errors on the part of the transitional government began. The largest and most important was to affirm that the president had resigned and named as witness a member of the Catholic church who would certify that he had seen President Chávez sign the resignation. Events would demonstrate that there never was such a letter. Una vez retirado el apoyo de la cúpula militar al Presidente Chávez, comenzó, sin embargo, la mayor cadena de errores por parte del gobierno de transición. El más grande y protuberante de ellos, asegurar que el presidente había renunciado y poner de testigo un miembro de la iglesia católica que aseguraría que había visto al presidente Chávez firmar su renuncia. Los hechos demostrarían que jamás hubo tal carta. On the basis of this nonexistent resignation, was built the transition government, which committed new errors: The unprecedented acceptance of the supposed resignation of the National Assembly, when in fact the transitional government dissolved it and simply designated Carmona as president. But that was not all, the transitional government's decree withdrew recognition from all popularly elected officials: mayors, governors, etc. As a result of this decree, which was the gravest error that could be committed, since at the same time it was taking refuge in the Constitution of 1999 it violated it in every way, and led to a chain of outrages: Some governors, as that of Táchira, were arrested and treated as criminals; the minister Rodríguez Chacín also was siezed and was at the point of being lynched by an opposition crowd Sobre la base de una renuncia inexistente, se montó el proceso del gobierno de transición, donde se cometieron nuevos errores: La única instancia legal para aceptar la supuesta renuncia era la Asamblea Nacional, pero el gobierno de transición la disolvió y simplemente designó a Carmona como presidente. Pero como si no fuera suficiente, el decreto de funciones del gobierno de transición dejó sin reconocimiento a todos los funcionarios de elección popular: alcaldes, gobernadores, etc. Como consecuencia de este decreto, que era por sí mismo el más grave error que se podía cometer, pues al mismo tiempo que se acogía a la Constitución de 1999, la violaba por todos los lados, se desencadenó una cadena de desafueros: Algunos gobernadores, como el del Táchira, fueron arrestados y tratados como criminales; el Ministro Rodríguez Chacín también fue apresado y estuvo a punto de ser linchado por una turba de la oposición. The Wall Street Journal's front page article on Venezuela (no link) echos this analysis."The brief government...immediately issued a decree shutting down the Congress, suspending the Supreme Court and authorizing the firing of elected officials, including state governors and mayors. The decree, says Janet Kelly, a public-policy specialist in Caracas, sent out a message that "the constitution is valid in everything but what I say it isn't." She calls it Mr. Carmona's "biggest screw up." Other mistakes Kelly and others identify in the Journal include, a too-white transition cabinet for the mixed-race country (and Chávez himself is nonwhite), and the failure consolidate control before forming a government. According to Anibal Romero, a professor at Simon Bolivar University in Caracas, a big mistake was the half-hearted but heavy-handed attempt to eliminate resistance, some televised.But while the crackdown soured the new government's image, Mr. Romero said it proved to be insufficiently strong to really keep Mr. Chávez's allies from communicating, planning and executing a counter-attack. The government, if it meant to crack down, should have declared a state of emergency under the 1999 constitution, suspended some rights, made arrests and implemented a curfew, he said. "You don't go half way if you are really serious," he said. "If you go half way, its the worst of both worlds." Maybe that's the bottom line: Chávez's allies were more serious than his opponents.
. . .
Sunday, April 14, 2002
VENEZUELA
Chávez is back. What's next? A media consensus has developed since Chávez return to power.
Today's summary in The New York Times, to many the "paper of record," can stand as the text of this consensus. The Times begins by noting that, in his first public moments after his return, a happy Chávezavoided vengeful criticism of his opponents today and pledged to help reconcile the deep political divisions that ignited the most serious political crisis in his tumultuous three-year presidency. "I am issuing a call for understanding," Mr. Chávez said..."I, too, have to reflect on many things. And I have done that in these hours."
The Times continues:For Mr. Chávez, the crisis has forced the populist and headstrong leader to face squarely the divisions within the ranks of the military, the rancor from the business and labor sectors and the problems at Venezuela's state-run oil company. The military, once a pillar of support for the president, was fractured last week when several high-level officers abandoned the Chávez government. In the hours after he was released and returned to the presidential compound at Miraflores this morning, there were signs that he had begun thinking about how to stop the free fall of a presidency that began with soaring popularity and expectations. If only...because, when the story begins to quote people--right or left--the tone changes."It will continue if the president does not create openings for dialogue," Mr. (Felipe) Mujica (of the Movement to Socialism) said. "The depth of the divisions in the country are clear now." An unnamed business leader was also skeptical:"Our attitude is wait and see. His words sound conciliatory and in the right direction. Let's hope it lasts. The wounds are very deep." The Times' conclusion:In the fallout of the political conflict, Venezuela is divided along class lines. Poor people on the west side of Caracas, who helped propel Mr. Chávez into the presidency in 1998, have called his return to power a proud moment. But frustration seethes on the east side, where well-to-do doctors, business owners and university students see his return as Latin America's newest dictatorship. So, that's it; the country's divided, and no one knows where Chávez intends to take it.
El Sur maintains that Chávez is still Chávez. And what Chávez is is a typical sergeant who somehow became an officer, and then--through the the massive failures of the country's political leaders (replicated in miniature during Carmona's two-presidency)--became President. He is given to bluster and bullying; his speeches are filled with threats against opponents. Today, immediately after a very close call (forget the conspiricists, who say Chávez set the whole thing up) he is relieved, overjoyed and a bit contrite.
Eventually Chávez will become Chávez again. Then look out, because the tactical situation now favors him and he's enough of a military man to know the importance of following through on a successful attack (which the Carmona government didn't, incidentally). Those sectors of society that oppose him are defeated; their leaders are in jail. The powerful lockout/strike and demonstrations that the opposition mustered last week are now impossible. Chávez has the pretext he needs to purge the ranks of military and government, and to begin to implement the laws putting much of the economy under government control that he got enacted last year but never was able to implement. Indeed, it was efforts to bring the subject of one of these laws (the state oil industry) to heel that stimulated the anti-Chávez demonstrations that led to his temporary downfall. For a while, the only restraint on Chávez is Chávez himself.
Over the longer run Chávez has gained no advantage over Venezuela's problems. He remains subject to the fundamental laws of economics and politics, which dictate that the populist-statist policies he wants to pursue will hurt the country's economy and that the falling economy will make him unpopular again. Less than two years ago he was wildly popular; last week he was almost overthrown. If Chávez continues as before, this is a trejectory that will repeat, probably within the year, the second time around being accelerated.
Meanwhile, the opposition's leaders showed themselves less than competent during their two-day tenure, exposng an incapacity that could have proved extremely dangerous to the institutions and people they represent. To this limited extent, Chávez's return may prove a blessing in disguise for them. Not that Venezuela's business community and middle class will see it this way. They will almost certainly react with anger and fear and remove as much as possible of their money (if not themselves) to Miami.
. . .
COLOMBIA: Colombia's leading presidential candidate escaped injury in a bomb attack today, reports El Tiempo. Presidential candidate Álvaro Uribe Vélez turned out to be unhurt by the explosion of a bus bomb as he passed in his motorcade near the Sociedad Portuaria in Barranquilla. There are two dead and about six injured. El candidato presidencial Álvaro Uribe Vélez resultó ileso al explotar un bus bomba al paso de su caravana cerca de la Sociedad Portuaria en Barranquilla. Hay dos muertos y al menos seis heridos. El Espectador, which also reports the story, attributes the attack to "urban militias of the leftist guerillas of the FARC" ("milicias urbanas de la guerrilla izquierdista de las Farc"), and reports that three died including, apparently, two of the bombers. Among the 24 El Espectador numbers as injured were three members of Uribe's police guard. The campaign for the presidency in Colombia, begun officially a month ago, has been tarnished by acts of terrorism by the guerillas of the FARC, whicj worsened after February 20, when the peace process that was being conducted by the government of (President Andres) Pastrana definitively broke down. La campaña por la Presidencia en Colombia, iniciada oficialmente hace un mes, ha estado empañada por actos de terrorismo de la guerrilla de las Farc, agudizados desde febrero 20, cuando se rompió definitivamente el proceso de paz que esa agrupación adelantaba con el gobierno de Pastrana. Uribe, who is leading in the polls with about 50 per cent in recent polling has survived previous attempts on his life. He is believed to be leading in large part because he is seen as taking the strongest against the FARC.
. . .
MEXICO-U.S.
Do we want Mexifornia? asks Victor Davis Hanson in City Journal. And here we come to the heart of our immigration problem. It is not that our state is too crowded...The real problem is that, while it has always been easier for people who emigrate to keep their own culture rather than join the majority, for the first time in our state's (and nation's) history, the majority feels it is easier to let them do it.
. . .
ARGENTINA
Report from the supermarket front: Blogger treasaigh.com, an American in the Paris of South America, reports as follows:I'm in a foul mood! I went to the supermarket yesterday to pick up a few things... toothpaste, deoderant, shampoo, a few food items, beer... Toothpaste gave me my first shock... 3 pesos for a 90 gram tube of Colgate (I'm partial to Colgate toothpaste)... a 60% increase over a 4 week period. Deoderant... 7 pesos for a small can of Old Spice (My brothers tell me I smell like a French whore if I use the local products) which cost 3 pesos a month ago.
. . .
VENEZUELA
Counterattack II: The Colombian paper El Tiempo reports that Chávez came back into power at 3:30 a.m. (Colombian time). "We are going to reorder the house," he told a reporter of a radio-television station at the (presidential) Palacio de Miraflores." "Vamos a reordenar la casa", dijo al pronunciar un discurso radiotelevisado desde el Palacio de Miraflores. Lest there be any suggestion that this is a chastened Chávez, newly conciliatory, he immediately fired the PDVSA board that replaced the board he had put in place.
What happened is that after Saturday's demonstrations and take-over of the presidential palace by military unitl loyal to Chávez, deposed ministers, assembly members and court justices loyal to him gathered there. Ousted vice-president Diosdado Cabello took an oath as interim president from deposed assembly president William Lara, vowing that he would turn the office over to Chávez, who would return. El Universal, has a report. Pro-Chávez forces then re-took the Fuerte Tiuna, site of the defense ministry, where Chávez was being held. El Universal has a report of this also.
Nine people were killed in the day's action.
Chávez's approach to the future is foreshadowed by his quick dismissal of PDVSA leadership. This is Chávez's chance to make himself into the new Fidel, if he wants to take it. The Venezuelan majority that opposes Chávez will be on the defensive. Demonstrations against him are over for now; Chávez will certainly attempt to punish the leaders and instill fear in the members of the organizations that organized the demonstrations, CTV, Fedecámaras and (already) PDVSA. Money has been fleeing to Miami for several months now; look for people to follow. (Oil prices will go up immediately, but that's a detail.)
A big loser is Colombia. Chávez has professed neutrality in that country's war with the FARC guerillas. There have been constant reports of cooperation between some military officers and units with the FARC. FARC's presence in Venezuela was confirmed in person by a reporter with the Colombian paper El Tiempo. Reportedly this was a major cause of tension between Chávez and other parts of the military. Here too, Chávez now has a free hand. Open cooperation is unlikely, but blind-eye toleration is possible, including quietly allowing the FARC sanctuary in Venezuela.
Though in very different circumstances, Argentina's Peronist President Eduardo Duhalde will also be taking comfort in the untimate ineffectuality of middle-class demonstrations and military intervention. A sign to look for: the formation of the Peronist equivalent of the "Bolivarian circles" street gangs.
Finally, Ari Fleischer probably wishes he hadn't been so quick to believe Chávez was out (sentiments shared by El Sur).
All in all, a mess.
. . .
Saturday, April 13, 2002
VENEZUELA
Counterattack: United Press International and other sources report that Chávez loyalists are rebelling. They include dismissed ministers of the Chávez government, military officers and units in Caracas and elsewhere, and demonstrators. They apparently have taken over the Miraflores Presidential Palace and proclaimed a government under deposed Vice President Diosdado Cabello.
El Universal reports that it, along with RCTV, Venevisión and Globovisión are besieged by mobs. The paper reports that it may not circulate tomorrow.
Reporters want protection from demonstrators, reports El Nacional:"We want Chávez," "We want Chávez," shouted the demonstrators who indiscriminately grabbed the microphones of RCTV to express their unhappiness against the (newly) installed government and with the audiovisual media that didn't transmit information about what occurred in the capital of the nation during this afternoon." "Queremos a Chávez", "Queremos ver a Chávez", gritaban los manifestantes que indistintamente agarraron los micrófonos de RCTV para expresar su malestar contra el Gobierno instaurado y con los medios audiovisuales que no transmitieron información sobre lo ocurrido en la capital de la nación durante esta tarde. This is just the situation the "Bolivarian circles" were created for.
. . .
VENEZUELA
Update: Events continue to move quickly.
1. El Universal reports that Chávez well be sent soon to an unspecified foreign country. Cuba is a good guess.
Other developments are more surprising.
2. The commanding general of the army, Efraín Vásquez, demanded restoration of the constitution, and conditioned continued military support on that, says El Universal. This is the "Bolivarian" constitution of Hugo Chávez."The provisional government will be supported if it complies with the following norms," added the official enumerating the conditions. "Se apoya al gobierno provisorio si se cumplen las siguientes normas'', añadió el oficial enumerando las condiciones. Among these demands (all listed in the article linked above) was restoration of the National Assembly, dominated by Chávez allies. National Guard commander, Carlos Alfonso Martínez, later released a statement in support.
Things just got much more complicated for Interim President Pedro Carmona.
3. In response, reports El Universal:The Interim President of Venezuela today declared without effect the dissolution of the public powers that was decreed yesterday...and announced the convocation of the National Assembly. El presidente interino de Venezuela dejó hoy sin efecto la disolución de los poderes públicos que decretara ayer...y anunció la convocatoria de la Asamblea Nacional. It does appear, however, that the justices of the Supreme Court have not been reinstated.
4. Not surprisingly, some Chávez's followers continue to make trouble. El Nacional reports that the deposed vice-president, Diosdado Cabello, is claiming to be Chávez's legitimate successor, and asserting that the new government "forms part of a dictatorship of the right" ("forma parte de una dictadura de derecha"). El Universal reports that pro-Chávez demonstrators are out and marching.
5. Carmona's fellow leader of the job action, CTV leader Carlos Ortega, is looking for an increase in workers' wages. This could be the beginning of division.
All of this puts great pressure on the new government. The most important of the day's decisions was the military's decision to put boundaries on the new government. General Vásquez undoubtedly had mixed motives: a reaction to South American criticism of the Venezuelan army's "coup"--the first since Argentina's in 1976; an awareness of the fact that Chávez still has following (including within the military; he promoted these officers) and that they are very angry; a desire to constrain new government. Inevitably, the effect of this decision--especially the reinstatement of the National Assembly--is to limit Cardona's options. But, in truth, Cardona faces the same problems after than those he faced before. The main difference is that his opposition is now partly inside the government, not just on the streets. That may turn out to be a good thing. To the extent the Bollivarians participate in decision-making, they assume responsibility. If they remain obdurate, so that the military needs to back up the government again, that's not a coup.
One more thing cannot be emphasized enough. Despite all the talk of coup, was not the classic Latin American coup in which the military overthrows the government on its own initiative and installs one of its own as leader. It was an uprising of the country's modern and modernizing elements against Latin American populism. Especially important was the role of the directors, managers and rank-and-file employees of the state oil company, PDVSA, who didn't want to see their world-class oil company ruined by cronyism and were willing to risk livelihoods and lives to save it. This episode demonstrated clearly that Venezuela has a middle class that wants to live in a modern, developed country and is willing to fight to get the country there.
. . .
VENEZUELA
Aftermath: In the first day after Chávez's departure, his successors completely dissolved the government, cashiering the Supreme Court and National Assembly, in favor of a transitional government made up of a president and consultative council. Already this government faces challenges: Chávez allies are denying that he resigned and asserting that, unless he does, the new government will be illegitimate. The new government was cooly received in Latin American countries. All Venezuela's problems that led to Chávez's election in 1998 remain. In addition, there is the problem of his legacy, consisting primarily of two things: the 48 laws that greatly increased the power of the state over the economy and the 20 per cent or so of the population that still supported him at the end.
1. On its first day in office, reports Yahoo! News - AP, Venezuela's transitional government decreed what is, effectively, its charter. (Here is El Nacional's point-by-point summary.) Important points include (these are points, not quotes):* Pedro Carmona is named president and the the name República de Venezuela is restored to the country, dropping "Bolivarian," a symbolic rejection of Chávez. * The National Assembly is suspended and replaced with a 35-member consultative council, both until after legislative elections, to be held no later than December 2002. (A general election must be held within one year.) * The members of Supreme Court and National Electoral Council (which refused to certify last fall's elections to the CTV--of strike-leader Carlos Ortega, for one) are dismissed and the president is given the power to remove and replace administrative officials at all levels. However, laws remain in force, unless they conflict with the decree. * Chávez's 48 laws are suspended, pending review. Meanwhile, Chávez allies have begun challenge the new government, asserting, for example, that he did not resign. One such report in El Universal, quotes the fiscal general, Isaías Rodríguez to this effect. In what is perhaps could become a more powerful challenge to the new government's legitimacy, William Lara, the former president of the Congress and close Chávez ally, claimed (according to this report from Yahoo! News - AP that: President Hugo Chavez, dressed in his trademark military uniform, struggled to negotiate his freedom in the last moments before his ouster and warned those deposing him they would meet the wrath of the Venezuelan people, a witness to the scene said. And,But Lara said Chavez warned those who ousted him: "The changes I have made are not lost. The people will reconquer the gains." So far, Mexico, Peru and Argentina have refused to recognize the new government, notes El Nacional. Mexico's non-recognition will last until new elections. Argentina's President Eduardo Duhalde, faced with continuous protests himself, undoubtedly sees his future in Chávez's present.
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Friday, April 12, 2002
VENEZUELA
Overview: The Latin Business Chronicle reviews Chávez record and Venezuela's political and economic situation. It's a good briefing for those who haven't followed the situation closely over the past few months.
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VENEZUELA
What nextII? The oil industry: Bloomberg reports that Venezuela's interim President Pedro Carmona has restored Guaicaipuro Lameda as head of Petroleos de Venezuela SA.
In another item, Bloomberg also reports that oil industry analysts believe that the removal Hugo Chávez is likely to reduce OPEC's ability to raise oil prices. Venezuela currently follows OPEC quotas and produces about 2.5 million barrels of oil a day. Pre-Chávez it produced as much as 3.4 million barrels a day. It is the second-largest supplier of oil to the U.S."Given the social unrest, any successor will try to maximize the revenue and increase the production,'' said Ignace De Coene, a fund manager at Fortis Investment Management in Brussels, who oversees 110 billion euros ($97 billion) of assets. "If they return to that policy there could be another fight within OPEC." The Financial Times agrees that the fall of Hugo Chávez will mean increased production. The paper also suggests that the government will reverse policies that have driven away foreign investment in the country's oil industry.
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VENEZUELA
Charges possible in killing of demonstrators: Hugo Chávez's interior minister,Ramon Rodriguez, has been arrested in connection with yesterdays killings of Chávez opponents during yesterday's demonstrations, reports Yahoo! News - Reuters"He is suspected of responsibility for yesterday's incidents," the mayor of Caracas' Chacao neighborhood, Leopoldo Lopez, told reporters. Chavez was being detained at a military base, although it was not clear if he had been charged. Rodriguez has been the only one of his former ministers to be arrested, but police have rounded up several men suspected of firing on the huge anti-Chavez protest in central Caracas on Thursday. The number of dead has reached 15, some of whom were killed by snipers shooting into the crowd of demonstrators from rooftops. A number of the actual shooters reportedly have also been arrested.
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VENEZUELA
What next II? The media is full of material about the resignation under pressure of Venezuelan President Hugo Chávez.
The AP (link via the Las Vegas Sun) provides a summary account of Chávez's political life, from the coup he attempted in 1992 to his resignation yesterday. The piece reviews the fissures in Venezuelan society that propelled his rise and greased his fall. Especially interesting is what AP says about the deterioration of Chávez's relations with the military.Commanders who had fought Cuban-backed guerrillas in the 1960s and 70s resented his friendship with Castro. They were angered by his ties with leftist Colombian guerrillas - including his denials that the rebels sometimes operated in Venezuelan territory. Officers objected to Chavez's distancing of Venezuela from the United States, including a decision to suspend Venezuela's participation in regional military exercises. They were also troubled by reports that he was secretly arming neighborhood block committees known as "Bolivarian Circles," named after South American liberator Simon Bolivar. As a former officer, Chávez had to know how his one-time compatriots would react to these things. Did he believe his own press releases? Clearly he was not as good a politician as was thought.
Also noteworthy in the AP report:After being ousted Friday, Chavez asked Venezuela's high command to allow him to go into exile in Cuba - and the request was denied. "He has to be held accountable to his country," said army Gen. Ramon Fuemayor. Near the end of the Financial Times' news summary are a couple of paragraphs that may explain why Chávez is being held:About three hours before Thursday's anti-government demonstration reached Miraflores, Freddy Bernal, an ardent pro-Chávez mayor of Caracas, called on several thousand members of government-organised "Bolivarian Circles" to gather outside the palace. Vice-Admiral Ramírez said that he possessed evidence of communications given by Mr Chávez directly to the "Bolivarian Circles" to take up arms and locate snipers to prevent the marchers from reaching Miraflores. El Tiempo, from neighboring Colombia, has two pages of pictures of yesterday's demonstrations (links on El Tiempo's front page).
El Tiempo also has a chronology of Venezuelan history and politics since 1988. It is excellent and sobering. It is also in Spanish.
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VENEZUELA
What next?
The departure of President Hugo Chávez is confirmed and described by Reuters : The 47-year-old Chavez, wearing a camouflage uniform and a red paratrooper's beret, left the Miraflores palace and was driven away in a black car to armed forces headquarters in Caracas, witnesses said. The new armed forces chief, Gen. Efrain Vasquez, said Chavez was "in custody." A small group of aides and supporters said goodbye and applauded as Chavez left, accompanied by two ministers. Then Reuters says this:Pedro Carmona, the head of Venezuela's leading business association, Fedecamaras, said he would head a transition government that would lead to free elections. Which is the first of several things to keep an eye on in the future.
1. Is it really a good idea to turn the government over, even temporarily, to a leader of a lockout/strike that led to the forced resignation of the government? Wouldn't it have been better to pass leadership down through the government? Admittedly Carmona comes out of the petrochemical industry, and Petroleos de Venezuela (PDVSA), the state oil company, was the proximate cause of this dispute and the source of the strikers who were the backbone of the action, so that, in a sense, the subsidiary here took over the parent. Nevertheless...
2. One big worry should be the future of Chávez's "Boliviarian circles," the street gang-like pro-Chávez enforcers noticed in El Sur last week. They were active in the climactic demonstration Thursday, attacking anti-Chávez marchers. Indeed, there were indications that the roof-top snipers who caused some of the reported 12 deaths were Bolivarians. The nightmare scenairo, here, would be that the Bolivarians go underground and ally themselves with Colombia's FARC guerillas. This is not far fetched. One of the complaints about Chávez was that he tolerated--even supported--a FARC presence in Venezuela. There had to be lower level contacts.
3. A similar worry is Chávez himself. As noted just above, he retains some support (the consensus seems to be about 20 per cent) and he has come back before. In 1992 he led a failed coup against the government that earned him jail time, but made him a popular focus of rebellion when people completely lost patience with the government he failed to overthrow. That's how he got himself elected president.
4. Argentine President Eduardo Duhalde ought to be worried. Venezuela's uprising, if that's not too strong a word, was a middle-class uprising. Argentina has (had?) a much bigger middle class and it is more burdened by incompetent, even criminal, government. Two differences that cut in Duhalde's favor are, first, that his country's problems became manifest in a predecessor's administration, and second, that Argentina's military still lives in the shadow of its disastrous administration between 1976 and 1983, and was significantly downsized in the aftermath. Still, as time goes on, Venezuela's example could prove inspiring, especially if Venezuela's future turns bright.
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Thursday, April 11, 2002
VENEZUELA
It's over: It appears that the Venezuelan military has deserted President Hugo Chávez and that he and his family are on their way out of the country.
The AP has a good summary of the day's events, up to and including the military rebellion, which came as follows:The commander of the army and other top military officers rebelled against President Hugo Chavez on Thursday after police and armed Chavez supporters fired upon a march by 150,000 opposition protesters near the presidential palace. At least 12 people were killed and as many as 110 wounded, officials said. Army Cmdr. Gen. Efrain Vasquez Velasco ordered all his officers to join him in rebellion against Chavez. "We ask the Venezuelan people's forgiveness for today's events," he said. "Mr. President, I was loyal to the end, but today's deaths cannot be tolerated." More than 40 other high officers joined the rebellion, including Gen. Luis Alberto Camacho Kairuz, vice minister for citizen security. Reuters also has a report, which quotes Camacho Kairuz as blaming Chávez for the deaths and asserting that the military was in control of the country."All of the country is under the control of the national armed forces," Camacho said. "The government has abandoned its functions," he added. El Universal has a complete, Spanish-language report of the general Efraín Vásquez Velasco's statement.
El Nacion reports that a plane, containing the family of Hugo Chávez left the Generalísimo Francisco de Miranda air base.
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VENEZUELA
Officers want Chávez to resign: According to El Universal some 10 high-level active-duty officers have called on President Hugo Chávez to resign."We are unable to accept the permanancy of a despot in the presidency of the republic whose permancy in office threatenes the country with disintegration. At this time we direct ourselves to the general officers and admirals...and to all the military personnel so that we join forces and realize a new Venezuela", he (National Guard General Héctor Ramírez Pérez) indicated. "No podemos aceptar la permanencia de un tirano en la presidencia de la República su permanencia en el cargo amenaza al país con la desintegración. En este momento nos dirigimos a los oficiales generales y almirantes...y tropa alistada y a todo el personal militar para que unamos esfuerzos y hagamos realidad una nueva Venezuela", (el general de la Guardia Nacional Héctor Ramírez Pérez) indicaron. Among the military officers joining the call for Chávez to resign were: Contralmirante Francisco Noriega, director de logística de la Armada, Contralmirante Daniel Comiso Urdaneta, general de brigada José Francisco Noriega, jefe de logística Estado Mayor, General de Brigada Marcos Ferreira, General de Brigada Oscar José Márquez, General de Brigada (ej) Henry Lugo Peña, y General de Brigada Pedro Pereira, Inspector de la Fuerza Aérea.
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VENEZUELA
Strike, Day Three: Various reports on the third day of Venezuela's general strike/lockout.
First, according to Yahoo! News - AP, it appears that the action is no longer nationwide: Blowing whistles and waving red, yellow and blue Venezuelan flags, thousands were marching from Parque del Este in eastern Caracas to oil monopoly headquarters to cheer the general strike's extension and demand the ouster of President Hugo Chavez. However, In downtown and western Caracas, generally poorer districts than the east, business almost was normal as most ignored the strike call. Traffic jammed downtown streets and most shops opened. That doesn't mean the lockout/strike is a failure.
An item from Reuters gives a feel for the contending sides' support:Half a million Venezuelans clamoring for President Hugo Chavez to resign marched to the presidential palace in Caracas on Thursday in a huge protest that marked the most powerful challenge so far to his three-year-old rule.With National Guard troops deployed to protect the palace and several thousand supporters of the president also gathered there, the country's military high command made a public appeal for calm and called on people to avoid violence. If Reuters' assessment is even close to the mark, Chávez's opposition has more intensity, and bigger numbers. And, note the military's seemingly neutral role.
Moreover, the job action is being supported where it does Chávez the most long-term harm, in the middle class and the oil patch, the Yahoo! News - AP report (linked above) says. The 950,000 barrel-per-day Paraguana refinery ran at less than 50 percent capacity, and loading of tankers proceeded slowly, with at least 20 vessels anchored at main ports. The 130,000 barrel per day El Palito refinery was restarted but won't reach full capacity until the weekend, the government said. Industry officials said gasoline supplies to major Venezuelan cities could be threatened if the slowdown continues. Retired Gen. Guaicaipuro Lameda, a former Petroleos de Venezuela president, said production had fallen by nearly 450,000 barrels a day. Venezuela usually produces 2.5 million barrels daily, and exports more than 1 million barrels per day to the United States. Already middle class discontent has exacerbated problems of capital flight, slowed growth, a falling Bolivar, higher inflation and increased unemployment. To the extent this week's action worsens these problems, it will eventually threaten Chávez's support among the poor as well.
Most importantly, it appears that President Hugo Chávez is not confident enough to resort to force. His side has issued threats aplenty; but, so far, except for peace keeping, an example of which is cited above, there has been no involvement by the military. Instead of force, Chávez is thinking accommodation. According to El Mundo, Chávez has agreed to talks with opponents inside Petróleos de Venezuela SA (PDVSA), talks that would lead to changes in the administration of the state oil company. Since it was anger at his changes to the PADVSA board and management that turned simmering resentment into open rebellion this week, this is a big concession.
And, what to make of this report in El Nacional and El Universal? From El Nacional: The Inspector General of the National Armed Forces, Lucas Rincón, denied--in a radio and television network broadcast--that the members of the high military command have resigned their offices and that the President Hugo Chávez finds himself detained in Fort Tiuna. "The national leader is in his office," he affirmed. El inspector general de la Fuerza Armada Nacional, Lucas Rincón, negó--en cadena de radio y televisión--que los miembros del Alto Mando Militar hayan renunciado a sus cargos y que el presidente Hugo Chávez se encuentre detenido en Fuerte Tiuna. ?El mandatario nacional está en su despacho,? aseguró. It is still to early to tell how this will turn out. But, things are definitely not going Hugo Chávez's way.
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Wednesday, April 10, 2002
VENEZUELA
Strike, Day Two: Venezuelans continue to support the lockout/strike directed at the government of President Hugo Chávez and in support of employees at the state oil company Petróleos de Venezuela SA (PDVSA), reports Yahoo! News - AP, although schools and more businesses opened.
Meanwhile:
1. Carlos Ortega, the head of the nationwide labor organization, Confederación de Trabajadores de Venezuela (CTV), called for the military to take "the side of the people, the side of the majority."
2.Chávez accused striking PDVSA workers of trying to overthrow him or cripple the country.
3. A slowdown at oil facilities has all but shut down one large refinery, closed another, and brought oil deliveries at Venezuala's ports to a near-standstill, leaving some 20 tankers waiting cargo.
4. One high-ranking officer, General Nestor Gonzalez Gonzalez, accused Chávez of refusing to govern democratically, sympathizing with Colombian communist guerillas and politicizing the military.
It is still too soon to definitively predict the outcome. But, at great hazard of error, the following seems most probable now: The nationwide strike will peter out in a few days, giving Chávez a small success. But, he will be unable to punish those who called it, much less those who participated. He will unable to fully restore the country's oil production, for the simple reason that disruption is easier than construction. He will not be sure enough of the military's support to attempt a coup on his own behalf (an autogolpe).
As noted yesterday, Chávez remains in charge of the nation's public institutions, but lacks support of the nation's public. Over the long run, it is more likely that his control of the institutions will erode than that his public support return.
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Tuesday, April 09, 2002
VENEZUELA
Strike update: El Nacional and El Universal carry several updates on the apparently successful nationwide lockout/strike called by the Confederación de Trabajadores de Venezuela (CTV) and Fedecámaras for today. El Mundo did not publish.
1. El Nacional reports that Chávez claimed the action was a failure: Chávez stated that the representatives of the CTV (the national union) and Fedecámaras (the national business group) are feeling rejected by the Venezuelan people. Chávez manifestó que los representantes de la CTV y Fedecámaras están siendo rechazados por el pueblo venezolano. 2. According to El Nacional violent confrontations occurred during the day near the National Assembly, the CTV offices and the Petróleos de Venezuela facility in Chuao.
3. The president of the CTV, Carlos Ortega, announced that the work action will be extended for another 24 hours, both El Nacional and El Universal report. The head of Fedecámaras, Pedro Carmona Estanga, gave his support to the extension and condemned the government's attempts to discourage participation in the action by requiring TV and radio stations to broadcast anti-strike messages from the government.
4. El Nacional also has a report on this effort at spin control. The government is considering action against media outlets that disrupted or otherwise didn't fully comply with the effort, the paper says. Meanwhile, El Nacional reports that demonstrators held a cacerolazo in front of the state television station. The government's mandatory media broadcasts also drew criticism from the the Interamerican Commission on Human Rights, notes El Universal
All in all, government opponents can consider today's lockout/strike a big success. In contrast with his passivity during the December 10 work action, Chávez aggressively tried to stifle this one. And, it didn't work. Fedecámaras and CTV are sufficiently emboldened to try to extend the action for 24 hours more. After that, who knows? Obviously, each additional extension becomes more difficult, as the action stops being a holiday and becomes a hardship.
More generally, the success of the lockout/strike indicates that Venezuela is in stalemate. On the one hand, Chávez remains in control of the government. This is the legacy of his formerly enormous popularity, which he used, when he had it, to revise the constitution, and to fill the administration, national legislature and high judiciary with allies. On the other hand, his popular support has since fallen very low, and his opponents seem no longer to fear him. This stalemate can be ended relatively quickly in any number of ways--escalating violence leading to Chávez's resignation, a military coup for or against him, a deal that splits the opposition. Or it can drag on, adding economic to political turmoil as Venezuelan oil revenues tumble. Whatever the next few weeks bring, this certainly promises to be a difficult Spring for Venezuelans.
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VENEZUELA
Strike III: A clear indication of how seriously the government of Hugo Chávez takes today's nationwide lockout/strike is the fact, reported by Yahoo! News - AP, that the government has commandeered TV and radio air time to urge people to go to work and to declare the strike a failure.
The work action's sponsors, the business group Fedecámaras and the union Confederación de Trabajadores de Venezuela, claim that the action has been a success.Venezuela's government all but silenced independent broadcast news reporting of a nationwide general strike called Tuesday to support a work slowdown at the state oil monopoly that has roiled international oil markets. In between the broadcasts, the 1 million-member Venezuelan Workers Confederation was able to declare the strike a success. Venezuela's Industrial Council reported 80 percent of industry shut down. There have been reports that the lockout/strike may be extended beyond one day.
This work action is partly an outgrowth of an ongoing battle for control of the Venezuelan oil company Petróleos de Venezuela (PDVSA), which has resulted slower shipments of oil from Venezuela.The five-week labor slowdown by Petroleos de Venezuela managers had already disrupted exports of crude and refined products to the United States and other markets, refinery and shipping officials said. Some 20 tankers sat idle outside Venezuelan ports. Reportedly, PDVSA's Paraguana complex is operating at half capacity, and the El Palito refinery in central Venezuela was closed. There are worries that the if the Venezuelan work action continues and Middle Eastern producers deliberately cut production, there could be another oil crisis.
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Monday, April 08, 2002
VENEZUELA
Strike! II Like the Venezuelan papers, the Financial Times also sees tomorrow's lockout/strike as a critical moment for Hugo Chávez. This English paper appears to believe he will survive and perhaps gain.Analysts say Tuesday's strike and the stoppage at PDVSA represent the biggest political challenge to the authority of Mr Chávez since he took office three years ago. "Chávez has a mutiny on board, if he doesn't deal with it, his government falls," said a European businessman. However, analysts said that if the joint labour- business strike runs for longer than 24 hours, as some union leaders have warned, the government may seize the political upper hand. "If the situation becomes anarchic, and the military have to step in to re- establish order, it will be Chávez who sends them in," said Carlos Hernández, political science professor at the Central University of Venezuela. "For now, the government still remains in control."
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VENEZUELA
Strike! The Caracas paper El Mundo sees tomorrow's nationwide, one-day lockout/strike as critical.With the dismissal of "rebel" directors from PDVSA and the calling of a national lockout by the CTV (national labor union), the political crisis that has been shaking the country for the past several months reaches a point of culmination, whose outcome will be decided in the next few hours. Con los despidos de los gerentes "rebeldes" en Pdvsa y la convocatoria al paro nacional por parte de la CTV, la crisis política que sacude al país desde hace varios meses llega a un punto culminante, cuyo desenlace se dilucidará en las próximas horas. Last December's lockout shut down 90 per cent of the country. This time, there are indications that participation will not be as complete. The Federación de Empleados Públicos is divided over joining, its members having been threatened by the government, which is, perhaps, a strong indication that the government has greater concern about the fallout from this second action than the first. School will be out, reports El Mundo, because the national teachers union, the Federación Venezolana de Maestros, will not work.
For its part, the government continues to refuse to respond to demands to reinstate fired executives, directors and staff at Petróleos de Venezuela (PDVSA). More ominous is the possible appearance of something all too common in South American political clashes, but new here, "disappeareds" ("desaparecidos"). The government denies that any of the state oil company's employees have kidnapped or killed for their activisim, reports El Universal.The Vice President of the Republic Diosdado Cabello, denied that there are disappeared workers from PDVSA and affirmed that probably they were "fleeing" in order to not have to face the consequences of their actions in front of the refinery of El Palito, State of Carabobo." El vicepresidente de la República, Diosdado Cabello, negó que haya trabajadores de Pdvsa desaparecidos y aseguró que probablemente estén "huyendo" para no enfrentar las consecuencias de sus acciones al frente de la refinería de El Palito, estado Carabobo. (This oil facility was temporarily closed by a work action.)
This will bear watching over the next few weeks, though it is indeed probable that any absent workers are in hiding.
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Sunday, April 07, 2002
COLOMBIA
FARC is in Venezuela: The Colombian newspaper El Tiempo has confirmed that FARC guerillas are in Venezuela. Reporters with the Bogata newspaper were taken to a FARC in Venezuela camp by members of the organization. While confirming Colombian allegations of their presence in Venezuela, the guerillas denied they had Venezuelan permission to be there.The commander "Dario" assured assured (the reporters) that they (the guerillas) were there temporarily and that President Hugo Chávez didn't know about it. El comandante "Darío" aseguró que están de paso y que el presidente Hugo Chávez no lo sabe. So far, the Venezuelan government has denied that FARC bands have crossed into Venezuelan territory. Obviously, this story is no longer tenable.
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ARGENTINA
Look to Ecuador, say economists Steve Hanke & Kurt Schuler in the Latin Business Chronicle. Why? Because Ecuador dollarized itself out of crisis at least as bad as Argentina's.
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COLOMBIA
Media bias? No way! "Anti-Rebel Candidate in Colombia Slips in Poll" is the headline on a Yahoo! News - Reuters story (dated April 4). And yes Alvaro Uribe did lose ground--exactly two points.Support for Uribe, an independent who advocates a tough line with leftist rebels fighting the government, fell to 51 percent in April from 53 percent in February, according to a poll by Invamer Gallup and Centro Nacional de Consultoria. Uribe is widely favored to succeed President Andres Pastrana, who in February broke off peace talks with the Revolutionary Armed Forces of Colombia -- known by its Spanish acronym FARC -- and is constitutionally barred from seeking reelection. But hints dropped by critics, including (second-place candidate Horacio) Serpa, that right-wing militias favor him in the elections have created headaches for the bespectacled, usually mild-mannered Uribe, who last month angrily cut short a magazine interview after he was questioned on the subject. Serpa, launching his second presidential bid, has suggested -- without naming names -- that Uribe is the natural candidate of the "paras" (militias) and that a Uribe presidency would result in all-out war. What the headline should say is something like "Anti-Guerilla Candidate Keeps Big Lead Despite Smear Campaign." But then this is Reuters.
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VENEZUELA
Lockout/Strike: Even as the conflict between Hugo Chávez and the employees of Petróleos de Venezuela (PDVSA) mount, Chávez must look forward to a 24-hour nationwide lockout/strike, on Tuesday, April 9, El Nacional reports. The lockout is being sponsored jointly by Fedecámaras, which represents the country's businesses, and the Confederación de Trabajadores de Venezuela, the which represents the country's unions. Last time these groups got together, on Dec. 10, 2001, they succeeded in obtaining 90 per cent compliance with a similar shutdown.
A Yahoo! News - AP story about the lockout (from Saturday, April 6) says the strike will be in support of the oil workers.
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VENEZUELA
The newest fight between Hugo Chávez and his oppostion is over Petróleos de Venezuela (PDVSA), the state-owned oil company. A few weeks ago, Chávez replaced several directors, the company head and some executive staff with Chávez loyalists. Since then, the company's employees, particularly white-collar staff, have been demanding reinstatement of the fired officials and a commitment to what they call merit in personnel decisions. Increasingly the union--the national labor organization opposes Chávez--has become involved. A previous report was posted in El Sur on Thursday. More recent updates include:
El Mundo reported on Saturday that several oil facilities were closed by work stoppages directly, or as a consequence of stoppages elsewhere. Today, El Universal reports that Hugo Chávez likened the shutdown of the Refinería de El Palito to the blowing up of an oil pipelene (la voladura de un oleoducto), which is to say, an act of subversion (un acto subversivo). Chávez, El Universal continues:Affirmed that all the activities of Petróleos de Venezuela are proceeding normally and denied that the possibility of a shortage of fuel or gas exists in the country, Afirmó que todas las actividades de Petróleos de Venezuela se realizan con normalidad y negó que exista la posibilidad de escasez de combustible o gas en el país. El Nacional reports today,that Hugo Chávez announced the dismissal of seven more PDVSA executives and the forced retirement of 12 upper level staff, reports. Chávez also rejected the idea of negotiations between the government and the company. He said these things today on his radio program, Aló Presidente. On the same subject, El Universal adds: With the phrase many thanks for your services and a "pa' fuera" the leader announced announced these firings and affirmed that he gave orders to the president of the oil company, Gastón Parra to automatically show the door to anyone who speaks out on the conflict and calls for changing the dynamics of the company. Con la frase muchas gracias por sus servicios y un "pa' fuera" el mandatario anunció estos despidos y afirmó que ha dado órdenes al presidente de la petrolera, Gastón Parra, a despedir de forma automática a quien aparezca de vocero en el conflicto y llame a alterar la dinámica de la corporación. El Nacional notes that the PDVSA staff remain defiant. Likewise, the top and middle managers of the state petroleum company declared an "indefinite strike," and repeated that the "inamovilidad laboral" that they say they enjoy prevents them from being "fired" by the government... At the Asimismo, los altos y medios gerentes de la estatal petrolera se declararon en "huelga indefinida", y reiteraron que la "inamovilidad laboral" de la que dicen gozar impide que sean "despedidos" por el Gobierno... El Universal reports the same thing.
This story is finally breaking through into the American media, now that Chávez has publicly fired some executives (see, for example, Bloomberg). Of course, the Middle East situation seems to have consumed all available media space. Even so, few things are more important to the U.S. right now than Venezuelan oil. Unless the crisis in the company is resolved soon, much more will be heard about it in the mainstream media.
The most important thing to notice about the conflict over Petróleos de Venezuela (PDVSA) is the lack of fear the employees display. Their willingness to stand up to Chávez's bullying and threats is good evidence of the decline in his power. The public demands last by military officers last month that Chávez resign show the same thing.
Nor can Chávez benefit if this conflict drags on. As noted in El Sur on Friday, oil and oil products account for 80 per cent of Venezuela's export earning and support 50 per cent of its government budget. Chávez simply cannot afford to see this income fail. Already, his other activities have discouraged foreign investment and caused considerable domestic wealth to flee to Miami. If Chávez fails to resolve his problems with PDVSA staff and their actions begin to affect revenues, this dispute could become very costly indeed.
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