Category: Latin America

Venezuelan president-cum-dictator Hugo Chavez continued his confiscation of private property and foreign investment yesterday by seizing oil projects and assimilating them into the state-owned petroleum organization. Delivering on his pledge to create a socialist state along the same lines as Fidel Castro’s Cuba, Chavez told foreign-owned firms that they now had to accept a minority stake in their own properties:

President Hugo Chavez ordered by decree on Monday the takeover of oil projects run by foreign oil companies in Venezuela’s Orinoco River region.
Chavez had previously announced the government’s intention to take a majority stake by May 1 in four heavy oil-upgrading projects run by British Petroleum PLC, Exxon Mobil Corp., Chevron Corp., ConocoPhillips Co., Total SA and Statoil ASA.
He said Monday that has decreed a law to proceed with the nationalizations that will see state oil company Petroleos de Venezuela SA, or PDVSA, taking at least a 60 percent stake in the projects.
“The privatization of oil in Venezuela has come to an end,” he said on his weekday radio show, “Hello, President.” “This marks the true nationalization of oil in Venezuela.”

Interestingly and not surprisingly, the Venezuelan strongman didn’t mention how he planned to compensate these companies for 60% shares of their projects. Instead, he told them that he didn’t want them to leave, and take all of their expertise and technology with them. Chavez wants them to accept the fact that they would do all the work while he gets most of the profits.
These projects were the only privately-financed oil production facilities in Venezuela, and their worth is estimated at $17 billion. Will Chavez send them a check for the $10.5 billion he owes for his share of their operations? Don’t bet on it. Chavez has offered compensation for other business assets that he has nationalized, but he has tried nothing on this scale so far.
Chavez’s diktat will take legal effect in four months, although Chavez says he’ll seize the projects by May 1. The companies have that long to negotiate terms with Chavez, who has an army to occupy the oil fields, making negotiations somewhat one-sided. The oil producers will likely try to strike a bargain with Chavez, but it makes little sense to do so. They will only be delaying the inevitable; Chavez will eventually steal it all from them. They should dismantle their operations and leave forthwith, taking the losses now and leaving Chavez to explain why the workers have lost their jobs as well as the expertise necessary to produce their primary export.

Supporters of Venezuelan president and ardent socialist Hugo Chavez point to his past two elections, one of which was a recall effort, as measures of his popularity. However, a group of analysts in Caracas contend that Chavez rigged both elections by making wholesale changes to the voter rolls:

Hugo Chavez may have lost both the recall referendum in 2004 and the December 2006 presidential election, according to studies conducted by a distinguished multidisciplinary team in Caracas, Venezuela. The team includes the rector of Universidad Simon Bolivar, Frederick Malpica, and a former rector of the National Electoral Council, Alfredo Weil.
Astonishing as it may seem to Americans who believe the contention by Mr. Chavez that he won both elections by a landslide — 58% to 42% in the recall and 61% to 39% in the presidential election — the studies show that since 2003, Mr. Chavez has added 4.4 million favorable names to the voter list and “migrated” 2.6 million unfavorable voters to places where it was difficult or impossible for them to vote.
None of these additions or migrations to the voter-register has been independently audited in Venezuela. Instead, the votes have been electronically counted by Chavez cronies. So when Mr. Chavez announces a landslide, there has been no way to prove otherwise, even though exit polls and other data have consistently shown that half the voters of Venezuela or more oppose Mr. Chavez.

It’s worth noting that Jimmy Carter vouched for the results of both elections. Michael Rowan and Doug Schoen want an accounting of his methodology. More importantly, they want an accounting of the favorable treatment Chavez gets from the Left, as well as from 17 Congressmen who have oil subsidized by Chavez delivered to their districts.
Chavez is another banana-republic ruler whose threats to nationalize industry and impose socialism by imperial diktat would (rightfully) raise screams if they happened in Zimbabwe or Russia. Why is Venezuela different?

For the last few years, Cuba has sent its doctors to Venezuela to provide free health care for impoverished citizens of its ally in the region. Hugo Chavez has welcomed the Cubans as a means of bringing closer ties between the two countries and to augment his nation’s health-care system. However, the physicians defect in increasing numbers by crossing the border with Colombia, disillusioned with both Cuba and Venezuela:

Ariel Perez was, like thousands of fellow Cuban doctors, a devoted soldier in Fidel Castro’s most important overseas mission — providing medical care to the poor in oil-rich Venezuela, Cuba’s most vital ally. But last year, Perez and two Cuban companions, carrying rucksacks with a few belongings and holding just $1,300 among them, sneaked across the Colombian border and promptly defected. …
Chávez and other government officials have declared the program, called Inside the Barrio, a success. But a Venezuelan medical association critical of the Chávez government has expressed reservations about the Cuban doctors’ qualifications, and political opposition leaders have criticized the program for its lack of transparency. Cuban doctors are not permitted to talk to foreign journalists or diplomats. They must seek permission to travel outside of their assigned municipalities, and doctors who have defected say Cuban and Venezuelan intelligence operatives kept close tabs on their whereabouts.
The doctors in Bogota spoke of the pride they felt delivering care to the poor in the name of their small country, which has made health care a priority since Castro took power in 1959. But they also talked of being terrified working in Venezuelan neighborhoods buffeted by crime.
Most jumped at the chance to work overseas, seeing it as an opportunity to earn far more than the $15 a month they were paid in Cuba. But the workload was heavy — from early morning until night, sometimes seven days a week. And the pay — around $200 a month — quickly evaporated in a country with high prices and double-digit inflation.

The Bush administration has tried to keep the information from becoming public. The process of granting asylum takes a significant period of time, and the applicants are in a precarious position during that time. Host countries also would prefer not to get involved in defections, and the lack of publicity allows everyone to look the other way.
It’s a fascinating story nonetheless. Cuba has long pointed with pride to its health-care system, which it touts as cutting edge, and which Castro’s government provides free for its citizens. The reality of their facilities tells a different story, as I posted two years ago. Pictures of Cilinico Quirigico’s emergency room restroom give a better indication of the dangers of Castro’s health-care system:

Doctors forced to work in these conditions understandably thought that a trip to Venezuela might provide an improvement. It certainly improved their salaries, which increased 1,400% percent. While the difference in buying power turned out to be significantly less than they imagined, it also gave them the opportunity to get out from under Castro’s thumb — and to a country that they could leave much easier that Cuba.
Many of them have left. Estimates range to 500 or more health-care professionals and their dependents who have fled both Chavez and Castro by either applying directly to our embassy in Caracas or by flight over the border into Colombia. A large number of them still await adjudication of their applications, in part because the US wants to ensure that no spies for either Castro or Chavez wind up with asylum.
Hopefully, the Bush administration can expedite the process and allow more of these freedom-seekers to realize their dreams.
UPDATE: Meanwhile, tourists defect from Cuban hospitality (via Babalu Blog):

A FAMILY are suing Thomas Cook after their dream trip to Cuba became the holiday from hell. Elaine Old, 44, claims their luxury hotel made the family sick.
She arrived at the resort only to find dirty beds, her toilet overflowing with human waste and food covered in flies.
Just three days into the four-star luxury break at the Brisas Guardalavaca Hotel, Holguin, Elaine and her family were left ill with a serious stomach bug.
But things turned from bad to worse when their elderly mother, Dorothy, 76, was left needing emergency hospital treatment after she slipped on the wet hotel floor and broke her leg.

The Sunderland Echo includes a video taken by the family that records some of the gastronomic surprises that awaited them in Cuba. Hint: those aren’t capers in the mashed potatoes. It appears that some of the seasoning adds itself in the open servings.

Venezuelan dictator Hugo Chavez apparently doesn’t like criticism, at home or from abroad. After the US expressed concern over the assignment of dictatorial powers to Chavez, he invited us “gringos” to take a trip south — way, way way south:

President Hugo Chavez told U.S. officials to “Go to hell, gringos!” and called Secretary of State Condoleezza Rice “missy” on his weekly radio and TV show Sunday, lashing out at Washington for what he called unacceptable meddling in Venezuelan affairs.
The tirade came after Washington raised concerns about a measure to grant the fiery leftist leader broad lawmaking powers. The National Assembly, which is controlled by the president’s political allies, is expected to give final approval this week to what it calls the “enabling law,” which would give Chavez the authority to pass a series of laws by decree during an 18-month period.
On Friday, U.S. State Department deputy spokesman Tom Casey said Chavez’s plans under the law “have caused us some concern.”
Chavez rejected Casey’s statement in his broadcast, saying: “Go to hell, gringos! Go home!”

Well, which is it, Hugo? Go to Hell or go home? Sounds like an invitation to visit the Dictatorship of Venezuela to me.

The Venezuelan national assembly has followed in the footsteps of the German Reichstag in the 1930s in voting itself into irrelevancy. It gave President Hugo Chavez dictatorial powers, which he says he will use in the short term to nationalize vast swaths of the nation’s industry and eliminate any term limits for his reign:

Venezuela’s National Assembly has given initial approval to a bill granting the president the power to bypass congress and rule by decree for 18 months.
President Hugo Chavez says he wants “revolutionary laws” to enact sweeping political, economic and social changes. He has said he wants to nationalise key sectors of the economy and scrap limits on the terms a president can serve.
Mr Chavez began his third term in office last week after a landslide election victory in December.
The bill allowing him to enact laws by decree is expected to win final approval easily in the assembly on its second reading on Tuesday. Venezuela’s political opposition has no representation in the National Assembly since it boycotted elections in 2005.

The transformation of Venezuela from democracy to banana republic is now complete. Chavez has reinvented the Fuerherprinzip, South America style, in having his rubber-stamp assembly grant him absolute power over the nation. No court, no legislature can overturn his decrees, at least not for the next eighteen months — and one doesn’t need a crystal ball to predict that Chavez will issue a decree negating that limitation as well, and probably sooner rather than later.
Western investors in Venezuela will suffer the same fate as those invested in Cuba before the fall of Batiste, or in Mexico during their occasional efforts to nationalize industries. They will be lucky if they can sell off their assets to Chavez for pennies on the dollar before he can seize them outright. The window for those transactions will close very shortly.
More importantly, Chavez has condemned the people of Venezuela to oppression and further misery. When outside investors stop underwriting projects in the country, their economy will head straight down. Chavez will use what remains — the oil production — to make splashy festivals for the poor and open a few schools and hospitals. The vast majority of what profit he can take will go right back into the pockets of Chavez and his cronies.
The drop in oil prices means that he will have less in his pockets already. Venezuelan oil is not of the highest quality and costs more to produce. Their margins are much thinner than the Saudis, for instance, who just pledged to increase production. If prices drop below $40 per barrel, which seems a stretch but still possible, Chavez will have almost no profit from oil production, and the lack of investors to build other industries in the country will cause Venezuela’s economy to grind to a halt.
It wasn’t that long ago that Chavez claimed he smelled George Bush’s aroma at the podium of the United Nations, calling him a devil and an oppressor. In this case, I think we can conclude that Chavez smelled the enemy of the Venezuelan people — and it was himself.
UPDATE: Some Leftists may indeed swoon with joy over Chavez, but the sensible Michael Stickings isn’t one of them:

Chavez talks up his Bolivarean revolution — his efforts to transform his country and Latin America, in alliance with like-minded rogue states like Iran, into a grand anti-American bloc — but what forms the core of his rule is not liberation but absolutism. In this case, the rule of “revolutionary” law — in effect, the arbitrary rule of a single unchecked man — is nothing but tyranny, authoritarianism, the oppression of the people. Arbitrary rule always is. Which is why the rule of law, as opposed to the rule of man, is so central to democracy. And which is why, in our advanced democracies, we must safeguard the rule of law vigilantly and diligently, protecting it from the trespasses of those who would weaken it, scrap it, in the name of executive authority.

Well put. After that, he takes a cheap shot at Bush, but that’s more habit than thought.

Fidel Castro’s medical condition continues to worsen, the Spanish newspaper El Pais reported last night, and the doctors in Cuba have been unable to resolve the problem. An infection in his intestines as a complication of his earlier surgery has the long-standing dictator on death’s door — again:

Ailing Cuban leader Fidel Castro is in “very grave” condition after three failed operations and complications from an intestinal infection, a Spanish newspaper said Tuesday.
The newspaper El Pais cited two unnamed sources from the Gregorio Maranon hospital in the Spanish capital of Madrid. The facility employs surgeon Jose Luis Garcia Sabrido, who flew to Cuba in December to treat the 80-year-old Castro.
In a report published on its Web site, El Pais said: “A grave infection in the large intestine, at least three failed operations and various complications have left the Cuban dictator, Fidel Castro, laid up with a very grave prognosis.”

The fact that the Cuban government flew Dr. Sabrido in from Spain to consult caused its own controversy a while ago. Cuba has always bragged about its free health care to Cubans as a key success for their workers’ paradise, but the necessity of finding a qualified physician from outside Cuba — an option not available to the workers in this paradise — exposed a little of the truth about the health-care system on the island. (For a little more of the truth, check out my post from March 2005, and this Babalublog post.)
So does this spell the end of Fidel and the Communist dictatorship in Cuba? Maybe. He was supposed to be at death’s door last year, too, but managed to hang on this long. He’s in his eighties and cannot live forever, but he’s done a pretty good job of surviving so far. While the Spanish press is much more reliable than the Cuban government-controlled media, it’s hard to say how much to trust this latest report from two sources who have not attended Castro at all. I’d recommend a little skepticism. So far, Castro’s final days seem more like the old SNL routine about Generalissimo Francisco Franco and his valiant effort to remain dead, but in reverse.
However, if you want to follow this story closely, you will want to keep an eye on Babalublog. Val and his co-bloggers have their pulse on the Cuban ex-pat community in Florida, a better source for the kind of signs that would accompany a change in power in Havana — certainly more reliable than the Cuban press.

Venezuela’s Hugo Chavez threatened yesterday to nationalize key industries and demanded dictatorial powers, accelerating the OPEC member’s move towards Castroism. Global investors reacted by beginning to bail out of corporations at risk from Chavez’ attempts to seize assets:

Verizon Communications had been looking to lighten its exposure to Latin America for some time when it struck a deal in April to sell investments in three properties in Puerto Rico, the Dominican Republic and Venezuela.
Now, it probably wishes it had disconnected its Latin lines even sooner.
The company could possibly lose up to several hundred million dollars, thanks to President Hugo Chávez of Venezuela, who threatened to nationalize the country’s main telephone and electricity companies.
Investors reacted with alarm here and in markets in the United States and throughout Latin America on Tuesday as they measured the impact of the plan by Mr. Chávez to nationalize crucial areas of the economy. Memories of past nationalizations during another turbulent era, in places like Cuba and Chile, helped drive down the Caracas stock exchange’s main index by almost 19 percent.

Chavez did not slake his thirst for power on just nationalization of the telecom and and energy industries. He also demanded enhanced executive powers that would allow him to impose laws by edict for one year before the Venezuelan assembly could attempt to reverse them. Chavez also proposed ending the autonomy of Venezuela’s central bank, putting Chavez firmly in control of monetary policy. He will likely face little dissent on either point from the rubber-stamp legislature, which contains nothing but Chavez allies now.
Verizon and AES face hundreds of millions in losses if Chavez nationalizes these industries. Some analysts claim that Chavez has too much exposure here in the US. Venezuela owns Citgo, and American courts could seize the fuel company’s assets to reimburse those losses if Venezuela does not pay market value for the assets Chavez seizes. That implies a rational thought process that Chavez has not always demonstrated, however, and in his zeal to create a Cuba with oil reserves, he may not care about any short-term losses here in the US. With control of monetary policy, he could simply divert more resources from the central bank, if necessary.
In order to gain the hard currency necessary for all his changes, however, Chavez will have to pump oil more vigorously than ever before. That makes it difficult for him to use oil as an economic weapon against the US. Venezuela is our fourth-largest source of foreign oil, but given the market’s fungibility, even if they sold less of their production to us, we would still find more oil on the market from elsewhere. Chavez cannot afford to sell less oil after nationalizing these key industries, at least not if he hopes to succeed in his efforts.
The Venezuelans will not stand for much more of this. Chavez nearly lost out in a coup attempt a few years ago. If he continues to create this tinpot dictatorship for himself, the next one will succeed.