June 29th., 2005

Oil and Poverty

Summary:

• The increase in oil prices increases hard currency reserves up to 30 billion.  Chávez imposes a Reform of The Central Bank Act so as to dispose of 5 billion as he sees fit.
• He manages oil resources from Aló Presidente without reservations from Parliament or The Controller’s Office.
• Worried about poverty figures, he ordered a substitution of the UNPD methodology to attain social welfare parameters according to his discourse.
• Public expenditures policy threatens economic stability.
• Revenue estimates come from inorganic money and indebtedness.
• The by-Laws of The National Assembly have been modified seven times to accommodate legislative proposals presented by Chávez.
• 20-to-30 year sentences for activities deemed a conspiracy with a country or a foreign enemy.
• PDVSA has serious difficulties to maintain levels of production due to a lack of capital.
• A salary increase for the military.
• Intellectuals agree that the militarization of power is the worst threat.
• At The Caribbean Energy Summit, in the company of Fidel Castro, he pleased leaders of the region with attractive offers.
• He  reiterated that Petrocaribe will operate from headquarters in La Habana.
• Praise and criticism of Chávez policy.
• Reporters and The Catholic Church offer resistance.

Venezuelan crude reached 48 dollars and The U. S. International Energy Agency (USIEA) reports in its June publication that Venezuela will earn this year, for oil exports, 36 billion dollars.  The government swims in money voiced an economic analyst in Caracas.  Indeed, according to Central Bank figures, in the first trimester, revenue estimates, including other-than-oil, reached 8.65 billion.  Foreign reserves are near 30 billion.  The National Assembly accepted the presidential view of “reserves outside The Central Bank” and gave the green light to the reform of this institution by establishing that this body ought to transfer to The Executive –in the remaining of 2005- no less than 5 billion from the reserves, to take care of social expenditures and special, strategic situations, under the sole discretion of the President.  Besides the voluminous allocations of The Ordinary Budget (32.5 billion), Chávez has 10 billion to manage –outside The Budget-.

In Aló Presidente (26 Sunday), he presented the second stage of Misión Mercal (subsidized nourishment), with a 3 billion investment.  He explained the source of the resources, he spoke  what he had disposed about its implementation and began giving instructions to Ministers and top officials for six hours with musical breaks –some in which he was the soloist-.  It is he way of managing pleasing Chavistas.  Neither Parliament nor The Controller’s Office find any objections, but surely, this is the cause of corruption and revolutionary inefficiency, frequently a complaint of the Lt. Col.  The constant promise of cero poverty by 2021 goes together with calls for greater efficiency:  “we ought to rush the pace and aim better, we’ve been here for 6 years already.”  Several times he’s said that he follows statistics, thus, his concern is reasonable.  The National Institute of Statistics (NIS) offered him unpleasant numbers:  poverty increased from 42 to 53 % between 1999 and 2004.  There was a 16 % of homes in dire poverty; now it is 25%.  According to data presented in UN Nourishment Summit, Venezuela is among 10 countries in the world where hunger has grown the most in recent years.  Besides rushing the pace, he ordered NIS to substitute UNPD international methodology by one evaluating standards of living in terms of benefits offered by the Missions.  This will give him social welfare parameters adjusted to his speeches.

THE SOURCE OF ALL BLISS IS THREATENED

Top economists agreed that public expenditures policy terms are a serious threat to economic stability as the country shows the highest inflation rate in Latin America and fiscal policy may lead to an inflationary bomb, similar to other countries in the region.  They charged that a sizable percentage of revenue estimates is inorganic money (exchange operations by The Central Bank).  Another significant chunk is nourished by indebtedness.  In March, the public debt was over 45 billion.  Economists were not heeded nor warnings of alleged notorious infractions of The Constitution by opposition deputies who, in a last ditch effort, said that the rush to reform The Central Bank Act violated The By-Laws of The Assembly.  Its President, Nicolás Maduro heard the arguments of the opposition and explained:  “I made a commitment to Hugo that this legislation would be approved today.”  He went on to say that the norms in By-Laws cannot interfere with projects of the Revolution.  In the present Legislature By-Laws have been reformed seven times to make adaptations to the goal of providing a mantle of formal legality to the dynamics of the regime.

A similar ease was evident in Maduro’s colleagues during the discussion of the second partial reform of The Penal Code.  A New Code is pending in The Assembly integrating and harmonizing scattered norms in numerous legislative pieces, some of which are contradictory.  Last March, a partial reform was approved to sanction with 20-to-30-year sentences any activity which District Attorney or Judges may deem “conspiratorial with a foreign country or enemy;” it criminalizes slander vs. officialdom and social protest and it promotes self-censorship in the mass media.   Violation of The Muzzle Act may entail monetary fines of such magnitude equivalent to bankruptcy.  A group of jurists requested the voiding of 33 articles –which in their view violate fundamental rights- before Constitutional Hall.  Their action is understood  to exhaust national procedures or instances.  The new partial reform pinpoints and worsens  the  penal  responsibility of judicial entities; contradicts basic principles of Law; limits constitutional guarantees; attempts vs. individual liberties; establishes new modes of penalizing dissidence:  all of the foregoing according to a document presented to deputies by The Venezuelan Penal Forum.  Iris Varela –an officialdom deputy- called for an end to debate:  “They will not be able to stop the reforms we wish.  We have the majority.”

Before Chávez’s powerful energy machinery, Venezuelan and foreign experts insist on the danger of foreign investment incoherencies.  Articles in Venezuelan, Brazilian, Mexican, U. S.,  and E. U. dailies agree  with a recent Credit Suisse-First Boston Report which proposes that PDVSA has serious problems to maintain levels of production due to lack of capital and that private companies could delay or cancel their investments.  “ The Government’s economic strategy does not seem to be the correct one.” They are referring to the official offensive vs. private operators –who produce 1.2 million barrelsxday- who are charged with tax evasion and breaching of contract.

OIL AND FOREIGN POLICY

In his speech on Army’s Day, the Lt. Col. announced 50 and 60 % increases for military personnel, making a Seargent’s salary better than that of a university professional.  Chávez is clear of the link between the use of oil resources and the loyalty of his followers, in the barracks and streets.

Frequently, the military are benefited with special bonuses and a privileged social security system.  However, beyond arguments, what’s decisive is the belief that with Chávez, the military are the bosses.  This is the belief of those in military garb and of intellectuals.  They agree that the greatest threat is the militarization of power, with strong levels of support.  The message to barracks leans on symbols and myths of the military milieu.  The message to the streets is an open one:  “With Chávez, the people rule,”and Miussions are invoked.  Barrio Adentro is the job of 30,000 Cuban physicians and paramedics scattered through the national territory.  The military salary increase launched similar demands from university professionals and Missions beneficiaries to receive similar salaries.  Chávez justified the increase for the military with the economic bounty.  Hard to deny it in terms of the million Chavistas formally in official payrolls and the million followers benefited by Missions.

Venezuela has legitimate rights to use its gigantic oil potential in its foreign policy as Chávez has repeatedly said.  At the MERCOSUR meeting he announced that PETROSUR would cover the energy needs of South America with Venezuelan oil.  At The Caribbean Energy Summit he gathered 15 regional rulers.  He came in the company of Fidel Castro.  He reiterated that PETROCARIBE shall operte from PDVSA Headquarters in La Habana.  Venezuela will supply energy requirements of the countries in the region –lowering costs- as  a new PDVSA affiliate would provide free transport.  It was an attractive offer for Caribbean islands, but some objected parts of the proposed text.  Does Chávez’s regional power shrinks?

The policy of the Lt. Col, recently, has received praise from Evo Morales, Daniel Ortega, Argentinean picketers, Ecuador’s Pachacutik, Salvador’s Farabundo Martí and naturally, Fidel.  He has been questioned, also, in recent days, by Fernando Enrique Cardoso, Bill Clinton, Felipe González, and Pierre Jean-Vandoome, French Ambassador in Caracas, the first non-U. S. diplomat to do so publicly.

In the national scenario, festivities for Reporters’ Day brough to light that the Guild and The Catholic Church make the bastion of greater resistance to The Revolution.  Democratic culture planted during most of the past century has made free expression and the right of information flags which keep on flying before the regime.