February 16th., 2009

Chavez Wins The Referendum

Chávez obtains, with his triumph in the referendum, the right to be a candidate once again in 2012, which he expressly manifested, without hiding that he will do the same again in 2019.  “This triumph marks my destiny.  I swear to dedicate all that is left in my lifetime to serve the nation and we will only have a nation when the Socialist Bolivarian Revolution has been consolidated”, he stated, before a crowd that shared his victory, and before whom he pronounced a speech wherein he chanted and quoted authors.  Firstly, Fidel Castro´s column.  He read several phrases from Jorge Luis Borges:  “The nation is of no one, we are all the nation”.  Borges´ quote is accurate, but he probably ignored that the words were addressed to Perón when he affirmed that he embodied the Argentinean people and pretended to ignore the existence of those who were against Peronism.  He affirmed that the Revolution entered a new phase, wherein he would preside the events that commemorate April 19, 1810, and July 5, 1811, classic dates of the Independence, but that we would not have an independent nation in as much as we “banished the vices of Capitalism, which imposes a long battle that will always keep me at the nation’s service”.  The President of the National Electoral Council (NEC) had read a bulletin, according to which, they still had to scrutinize over 800,000 votes, an abstention of 33%, but that these numbers gave the “YES” option a 54% and the “NO” option a 45%.   Upon the end of Chávez´ speech, a spokesperson for the opposition acknowledged the triumph, attesting that the battle had not been fair, since Chávez had the full power of the State at his service, and notwithstanding this fact, the ones who took it upon them to defend the Constitution trespassed the 5 Million votes.  Another leader from the opposition pointed out that 5 Million votes may be more than 50% of the next Parliament.  It is a fact that Chávez got 6 Million votes, one less Million than what he obtained in the re election event, and the opposition votes were 5 Million, one more than what it obtained in the re election event.  A representative from the youth pointed out the presence of the students as witnesses in the electoral tables and their decision to continue battling for democracy and the national reconciliation in a plural society.  “The future is bright because it is represented by the new generations”.  Chávez manifested  that he proposes to comply with the social programs, especially the Missions, and that he would respect the international agreements.  He had anticipated this in the Alba Summit, when they met to celebrate the tenth anniversary of his arrival in government, wherein he affirmed that Cuba, Bolivia, Nicaragua, Honduras and the other Central American countries that are to be incorporated in Alba, as well as the Caribbean countries, will have their energy needs met with Venezuelan oil.  He said that the world economic crisis affects Capitalism, on the contrary to XXI Century Socialism, and that Venezuelans need not to worry since their government had taken measures and counted with sufficient resources to satisfy the needs of the people, and especially those of the Missions.

Chávez must rule 5 more years, in accordance with the Constitution, and it does not seem that he can satisfy all that he promised in his speech.  The Venezuelan economic picture is determined by oil, whose future, even if it surfaces back up in a prudential time, will be uncertain.  Venezuela is seen as the archetype of an oil-state.  According to the Central Bank figures, for every US$ 100 that enter the country, US$94 come from oil. 

 MAGNITUDE OF THE CRISIS

The State oil company talked about producing 3,150,000 barrels per day, a number that would be reduced in order to comply with the OPEC decisions, which evidences the contrast with reality.  Production was of 2,400,000 barrels per day, an amount wherein the national consumption and donations to Cuba, Bolivia, Nicaragua and the Caribbean must be deducted from, which reduces income significantly. In the optimistic perspective that the prices of the Venezuelan oil will maintain in US$ 40 barrels (currently 36), the oil dollars will be insufficient to comply with the 2009 budget, elaborated on US$ 60 per barrel, and an official expense of US$ 77,860 Million.  According to Economy Professor Orlando Ochoa, the recent transference of US$ 12,000 Million from the Central Bank to FONDEN, means that the fiscal deficit will continue to be covered with the international reserves, which are now in US$ 29,470 Million.  The fall of the reserves, as stated, seriously threatens the support of the Bolivars in circulation, as well as restricting the possibility of facing the foreign accounts of the country.  The level of reserves would be enough to pay 7 months of importations.

As per Dr. Ochoa’s opinion, this situation explains that they resorted to the international reserves of the Central Bank as a mechanism for monetary financing for the growing deficit, which “indicates that the government counts with much less resources as those it claims to have and the magnitude of the cash deficit in the National Treasurer Office and PDVSA is very big”.  He adds that the government is recurring to the impression of money to cover the deficit,  in a policy with inflation effects that will impact fundamentally on the most poor, whose salaries barely cover the basic basket.  Venezuela closed 2008 with the highest inflation rate in Latin America.  The accelerated increase in public expense (Central Government and Fonden) reaches levels close to US$ 90,000 Million, which becomes unsustainable. The expert claims that the economy will enter into a recession upon the second semester of 2009, year in which the inflation rate will reach 40%, and with it, the prices of foodstuffs will elevate in 60%.  With high inflation, impoverishment, fiscal deficit, devaluation and recession, there is no way out of this situation without a coherent economic plan that inspires confidence and credibility both within the country and abroad.  This is an opinion shared by institutions and personalities of the most respectability, that express their anguish by the national reality and question whether we are expecting a Cuban style dictatorship, or if Chávez, a shrewd, pragmatic politician, pathologically fascinated by the exercise of power, is convinced that the impossibility of governing is of such nature that he will be forced to rectify to govern until February 02, 2014, or assume, without any concealment, a strong dictatorship.  In Chávez´ speech there was not one word referring to dialogue with the 5 Million people that voted NO, repeating that the principles of revision and rectification are still in force.  The middle class and the producers, he said, will be rewarded in the new phase if they become actors that contribute to the creation of endogenous, participative and protagonist Socialism, and abandon the destabilization they have been working on, inspired in the stubbornness of not separating from Capitalism.  The referendum showed the fracture of the Venezuelan society.  There are two blocks confronting each other.  The NO option won in the urban developed zones, whose economic importance turns them into determining factors in the country, as from a qualitative point of view.  The other block is not measurable.  It is comprised by Neo Marxists, an important sector seduced by Chávez´ charisma and a clientele that responds to gifts, but whose loyalty is not guaranteed if the finances result insufficient to keep them satisfied, a problem not far to the Revolution.

 IMPOSSIBILITY TO GOVERN THREATENS CHAVEZ

Chávez has counted with US$ 870,000 in his ten years in government.  There is consensus that the results of the decade are frustrating:  “He has wasted a golden opportunity wherein the State income increased and they did not turn into productive wealth nor in improvement of the quality of life”, as written by an ex directive of the Central Bank.  The source adds that the population is a prisoner of a scheme that condemns it to live off the gifts that they receive from public entities, destroying the moral fiber of many people who lost the incentive to prepare or qualify in order to look for a job.  Four Million live off the State as employees, awarded from scholarships and beneficiaries of the Missions.  In the last 3 years, 40% of the oil income was transferred to the funds that Chávez personally administers, without any accountability or rendering of accounts.  PDVSA´s  financial situation leads it to ask for help from transnational companies to exploit the extra heavy oil from the Orinoco Strip and develop the refining projects announced under the slogan “Oil is now ours”.  According to Business America, it is not clear if the foreign operations will rescue the Venezuelan oil industry this year.  If affirms that there are claims before the International Court of Arbitration on account of debts that PDVSA has not honored, and that the companies expect the country to grant judicial guarantees that are now precarious.  The Central Bank informs that their financial statements register losses for US$6,000 Million.  The experts explain that this is because the transfers to Fonden without due consideration in Bolivars, have deteriorated the patrimony and severely restrict its capacity to have an effective anti inflation policy.  Currently, the President of PDVSA and the Finance Minister are looking to the future sales of oil to obtain financing at any price to cover the fiscal deficit and the situation of the oil company.

Chávez, in his speeches, frequently repeats:  “Here I am the boss”.  To the Governors and Mayors from the opposition who won last December, he divests them of their functions and the central government assumes them, violating the Constitution.  In Miranda, Zulia, Carabobo, Táchira and Nueva Esparta, Caracas Mayor´s Office and in other important cities, which, all together represent the majority of the population of the country, its inhabitants are convinced that the cooperation of all is indispensable to affront the problems they face.  The most patent case is that of Caracas, where the circulation of traffic is an infernal problem and everybody is asking for urgent measures to improve it.  Notwithstanding, the Mayor of the Libertador Municipality, won over by the regime, denies to meet with the City Mayor, the Governor of the Miranda State and the other 4 Mayors of the city, who are from the opposition, in order to, together, study the measures that have successfully been implemented in other Latin American cities.  His argument is the following:  “I will not meet with Fascists”.  The Zulia Governor and the Mayor of Maracaibo request to talk with national authorities to define mechanisms of relation.  The Zulia State is the most important State in the country and Maracaibo is the second city in the nation.  The Governor of Táchira manifests that he was elected to govern a State with strategic characteristics, on account of constituting a border State with Colombia, which makes it indispensable for communication between the regional and central governments.  Chávez´ answer is to accuse them all of being pitiyanquis, that they only deserve disdain and with whom he is not willing to talk.  Chávez must govern for 4 very difficult years.  He seems not to worry about the reality nor have any notion that the impossibility to govern is his biggest danger.  Also for the democratic system.