Posted on 04/14/2002 4:01:40 AM PDT by Cincinatus' Wife
Planning Minister Felipe Perez acknowledged Jan. 2 that the government's $24 billion budget for 2003 would have to be "revised" during January to reflect the fiscal losses accruing from PDVSA's work stoppage. The government will have to slash its $24 billion budget by at least 20 percent to avoid financial insolvency, according to Central University economics professor Francisco Vivancos. However, with new polls showing that President Hugo Chavez is losing substantial support among poor Venezuelans, who represent the base of his political support, the government likely will try to keep budget cuts to a minimum. At the same time, it probably will resort to devaluing the currency, issuing Venezuelan debt paper, deferring payments of external and internal debts and possibly seeking financial assistance from the International Monetary Fund and other multilateral entities.
Still it is unlikely that the IMF will aid Venezuela's government without substantial economic reforms, which Chavez would be unwilling to make. Venezuelan banks -- already holding $12 billion of domestic government debt -- in turn will be unwilling to absorb more government debt, even at exorbitantly high interest rates, while the combined work stoppages in the private sector and PDVSA last. This will leave the Chavez government with three main options for dealing with its fiscal deficit: cutbacks, currency devaluation and deferment of debt payments. However, these options will make a bad economic situation much worse and further cut into Chavez's popularity among the poor. ***
The new constitution, through design and circumstance, ended up concentrating power in the presidency and eliminating most checks and balances. It was drafted by a constituent assembly elected through a rule that gave Mr Chávez 92 per cent of the seats with just over 50 per cent of the vote, essentially disenfranchising the opposition. This winner-take-all assembly dissolved the elected Congress and appointed loyal supporters to the Supreme Court, the attorney-general and the comptroller-general without following constitutional procedures. In addition, the new constitution extended the presidential period, allowed for a one-time re-election and substituted a two-chamber congress with a one-chamber national assembly, in order to lessen the burden of consensus-building. This concentration of power has allowed the government to get away with murder, misuse public funds, arm violent gangs and disarm opposition local police.***
At a Miami press conference this past Sunday, Diaz said that shortly following the September 11 terrorist attacks, Chavez commissioned him "to organize, coordinate, and execute a covert operation consisting of delivering financial resources, specifically $1 million, to [Afghanistan's] Taliban government, in order for them to assist the al-Qaeda terrorist organization," while, "making it appear as if humanitarian aid were being extended to the Afghan people." ***
After an attempt on his life, Diaz said he was smuggled out of Venezuela in the hull of a fishing boat last month and now is in Miami. He confirmed that his family is in hiding after leaving their home in Valencia, Venezuela, over the weekend due to death threats. Diaz said he will warn U.S. officials of Chavez's direct involvement with international terrorism and his formation of a bloc of Latin American countries opposed to the United States. "My objective here in the U.S. is to show who Chavez really is and the danger he represents for the whole Western Hemisphere and especially in Venezuela," Diaz told WND. The State Department's Bureau of Western Hemisphere Affairs said it would not comment on Diaz or his allegations in accordance with protocol.***
……………………Paul MacAvoy, an economics professor at Yale University who has followed the industry for 30 years, said he's never seen a restructuring plan like the one proposed by Chavez. Since production, refining and distribution operations are scattered, a single operational headquarters - rather than two separate ones, as proposed by Chavez - is the industry norm, he said. "This looks like a political ploy to show (Chavez) supporters the company is being dismantled for their benefit," MacAvoy said. Ed Silliere, vice president of risk management at Energy Merchant LLC in New York, said the planned PDVSA shake-up "could become a problem rather than create more efficiency." "This is certainly not a move seen in a democracy. It looks like something done under a controlling state," he added.***
Though Mr. Reich's supporters had thought Mr. Bush would renominate him after the Republicans captured the Senate in November, their hopes were dashed when senior Republicans, including Senator Richard G. Lugar of Indiana, the new chairman of the Senate Foreign Relations Committee, joined Democrats in opposing him. His opponents argued that Mr. Reich, a staunchly anti-Communist Cuban exile, botched relations with Venezuela and had taken too hard a line on Cuba. Mr. Reich, these critics said, also did not have the support of Secretary of State Colin L. Powell.
Ari Fleischer, the White House spokesman, acknowledged the bipartisan opposition to Mr. Reich today in explaining why Mr. Bush had decided to pull him into the National Security Council, a position that does not require Senate approval. "The principal reason was because the president wanted his expertise here," Mr. Fleischer told reporters. "I never ruled out that there could have been other factors as well, and it's always important to gauge the inclinations of the Senate."***
Under the terms of two CARTER/TORRIJOS treaties, the United States relinquished ownership and control of the Canal Zone in December 1999. The properties included the waterway, land, 14 military bases and 5, 000 office and residential buildings. It was done as former President JIMMY CARTER put it, "to eliminate the vestige of colonialism." When the United States then withdrew its military forces from Panama, it didn't take long for Chinese companies to fill the vacuum. With a little help from some Panamanian friends, a Hong Kong-based international shipping firm, Hutchison-Whampoa, with reported ties to China's communist government, quickly acquired 50-year leases on two prized shipping ports vacated by the United States. The ports at Balboa and Cristobal are located at the Canal's main entrances.
China's interest in Panama is not limited to shipping ports. Panama's Maritime Handbook for 2002/3 lists China as the third greatest user of the Canal and another Chinese shipping firm, COSCO, as the largest single client on Panama's ship registry. The Washington Times reported, "In recent years, Chinese companies have invested $200 million in Panama, with millions more pledged." Over the years, watchdog groups like the Center for Security Policy, National Security Center, Eagle Form and Freedom Alliance (which I work for) have warned about Chinese mischief around the globe. In addition, former U.S. Senator Fred Thompson, past Chairman and Ranking Member of the Government Affairs Committee and former Select Committee on Intelligence member wrote, "China has sold nuclear components to Pakistan, missile parts to Libya, cruise missiles to Iran, and shared a wide variety of sensitive technologies with North Korea."
Panamanian educator and journalist, Dr. Tomas Cabal, in testimony before the U.S. Congress said, "COSCO is the merchant marine for the Chinese military and has shipped weapons of mass destruction technology and delivery systems to other countries." Little wonder why many worry about the contents of cargo on Chinese ships transiting the Canal and being unloaded by the Chinese gatekeepers. If this isn't chilling enough, the U.S. withdrawal also created opportunities for other opportunists in the region. A Columbian-based foreign terrorist organization, FARC, hides in Panama's southern jungles because Panamanian security guards are unable to patrol the porous border with Columbia. In addition, South American drug cartels are flourishing in Panama. U.S. intelligence reports Panama still serves as a major cocaine transshipment point and a major drug money-laundering center. ***
In January 2002, four supporters of Chavez's ruling party were slain in western Zulia state. Nineteen died last year on April 11, when rival marches clashed in downtown Caracas. The bloodshed spurred a coup and Chavez's brief ouster. Loyalists in the military returned him to power on April 14. Three more citizens were killed, presumably by a lone gunman, at an opposition rallying point on Nov. 6, and two government supporters died of gunshot wounds at a street march last Friday. Thursday's aggressions occurred as thousands of Venezuelan bank workers stayed home to support a nationwide strike seeking new presidential elections, further weakening the currency as analysts speculate that Chavez's government is running out of money. The nationwide strike that began Dec. 2 has shut thousands of businesses and brought Venezuela's vital oil industry - once the world's fifth-largest exporter - to a virtual halt. Gas has been imported.
Amid fears of a banking crisis, Venezuelans bought U.S. dollars and sent the bolivar currency to a record low of 1,593 to the dollar - 5 percent weaker than Wednesday and down 12 percent for the year. Analysts speculated Chavez's government may have to devalue the bolivar to balance its budget. Most government income is in dollars and a weaker bolivar would increase its domestic spending power. Spokesmen at three of Venezuela's largest banks - Banco de Venezuela, Banco Provincial and Banesco - said 80 percent of the country's nearly 60,000 bank employees stayed home Thursday.***
Many experts, however, argue that his inability to arrest a worsening economy is more a result of his ineptitude and mismanagement than ideology. But many Venezuelans hear only his radically leftist rhetoric, and can't separate his actions from his words. For instance, while he says he is opposed to globalization, Chávez hasn't done anything to disconnect Venezuela from the global economy, says Vladimiro Mujica, a professor at the Central University in Caracas and a representative of Citizens Assembly, a nongovernmental organization working with the opposition. "Some people in the opposition like to raise the ghost of communism, but I don't think that is what we have," he says. "What we have is a very corrupt regime that is clinging to power." Opponents say that since taking office, Chávez has rewritten the country's Constitution to consolidate more power in his own hands.
Pollster Keller is one of many who accuse Chávez of using state funds to finance other leftist candidates in Latin America, such as those who were recently defeated in Nicaragua and Bolivia - the main funding coming from the state-run oil company, Petroleos de Venezuela, or PDVSA. "He wants to use the money of PDVSA as a political weapon," says Jose Manuel Boccardo, a manager at the company before the strike. "He wants PDVSA to be the cash cow for his geopolitical strategy, and we don't want to be part of that."***
The naming of Cuba comes as no surprise. Chavez is the Cuban leader's life support. Iran and Algeria can also be explained: Last week, Algeria sent oil workers in an attempt to restart Venezuela's oil industry, and Sunday a government delegation from Iran arrived in Caracas, also to help break up the strike, now in its sixth week. But why single out North Korea? For that, we must look at the background of Hector Navarro and other members of the Chavez inner circle. Before taking power, Navarro hailed North Korea as a model to follow, and in a document co-authored with former Chavez industry and commerce minister Jesús Montilla and former Chavez central planning minister Jorge Giordani, he wrote: "Socialism survives [...] in North Korea which, although isolated and alone, has achieved a strong economy."1 While this opinion may be shared by other graying leftists who have hitched their star to Hugo Chavez's Marxist experiment -- having previously bet the farm on socialist dreamlands like Russia, China, Vietnam, Cuba, Nicaragua, Cambodia and El Salvador -- more clear-headed analysts plainly disagree. North Korea is one of the world's most centrally planned and isolated economies, and faces desperate economic conditions. Far from having "achieved a strong economy", industrial capital stock is nearly beyond repair as a result of years of underinvestment and spare parts shortages. Industrial and power output have declined in parallel. In North Korea, large groups of the population survive by eating grass and bark off the trees.
This, however, does not affect Navarro, nor his boss Hugo Chavez, who in a recorded message took to the airwaves late Sunday and again Monday at noon, repeatedly reminding Venezuelans that "We have burned our boats. There is no turning back. We will carry on consolidating and deepening this Revolution,"2 and promising the country's 24 million citizens to take their country a few hundred years back in time: "If we have to cook with firewood for 2 years, we will. Or for 20 years, if we have to."3 The belief that a pure revolution can only be born once all remnants of the previous society have been destroyed is a popular theory among followers of Pol Pot's illfated Cambodia and of Mao's Cultural Revolution. And, according to Chavez-watcher Richard Gott, several of the president's closest advisers were once associated with a Chinese-oriented split from the Venezuelan Communist Party, while Chavez himself has declared that "I have always been a maoist".4***
Chavez, a radical Marxist, was elected four years ago on a campaign promising to eradicate poverty and do away with government corruption. Since he was elected he has done away with the rule of law and private property while presiding over the greatest oil boom in Venezuela's history. Corruption and poverty have grown to levels unseen in the country's history. Chavez passed 49 decrees that expropriated private property in the name of his "revolution." He terrorizes the opposition with his militia, the Circulos Bolivarianos-armed thugs financed by the government. But there is hope.***
To the 40 3rd day of the strike launched by the opposition against Hugo Chavez, from the foodstuffs disappeared from the stores, in particular the cornstarch necessary to the preparation of the basic dish vénzuélien, the arepa, a kind of crepe. Others are almost in out-of-stock condition, like rice. "We had to import meat of Brazil, food and milk of Colombia, rice of Dominican Republic", continued president Chavez. The president had already called upon the army to guarantee the distribution of gasoline and the control of the oil industry which ensures 50 percent of the public revenue.***
Venezuela: Regime Prepares To Seize Food Production Assets***The possibility that food stuffs could be stolen outright in the event of a military seizure also is difficult to discount. While charged with distributing gasoline, sources have told Stratfor that some soldiers demanded cash payments and refused to issue receipts to citizens. Finally, many food companies in Venezuela are owned by U.S. or European multinationals. Chavez could run afoul of these countries if their governments perceive him as confiscating private property illegally. Though Washington has made little secret of its distaste for Chavez, Bush administration officials have made no apparent moves to tilt the balance in the current political standoff. However, the United States historically has taken an extremely negative view of the seizure of U.S.-owned assets, as occurred in Cuba decades ago. Should Chavez attempt to take physical control of U.S. assets in Venezuela, the Bush administration likely will take a tough stance.
Chavez already has urged Venezuelans to "prepare for a difficult period" during the first months of 2003, and cautioned that the regime's efforts to break the national strike will have a serious negative impact on the government's financial stability. Others also are warning of a deepening financial crisis in Venezuela. Analysts in New York City have warned that if PDVSA's strike continues, the government will "have problems" servicing its $18.3 billion foreign debt on schedule, according to the Wall Street Journal. Analysts in the United States also warned that collapsing public finances and a drop in foreign exchange reserves at the Central Bank could trigger the imposition of capital and exchange controls to stem capital flight and the currency's devaluation.
An estimated $11 billion was taken out of Venezuela in 2002 by private savers, according to Ricardo Hausmann, a former Venezuelan Planning Minister who now teaches at Harvard University. Since Chavez became president in January 1999, capital flight from Venezuela has totaled more than $34 billion, he said. For the first time since the PDVSA work stoppage began, Chavez admitted Jan. 10 that Venezuela was able to produce only 150,000 barrels a day of crude oil, on average, during December. However, the president claimed only a week ago that PDVSA was producing more than 1 million bpd.***
In Caracas, gunfire erupted at an opposition rally. No one was hurt, and the rally resumed. There were no arrests. Chavez supporters armed with machetes and sticks also prevented a demonstration at an oil facility in central Carabobo state, Globovision television reported. A minor clash occurred at a plant in Barinas state. Chavez opponents claim the president's fiery rhetoric incites violent reactions from his most radical backers.***
Both sides also have interpreted the law according to their own convenience. Dec. 15, the opposition protested furiously after Chavez declared that military officers need not obey judicial orders. Nevertheless, when the Supreme Tribunal of Justice ordered striking petroleum workers back to work a few days later, the opposition ignored the ruling. Chavez justified his instruction to the generals by saying that the president's authority superseded that of the courts.
…………….''The opposition says, `This government is so unjust we won't obey anything,''' she said. ''You're questioning the legitimacy of the government to rule.'' Indeed, the discourse of many Chavez opponents has become increasingly incendiary in recent weeks. ''We're fighting to install the rule of law,'' says constitutional attorney Luis Betancourt, who compares Venezuela under Chavez to Panama under Manuel Noriega and even Germany under the Nazis. ''In a battle, you can't respect the same rules as in a democracy.''***
Flanked by soldiers in camouflage gear, the leftist-populist president warned that his opponents were taunting "a giant." "The revolution will not be defeated, it will be strenghthened," the former paratrooper said of his program of social reforms his opponents claim ruined the economy and failed to improve the lot of the millions of impoverished Venezuelans. Chavez also said that if public schools closed in support of the strike did not reopen, their directors would suffer the same fate as about 1,000 striking employees of Petroleos de Venezuela (PDVSA) fired in past weeks.***
"They are worse than an atomic bomb," Chavez said during his weekly radio and television show Sunday. "If they continue to use their licenses to try to break the country or oust the government, I would be obligated to revoke it." Venezuela's largest labor confederation, business chamber and opposition parties began the strike Dec. 2 to demand that Chavez resign or call early elections if he loses a proposed nonbinding referendum on his rule. Opponents accuse the former paratrooper of running roughshod over democratic institutions and wrecking the economy with leftist policies. The opposition has staged dozens of street marches, called for a tax boycott and held a two-day bank strike last week. A strike by oil workers has helped push up world oil prices. ***
……….On Sunday, tens of thousands of the anti-Chavez protesters marched on Los Proceres park outside the Fort Tiuna military base in Caracas, seeking military support for the strike. Troops lobbed tear gas at the protesters but they quickly regrouped, shouting "cowards" at hundreds of soldiers facing them with armored personnel carriers. Troops also kept back dozens of Chavez supporters protesting nearby. The first marchers to arrive at Los Proceres park, which is outside the Fort Tiuna military base, stomped down barbed wire blocking the entrance, but they did not try to break past security lines. ***
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