Tag Archives: 14-A

Venezuela

Photo essay: Caprilistas block traffic in Caracas suburb to protest fraud

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I was in Altamira this afternoon watching the opposition protest gathering steam — it’s now apparently devolved into something much more severe, with police responding shortly after I left, complete with rubber bullets and tear gas. The metro station in Altamira was shut down shortly thereafter.Venezuela Flag Icon

For background purposes, Altamira lies in the eastern part of the city, so it’s a natural place for a pro-opposition rally. It also lies in Chacao municipality, which is technically located in Miranda state, where opposition presidential candidate Henrique Capriles serves as governor.

The CNE (the National Election Commission) confirmed the election of Nicolás Maduro as the winner of Sunday’s election, and a hasty inauguration has been scheduled for Friday.

Meanwhile, Capriles has called for calm while also calling for further protests. Caracas has been ablaze with the sounds of banging pots and pans — the cacerolazo — for the past 45 minutes, and a broader strike is scheduled for tomorrow. As I wrote last night and earlier today, Capriles and the opposition believe he has won, but it’s far from certain where the country goes from here.

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Photo credit to Kevin Lees — Caracas, Venezuela, April 2013.

 

Venezuela

Cabello comments indicate cracks in the chavista high guard?

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One key piece of data that I missed last night is the response of National Assembly leader Diosdado Cabello (pictured above), who tweeted the following last night:Venezuela Flag Icon

Profunda autocrítica nos obligan estos resultados, es contradictorio que sectores del Pueblo pobre voten por sus explotadores de siempre.

Deep self-criticism obliges us to note these results, and it’s contradictory that sectors of the poorest people have voted for their exploiters.

Cabello is the behind-the-scenes pragmatic bulldog of chavismo and he’s clearly the most relevant political leader within chavismo after the newly declared president-elect Nicolás Maduro.  Given the narrow victory that Maduro won, he may well now be chavismo‘s most relevant political leader.

That makes his rather subdued statement an important touchstone for where Venezuela’s ruling part is headed, and it’s somewhat more subtle than the full-speed-ahead, at-full-volume victory speech that Maduro delivered Sunday night.

Some background: he served as the governor of Miranda state from 2004 to 2008 — opposition candidate Henrique Capriles got his start in national politics in 2008 when he ousted Cabello by a seven-point margin to become the governor of Miranda.

Cabello has since 2012 been the president of Venezuela’s Asamblea Nacional (National Assembly), where the Partido Socialista Unido de Venezuela (PSUV, or United Socialist Party of Venezuela) and its allies control 96 seats to just 65 for the opposition.

If Maduro’s victory is not overturned following an audit of the election results, the next electoral test for chavismo will come in December 2015, when Venezuela holds its next scheduled parliamentary elections, and it seems fairly possible that Cabello and the PSUV could lose their majority.

Venezuela

LIVE BLOG from Caracas: Election night in Venezuela

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CARACAS, Venezuela — Polls closed at 6 p.m. (6:30 p.m. EST) and we have no results yet. Venezuela Flag Icon

Opposition candidate Henrique Capriles within the past hour tweeted that he was alerting the world that the chavista government is trying to subvert the will of the people.

Opposition leader Leopoldo López followed up with his own tweet warning the government that ‘we know what you know.’

That’s pretty aggressive.

Results weren’t announced in the October 2012 election until around 10 p.m., but an opposition campaign source noted a couple of days ago that the later the result is announced, the better for the opposition.

9:01 pm: Francisco Toro at Caracas Chronicles is reporting that a Capriles campaign quick count shows a very narrow lead for Capriles. That’s certainly more promising than an exit poll.

Meanwhile, at Capriles headquarters, the chairman of the Mesa de la Unidad Democrática (MUD, the Democratic Unity Roundtable), Ramón Guillermo Aveledo is very bullish. He says the opposition will wait for CNE (the National Electoral Council) to announce results, but threatens that the opposition will start announcing results if the CNE doesn’t. This is in contrast to a relative angrier and defensive appearance by Jorge Rodríguez, the campaign leader of the Partido Socialista Unido de Venezuela (PSUV, or United Socialist Party of Venezuela), who spoke earlier to note that turnout was high, and called for calm.

9:16 pm: We’re sort of in new territory now.   If Capriles has indeed won, and every indications from Capriles headquarters are that he has, there’s no precedent for a peaceful transfer of power.  But after 14 years of chavismo, it’s hard to know what come next.  Even if Capriles has lost by a narrow margin, we’re in for a long (and perhaps tense) night.  Stay tuned.

9:30 pm: The Capriles campaign has the same votes as the CNE, but winning more votes doesn’t mean that CNE will just stand down, announce Capriles the winner, and thereupon peacefully transfer power.  The key arbiter in this scenario would the armed forces, and many of their leaders have a vested interest in a win by chavista candidate Nicolás Maduro.  So though the army’s leaders emerged relatively early in the evening to assert their role in protecting the vote, if Capriles has won, don’t expect an announcement, but a lot of behind-the-scenes negotiations between Capriles HQ and Maduro HQ.  After 14 years in power, and 14 years spent disrespecting much of the tenets of a liberal democracy, it’s going to be a lot more difficult.

9:35 pm: When I talked to Capriles advisers on Friday morning, they warned that if Capriles does win more votes than Maduro, the most aggressive chavista supporters, gangs of armed partisans, may well incite violence.  This is why Capriles has regularly appealed to the military to keep the peace.

When I talked to López, he struck a cautious note as well:

‘We hope that the people will be a buffer to that, the people not only voting, but the people in the streets, people defining their commitment with a new face for Venezuela,’ he said. ‘[The chavistas of course will have the intention of using what they’ve always used — violence, intimidation, abuse of power. But it’s in the hands of the people in the streets to hinder that.’

9:52 pm: We’re approaching the time when October 2012 election results were announced, and there’s not yet any indication that the CNE is about to announce a result in this election. In that election, Chávez defeated Capriles by 10.76%.

9:55 pm: As I wrote on Friday, the difference between Chávez and Capriles six months ago was 1.6 million votes — Capriles won 6.59 million votes and Chávez 8.19 million votes. Assuming the same base in today’s election for Capriles (6.59 million votes), Capriles needed to get either 19.5% of the chavista base to abstain, 9.75% of the chavista base to switch to Capriles from Maduro this time around, or some combination of the two — say, by having 9.75% abstention and a Maduro-to-Capriles swing of 5%. That’s never been incredibly outside the realm of possibility, especially given the late-breaking momentum of Capriles and the defensive campaign that Maduro’s run.

10:05 p: We’re now awaiting the first bulletin from the CNE.

10:10 pm: My source in the Capriles campaign says they won. So all eyes are now on the CNE.

10:17 pm: Pots are banging in the Sabana Grande neighborhood in Caracas. That’s the cacerolazo traditional form of protest from the esquálidos, the opposition supporters — so named because Chávez called them the ‘little squalid ones’ once upon a time. It’s a far cry from the toque de Diana that I heard earlier this morning, the horns blaring a reveille for 13 minutes starting at 3:30 a.m., long a chavista tradition. The change, in 19 hours, from the chavista horns to the caprilista pots banging, is a metaphor for the change in the air today as the opposition has become increasingly optimistic.

10:22 pm: Gunshots are ringing out — a clear sign that the chavistas want to make some noise too.

10:32 pm: It’s worth noting for non-Venezuelan readers that Hugo Chávez didn’t go undefeated in elections over his 14-year rule. He lost a referendum in December 2007 when he pushed to amend the constitution to abolish presidential term limits, curb central bank independence, and allow the president to assert more control over the selection of state governors and mayors. That overreach — and the failure of the chavista electoral machine — showed that Chávez and the PSUV wasn’t invincible.

10:40 pm: While we wait for some further news about what’s happening at the highest levels of Venezuela’s power struggle, it’s worth noting that the MUD is a very diverse group of political parties that have banded together for electoral purposes. If Capriles wins, he’ll not only face a National Assembly that’s still dominated by chavistas and an entire state infrastructure, from the bureaucracy of the government to the courts to Petróleos de Venezuela, S.A. (PDVSA) dominated by chavistas, but a very wide coalition that includes many parties. The MUD has been more successful than a previous coalition attempt, the Coordinadora Democrática, which disbanded in frustration after Chávez won a referendum to recall him from the presidency by a lopsided 59.1% to 40.6% margin in August 2004.

10:49 pm: One of the issues that Aveledo mentioned earlier tonight was the importance of every vote being counted, especially the votes of Venezuelans abroad. There’s a lot of doubt that those votes will ever fully reach Caracas, and the Miami consulate actively stood in the way of largely anti-Chávez Venezuelan expats, who traveled to New Orleans to vote in both October and again in this election. Reports from the Caracas airport earlier today suggest that only one passport agent was available to allow expats back into the country, obviously back in the country for the purpose of voting.

11:00 pm: It’s been exactly five hours since polls closed across Venezuela, and so far, radio silence from the CNE.

11:14 pm: Here come the rectors at the CNE. Maybe we’ll have an official announcement shortly. At the podium.

11:18 pm: The official announcement from the CNE, with 99.12% of votes counted is 78.71% participation, is 50.66% for Maduro to 49.07% for Capriles. Hard to believe the Capriles campaign is going to accept this, so the long night is about to get even longer.

11:23 pm: Gunshots and music blaring here in Sabana Grande. The official count is 7,503,338 for Maduro and 7,270,403 for Capriles. But no one believes that right now. First question is whether the government is making this announcement with the full support of the armed forces. Second question is whether the opposition MUD will now announce their own set of results — they have access to the same numbers as the government, so it will be interesting to see how long it takes to call their bluff.

11:24 pm: Maduro is now addressing the crowd (yes, in a tri-color jumpsuit!)

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11:26 pm: Capriles will also address the Venezuelan people shortly.

11:35 pm: Maduro is saying that Capriles called and offered a formal pact, but he said no. Caracas is ablaze with the sounds of music and fireworks from Maduro supporters. So it will be interesting to see what Capriles has to say, presumably after Maduro is done with his speech at Miraflores. If this is the actual result, or if it’s fake, it certainly makes Maduro seem like he stole the election. As Francisco Toro writes at Caracas Chronicles tonight, it really is the worst-case scenario.

11:43 pm: The CNE and Maduro will support a full recount and audit of the votes.

11:46 pm: Does anyone know how many times he’s mentioned Chávez tonight? I’ve lost track, but at least a dozen.

11:52 pm: Maduro hasn’t even finished his speech (which I suspect has run so long to prevent Capriles from speaking anytime before midnight), but Argentine president Cristina Fernández de Kirchner has already congratulated him on his victory.

11:55 pm: Maduro is done speaking, so now the focus will shift to Capriles, who has a difficult task ahead of him. The 64,000-bolívar question is whether he accepts the CNE’s results (even with the audit) or declares his own victory on the basis of his campaign’s own information.

12:02 am: Actually, no, Maduro wasn’t done speaking. Here’s Fidel Castro’s response — simply, ‘Maduro’s won, the revlution continues.’ Not exactly a ringing endorsement.

12:11 am: OK, now he’s done, with a couple of ‘viva Chávez’ and a ‘hasta la victoria siempre.’

12:13 am: For the record, even if the CNE numbers ultimately turn out to be 100% correct, it would represent a drop-off of 680,000 votes from Chávez’s victory six months ago and a gain of 680,000 votes for Capriles. Turnout dropped by just 2%, so that’s around 296,000 votes, if we assume that that dropoff came mostly from the chavista camp. That means that 192,000 chavistas switched to Capriles, or Capriles picked up 384,000 new voters. Either way, it’s a huge victory for the opposition, given where he started a few weeks ago.

12:16 am: Here’s Capriles about to give his speech.

12:19 am: Holding up a stack of voting irregularities, Capriles denies Maduro’s story about a pact, calling him a liar.

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12:23 am: Capriles will not concede or accept the result until a full recount has been held of each and every vote.

12:26 am: Says that the MUD has a different result than the one announced, but doesn’t provide the actual result.

12:27 am: ‘My pact is with God and Venezuela.’

12:30 am: Capriles is taking an aggressive tone as ever with Maduro, saying that if he was illegitimate before, he’s still illegitimate and that the results do not reflect the truth in the country. Nonetheless, Capriles is not declaring victory outright — he’s holding back from that step, at least por ahora.

12:39 am: Major general Wilmer Barrientos: “Quiero felicitar al Presidente Electo Nicolás Maduro, usted es el jefe de la Fuerza Armada Nacional Bolivariana.” So that’s where the armed forces stand.

Photo credit to Kevin Lees — Caracas, Venezuela, April 2013.

Venezuela

A primer on PDVSA — and the interaction of oil and politics in Venezuela

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CARACAS, Venezuela — You’d think in Caracas that the governing party were the PDVSA, not the PSUV.Venezuela Flag Icon

But the state-owned oil company, Petróleos de Venezuela, S.A., functions as much as any other organ in Venezuela in service of the government, formerly headed by Hugo Chávez and now, Nicolás Maduro.

Indeed, a stroll through Caracas finds the PDVSA brand saturates the city — much more than the nominal governing party, the Partido Socialista Unido de Venezuela (United Socialist Party of Venezuela). Here’s a PDVSA-branded hopscotch:

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PDVSA (pronounce it ‘pay-duh-vay-suh’) was founded in 1976 when then-president Carlos Andrés Pérez nationalized the oil industry at the height of an oil boom the likes of which Venezuela had never seen. Venezuela’s oil industry began in 1914 when the first oil well was drilled in Mene Grande, in western Zulia.  It began exporting petroleum by 1918, and that soon eclipsed an economy once based largely on cacao and coffee — though cacao production was dwindling in the early 20th century, Venezuela exported more coffee than any country in the world other than neighboring Brazil.

Venezuela was the world’s leading oil exporter by the end of the 1920s — Caracas was known as ‘the gas station south of Florida.’ We think of the Organization of Petroleum-Exporting Countries (OPEC) as a largely Middle Eastern cartel today, but it was founded in large part in 1960 on the initiative of Venezuelan energy minister Juan Pablo Pérez Alfonso, who helped create it after reaching out to his ministerial counterparts in Saudi Arabia.

Through the next 40 years, Venezuela’s fortunes rose and fell with global oil price, but PDVSA remained relatively at arm’s length from the government — it paid income taxes and royalties to the government, as well as dividends (because it’s entirely state-owned).

This continued even after Chávez was elected — until 2002, that is, when Chávez attempted to take control of PDVSA, leading to a rebellion/coup attempt and a general strike among PDVSA employees later that year. Chávez, as it turns out, simply fired most of the offenders, and over the past 11 years, PDVSA has become essentially an arm of the government, which itself increasingly became an organ of chavismo.

So PDVSA employees today wear red, the color of chavismo, and over the past decade, PDVSA has been a direct contributor of funds to social programs, bypassing the formal channels of government — and also incurring its own liabilities (indeed, the IMF’s estimate of Venezuela’s public debt of around 51% includes PDVSA debts as well).

Whatever the benefits to deploying that capital for social welfare programs (and I’m not arguing for or against), it means there’s simply less capital to maintain production or develop new avenues for refining oil.

Rafael Ramírez, a loyal chavista, was appointed minister of energy and petroleum in 2002 and PDVSA’s president in 2004. If Maduro wins the election, it’s expected that Ramírez will stay in place — and so will continuity in oil policy under the Maduro administration. If Maduro replaces Ramírez, however, it could be an indication that he wants to shake up some of his predecessor’s policies.

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Oil proceeds represent around 95% of Venezuela’s exports, around 20% of its GDP and over 50% of the government budget. So what happens in the oil industry matters for what happens with Venezuela’s government and its economy. Continue reading A primer on PDVSA — and the interaction of oil and politics in Venezuela →

Venezuela

Photo essay: Political graffiti and street art in Caracas

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CARACAS, Venezuela — Apropos of nothing, I wanted to collect some of the more interesting shots of political graffiti I’ve captured this week in Caracas.Venezuela Flag Icon

Most of the graffiti, of course, promotes the late president Hugo Chávez and his successor, acting president Nicolás Maduro, and not opposition challenger Henrique Capriles.

I’ll say one thing, though, and this goes well beyond street art: if any of my friends want to run for politics, I’ll send them to Caracas to talk to the chavistas because, while Capriles has a rapidly deteriorating economy, an aggressive campaign, and a defensive and lackluster Maduro all working in his favor, Maduro remains the favorite because the chavistas certainly know how to win votes.

Of course, standard political campaign banners abound throughout the city:

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But even five weeks after his death, Chávez’s presence dominates the city, even on its sidewalks and on its buildings:

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In fact, even the ‘libertador’ himself, Simón Bolívar has more street cred than Maduro:

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Here’s a commemoration of the 2011 bicentennial of the Venezuelan Declaration of Independence:

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But that’s not to say that Maduro isn’t a common enough presence (both in favor and against):

image Continue reading Photo essay: Political graffiti and street art in Caracas →

Venezuela

Livin’ la vida seca — the election dry law takes effect in Venezuela

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CARACAS, Venezuela — Imagine that following former prime minister Margaret Thatcher’s death last week, the United Kingdom implemented a week-long period banning the sale of alcohol.Venezuela Flag Icon

Or that in the weekend leading up to the 2012 U.S. presidential election, Americans would be unable to find a drink, forcing Americans to  become public teetotalers.

But Friday night at 6 p.m., that’s exactly what happened in Venezuela in advance of the presidential election on Sunday — the ley seca takes effect, which means that no alcohol can be sold publicly in the country, through at least next Monday.  It’s the third time in five weeks that the ley seca has been in effect — thirsty Venezuelans were out of luck for a week following the death of former president Hugo Chávez, and they were out of luck again during semana santa, the Holy Week.

In Venezuela, though, it’s just another obstacle to be overcome.  In a country where the official exchange rate between dollars and bolívares and the black market rate can be up to 400% different, there will certainly be a way around

So around 6 p.m. tonight, if you were grabbing beers at a corner bar, for instance, your bartender might have switched out your bottle of beer into a more discrete, opaque cup.  Venezuelans, especially, have practice getting around laws where economic incentives make breaking the law more efficient than upholding it.  Prohibition in the United States in the 1920s, and really, the ‘war on drugs’ in the past 40 years in Latin America and the United States are illustrative.

Though in a country of perfectly fine aged dark rum, Venezuela is one of the world’s top whisky importers and imbibers, I withhold any judgment as to Venezuelan taste.

So bottoms up — and happy election weekend!

Photo credit to Kevin Lees — Caracas, Venezuela, April 2013.

Venezuela

Capriles campaign optimistic with 48 hours to go — but can it win?

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CARACAS, Venezuela — The national headquarters of Henrique Capriles on Friday morning buzzed with optimism, with less than 48 hours to go before polls open in a race that many have judged hopeless for the opposition.Venezuela Flag Icon

In the wake of a rally in downtown Caracas last Sunday that brought hundreds of thousands of supporters to rally behind Capriles (without having to bus in massive numbers of supporters from across the country, as the chavista candidate Nicolás Maduro did in a similar rally on Thursday), and in the wake of a widely ridiculed comment by Maduro that a little bird told him that the spirit of Hugo Chávez blessed his campaign, Capriles campaign advisers are optimistic that their candidate has the momentum going into Sunday’s election, especially as voters realize the extent of Venezuela’s rapidly tumbling economy in recent months.

But Maduro, who is hoping to win a full term in his own right after the 14-year rule of his predecessor, Chávez, has everything else — the implicit support of the structure of the entire government, the armed forces, the state-owned oil company, plenty of resources, and significantly stronger media presence.

Though election law prohibits the publication of polls in the week prior to the election, polls are rumored to show Capriles closing a gap with Maduro — one such poll allegedly shows Maduro with a narrowing 55% to 45% lead, and Capriles’s internal polls show a massive swing as well. But whittling down Maduro’s lead and winning the election are two different things.

Leopoldo López, the former mayor of Chacao (one of five municipalities, and generally the ritziest, within Caracas) from 2000 to 2008, is one of the rising stars of the opposition. Chávez’s government barred López from running for office until 2014, a move that brought the censure of the Inter-American Court of Human Rights. In 2009, he founded Voluntad Popular, a centrist party that’s a member of the broad opposition coalition, the Mesa de la Unidad Democrática (MUD, Democratic Unity Roundtable).

‘I’m excited about change, I’m excited about the real possibility of winning, I’m excited about Venezuela opening a new cycle,’ Lopez said on Friday morning at Capriles headquarters. ‘The worries? What the government could do to put a stain on what will happen. This is not a regular election. This is not Bush-Clinton, this is not Candidate A versus Candidate B. This is a race against a state. I doubt there are other democracies where there are [such] clear differences in terms of the abuse of power. In this case, this is PDVSA, the state oil company, and the other powers of the state, against the people. But we have great faith the people will make the difference.’

The executive director of the MUD, Ramón Guillermo Aveledo (pictured above, with Caracas mayor Antonio Ledezma and other top MUD officials at his right, rejected outlandish charges made in recent days at a press conference earlier today at Capriles headquarters as well.

Here’s the arithmetic. Continue reading Capriles campaign optimistic with 48 hours to go — but can it win? →

United States, Venezuela

A conversation with Ambassador Patrick Duddy

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CARACAS, Venezuela — For what it’s worth, here’s some more of the conversation from last Friday with Patrick Duddy, who served as the U.S. ambassador to Venezuela from 2007 until 2010 and who kindly gave me nearly a half-hour of time to discuss current U.S.-Venezuelan relations.

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The late president Hugo Chávez ejected Duddy from the country on September 11, 2008, though Duddy returned a few months later, and I was curious as to his view of U.S.-Venezuelan relations especially because he served under both U.S. presidents George W. Bush and Barack Obama.

Obama’s appointee to succeed Duddy, Larry Palmer, was rejected out of hand by Chávez in 2011, and the post continues to remain vacant.  Palmer now serves as ambassador to Barbados and the Eastern Caribbean.

Duddy, a veteran U.S. diplomat, has served throughout Latin America, including Brazil, Paraguay, Chile and Bolivia.

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On the policy differences between the administrations of George W. Bush and Barack Obama on Venezuela:

It would be easier to underscore the commonalities between the Bush and Obama administrations. I served as ambassador from 2007 to September of 2008 for President Bush, and then as you know, I was expelled on Sept. 11, 2008, spent some months out of the country, [and] returned the next summer as President Obama’s ambassador…

Both administrations, while I was ambassador had a pretty clear message which was we thought… both sides would benefit from a more productive relationship.

On Maduro and potential U.S. relations in a Maduro administration: Continue reading A conversation with Ambassador Patrick Duddy →

Venezuela

Venezuela marks coup anniversary in leadup to election

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CARACAS, Venezuela — On April 11, 2002, a large band of opposition supporters marched on Miraflores — the presidential palace — were met by chavista supporters, and exchanged gunfire meters from where Hugo Chávez and his advisers were sitting. A handful of protestors died and ultimately, in the following hours, Hugo Chávez left power for 47 hours. Right-wing businessman Pedro Cardona shortly took occupation of Miraflores, though his suspension of the National Assembly and failure to secure the support of Venezuela’s army slowly isolated him, and the Venezuelan army itself restored Chávez to power on April 14.Venezuela Flag Icon

On April 11, 2013, exactly 11 years later, Chávez’s supporters, having freshly mourned their fallen leader last month, will mark the final day of the snap presidential campaign in a massive rally for his successor, acting president Nicolás Maduro, throughout Caracas.

I don’t want to spend too much time rehashing what’s now become history, legend, and political fodder. It’s famously difficult to know just exactly what happened back in 2002, whether it was technically a full golpe (a coup d’etat) or not, the full role of the army in both pushing Chávez (briefly) from power and restoring him, who opened gunfire on whose orders, or even how many people died. But it came in a particularly tense year of transition, and it’s generally accepted that the coup — much like the general strike later that year — came as a result of Chávez’s ultimately successful attempt to assert control over the state-owned oil company, Petroleós de Venezuela, S.A. (PDVSA).

The quintessential film on the subject, despite its pro-Chávez leanings, is a documentary, The Revolution Will Not Be Televised, shot by an Irish film crew that just happened to be in Miraflores working on a piece about Chávez when the April 11 events rapidly spun out of control.

Another account — one that I think gets closer to the heart of the matter, despite the fact that it’s written by someone who has decidedly anti-Chávez sentiments, comes from Francisco Toro, one of the authors of the Caracas Chronicles blog, which posits that both Chávez and his opponents, having played brinksmanship games for months, finally went too far, leaving the Venezuelan army in the middle to keep both sides from escalating the bloodshed that day.

Though it’s eleven years later, and there haven’t been any coup or near-coup attempts since, it’s not without some irony that the anniversary hangs over Venezuela tensely three days before voters decide whether to reward chavismo with another six years in office or to turn to opposition alternative Henrique Capriles.

There’s been some discussion in the Venezuelan media over whether the armed forces are being deployed to help get out the vote for the governing Partido Socialista Unido de Venezuela (PSUV, or United Socialist Party of Venezuela), though military officials have backtracked from that claim in recent days. Capriles in an interview with El Universal earlier this week forcefully argued that Maduro and the PSUV should respect the election results, and cautioned that the armed forces would be responsible to ensure a peaceful transition. Though Chávez managed to commingle politics into every aspect of the state — from PDVSA to the central bank to state government — the military has retained relatively more of a patina of independence from politics than other state institutions.

Polls, which are not quite accurate in Venezuela, gave Maduro an edge in the leadup to the election, but that doesn’t mean Capriles is hopeless — he won a tough reelection as the governor of Miranda state in an otherwise dismal set of regional elections in December 2012 after placing just 11% behind Chávez in the October 2012 election — a better showing than any of Chávez’s rivals stretching back to 1998. Maduro is no Chávez, and since the 2012 presidential election, Venezuela’s economy has only gotten worse, and there’s been no appreciable improvement in the standard of living, some of the continent’s worst crime and power shortages throughout the country.

Because everyone assumes that Maduro will somehow find enough votes to win the election, no one really knows how easily Maduro and the chavistas would transfer power. Continue reading Venezuela marks coup anniversary in leadup to election →

Venezuela

Not a banana republic, but an avocado economy

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CARACAS, Venezuela — Since the end of the Bretton Woods system, or at least since the end of the ‘currency snake’ in Europe that preceded formal monetary union, it’s become difficult not to think about currency in terms other than a floating price determined on the free market.Venezuela Flag Icon

Sure, China still sets its own currency, and the renminbi may well be undervalued, but that matters less to China because its whole macroeconomic game is exporting. Manufacturers from a factory in Guangdong province assemble their goods, sell them to the United States, and promptly turn over their dollars to the Chinese government, which then exchanges them for renminbi. That’s how China ended up with such a glut of dollars in the early 2000s, and that’s why relatively fewer exports could mean fewer dollars, which could be one of the few market pressures to cause U.S. bond yields to rise after five years of historically low borrowing costs for the U.S. government.

Of crude oil and curses

But in Venezuela, there’s one major export — oil — and that revenue is in the hands of the government. In one sense, economics in Venezuela or in any other petrostate is pretty facile: when the oil price goes up, the country has a boom; when the oil price goes down, the country goes bust. That’s why the oil crisis 1970s and early 1980s were such a great time for Venezuela but such a bad time for the United States, why the cheap-oil era of the 1990s was so bad for Venezuela and, conversely great for the United States. It’s why Hugo Chávez was riding so high in the early 2000s, and why the brief drop in oil prices with the global financial crisis in 2008 and 2009 was bad for Venezuela as well as everyone else.

Unlike China, which had a $231 billion trade surplus in 2012, however, Venezuela’s trade surplus masks its growing dependence on imports, and so the key market for dollars is among those who import those goods (and for Venezuelans who want to take business trips — or shopping trips — to Miami).

For lots of reasons,there are disincentives for homegrown production in Venezuela. Many of those reasons have to do with the behavioral economics aspects of the ‘resources curse’ and the petrostate, but they also include the uncertain business climate under the last 14 years. Why start a farm in 2003 when the Chávez government might decide to expropriate it on live television in 2008?  So the country is increasingly importing even those products, such as fresh produce, that it could arguably grow for itself more efficiently. It’s even started importing refined oil products rather than develop the capital to clean the ultra heavy crude that comes out of the ground in Venezuela. A similar dynamic exists in Puerto Rico, where the U.S. government intervened in the 1950s with subsidies for industry during ‘Operation Bootstrap,’ thereby decimating the boricua agricultural sector to this day — produce in tropical San Juan is imported from Florida, Texas and California.

Of dollars and devaluations

Today, the official rate of the Venezuelan currency, the bolívar, is 6.3 per U.S. dollar.

But no one actually pays that, especially these days.

There’s a black market rate, rumored to be up to four times the official rates, a tourist rate that’s discounted a little from the going black market rate, and even a couple of weeks ago, when the Venezuelan government auctioned off dollars through a new system called SICAD (Sistema Complementario de Administración de Divisas) to currency-starved importers, they didn’t release the price for which the dollars sold, but it’s rumored to be something like between 10 and 15, which is quite a devaluation from the 6.3 rate.

It’s still technically illegal for local media to report any black market rates for the bolívar, of course — through March, at least, you could follow the price through a plucky Twitter account, which slyly presented the daily price for ‘fresh avocados.’ That account — and another one, for ‘fresh lettuce,’ shut down after Venezuelans, their businesses starved for vital dollars, lost their bolívares in a twisted online scam.

The new SICAD dollar auction comes after a formal devaluation in February, which lowered the rate from 4.3 bolívares to 6.3.

It’s fairly common for people to talk about two devaluations, in fact — the first formal devaluation of the official exchange rate from 4.3 to 6.3, and the second informal devaluation, whereby Venezuelans may have been buying dollars from the government for as high a price as 15 bolívares.

(Oh, by the way — the actual price of an avocado? I bought a huge one today for 60 bolívares. A tube of imported toothpaste manufactured in the United States, which is subsidized, costs just 20 bolívares. Another example of the distortions in a heavily-subsidized economy that depends on imports for many of its staples.) Continue reading Not a banana republic, but an avocado economy →

Venezuela

Maduro campaign active on penultimate campaign day in Caracas

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CARACAS, Venezuela — One morning spent traipsing through Sabana Grande and Altamira is all you need to know who has the greater resources in Venezuela’s snap presidential campaign.Venezuela Flag Icon

It’s clear that election activity is very much in full swing. In the heart of cosmopolitan Caracas — and even in the eastern districts that are wealthier and which you’d expect to be very much behind opposition candidate Henrique Capriles — the more pronounced street presence belongs to the chavistas and their candidate, acting president Nicolás Maduro, the hand-picked candidate of his late predecessor, Hugo Chávez (pictured below in effigy in Altamira earlier today), notwithstanding a massive rally last Sunday on the Avenida Bolívar in support of Capriles.

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It’s astonishing the extent to which the Maduro campaign is really just a rehash of the October 2012 Chávez campaign — at one booth on the Sabana Grande, a Maduro volunteer handed me a poster of el comandante himself with a pamphlet describing Chávez’s 2012 campaign plan for the next term. While it’s a function of facility, there’s also certainly no electoral downside for Maduro in making Chávez very much his 2013 running mate.

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Capriles signs are few and far between, but they do exist and they are around, though I certainly didn’t see much in the way of boisterous caravans of Capriles supporters in the way that red-shirted chavistas paraded throughout the city today:

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I didn’t see much in the way of anti-chavista or anti-Maduro graffiti, though it’s very much in favor of Maduro — and in opposition to Capriles. Here’s one building with the words ‘un gran cobero,’ a slur that roughly translates to ‘big liar’ in Venezuelan slang, against Capriles that Chávez was known to use in the 2012 campaign:

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I’ve never been to a country with such a basketcase economy (more on that later), Maduro has less personal commitment and charisma than Chávez had, Capriles has run a much more aggressive campaign, and polls even showed the race tightening last week. So there’s really no way to extrapolate a Maduro victory just because the government has more resources to use to bring carloads of supporters out or to print more posters to hand out. But if one morning and afternoon stroll is worth anything (and it’s anecdotal, nothing more), Maduro has the upper hand — the key, of course, is whether the ground game on Sunday will turn out as effectively.

Photo credit to Kevin Lees.

Venezuela

The political geography of Caracas

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When you fly into Caracas, you fly into Maiquetía on the coast — at basically sea level, Maiquetía is everything you’d expect from a sweltering, languid coastal climate in the Caribbean.

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The coast is really just a narrow strip of land, the ‘Litoral Central,’ prone to mudslides and which has a coastal attitude separated from Caracas proper by a mountain — El Ávila, which rises 8,000 feet from the coast before cascading back down into a valley of around 3,000 feet.

That’s Caracas, there in the valley, which enjoys more temperate weather than the coast from which El Áliva separates it. But as the city has grown exponentially to include up to 3 million residents since its initial burst of oil-fueled growth in the 1950s, Caracas has expanded out from the valley and into the mountains above.

So when you come into Caracas, you drive first from the coast up to the mountains, where your first impression is a sea of shanties in the barrios overlooking the valley.

Though there’s an east-west socioeconomic divide (unlike London, Caracas’s east side is tonier), the central geographic feature of Caracas is that the higher up you go, the poorer it gets.  Like Lima (pictured below) or the famous favelas of Rio de Janeiro, the best real estate is owned by the poorest residents of the city.

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That’s ultimately at odds with the norm throughout much of the rest of the world, where the highest real estate belongs to the wealthiest. Think about New Orleans in 2005 — the wealthier Ninth Ward was spared the brute force of Hurricane Katrina that essentially destroyed lower-lying areas. Think of New York, and the consistent march of the aristocracy uptown in the 19th century. The same holds true of Los Angeles County and the Hollywood Hills, or of Montmarte in Paris or even cities like Port-au-Prince. I can’t find the link, but I’ve read studies that indicate this was because higher-elevation real estate was originally healthier when cities originally developed — farther from the sewage and other microbes further below.

Today, there’s not much risk of cholera or other 18th century illnesses afflicting anyone at any altitude in Caracas. But of course, much of the poverty in Caracas, and the corresponding violence that afflicts Caracas, (that’s made Caracas increasingly one of the most dangerous cities in the world), takes place in the barrios far higher than the valley below.

Top photo credit to Caracas1010a, bottom photo credit to Kevin Lees — Cerro San Cristobal, Lima, November 2010.