July 2009 Archives

While I am a huge fan of the Reuters Factbox, sometimes they don't act quickly enough to put one together of what I want. So, with all due respect to the Reuters LatAm crew, consider this my inaugural version of the Factbox : the MaestroFile. This episode's topic is Colombia-Venezuela trade, so that I have something handy to refer back to when discussing how Hugo's threat to cut off trade relations with Colombia will screw the Venezuelan people more than anyone else.

• In 2008, Venezuela imported $6 billion worth of Colombian goods. Colombia imported just over $1 billion worth of goods from Venezuela.

• Venezuela is Colombia's second-largest market for exports, after the U.S.

• Venezuela depends on Colombia for basic goods such as dairy, meat, clothing and, more strategically, imports 300 million cubic feet of natural gas a day, twice as much as originally agreed upon. PDVSA needs the gas for its oil reservoirs to increase pressure and boost production, and as raw material for its petrochemical industry.

• Colombian exports to Venezuela actually rose 17% in 2008 from the previous year.

I've finally set aside some time to read the GAO report on Venezuela released a couple weeks ago that everyone's chattering about, "U.S. Counternarcotics Cooperation with Venezuela Has Declined." The main talking point on this so far has been to focus on Venezuela's evolution as a major transit hub for hemispheric narcotics trafficking, principally thanks to entrenched government corruption. While Venezuelan authorities claim to have their own counternarcotics operations, the GAO finds caveats with just about every one of them. From the Venezuelan government's standpoint, the report is hypocritical, a political ruse, a distraction, a lie, among a host of other objections.

The report purports to determine:

1. What is known about cocaine trafficking through Venezuela;
2. What is known about Venezuelan support for Colombian illegal armed groups; and
3. The status of U.S and Venezuelan counternarcotics cooperation since 2002.

And I suppose it does its job. But to be honest, none of it will really be news to anyone even remotely paying attention (sections are headed by such lucid titles as "Venezuela is a Major Drug Transit Country" and "Venezuelan Lifeline to Illegal Armed Groups Threatens Colombian Security"). What the report does well is aggregate in one place what everyone already knows. You know, instead of pointing to some Reuters article here, a Bloomberg report there, some Daily Telegraph article over there, oh and don't forget the Economist, and of course everyone loves a good octopus story.

And that's just since the beginning of 2008. If we wanted to go back further, well I have saved to file a number of other articles whose links have gone dead so I won't point you to those, but an LA Times dispatch is still up from March 2007, as well as Bloomberg/EFE, and El Universal, and Newsweek, and Foreign Policy editor Moises Naim...I think you get the point.

I mean really, after a while, your eyes start to go blurry from it all.

I am referring, of course, to the economist, not the conquistador.

Here's the paragraph from yesterday's New York Times article on Venezuelan cacao farmers that grabbed me :

"We could be a world leader with cacao, what beef is for Argentina or rice for Thailand," said Jorge Redmond, Chocolates El Rey's chief executive, reflecting on the industry's upheaval. "Instead we're faced with 52 different permits to export a container of our product, compared with four steps to export when Chávez came to power."

There can only be one place to go from this paragraph, and that's the World Bank's annual Doing Business report, largely inspired from de Soto's pioneering work on the obstacles to economic progress in developing countries. The annual survey ranks 181 countries around the world according to how easy it is to do business in them. Since it's a been a while since I've perused this, I thought this was as good a time as any just to remind everyone where Venezuela sits on the global spectrum of red tape. More commentary after the jump:

To protest against the government's bid to criminalize protest, a demonstration set up in front of the Public Prosecutor's office, initiated by PROVEA, which featured several dolls that emulate protesting workers and police repression. Source : diario La Voz

Any person who discloses information that is considered a "false" or "manipulated" and that would "harm the interests of the State" or "public morale", could spend up to four years behind bars. Article 5 of the draft for the Special Law Against Media Offenses, presented today to the National Assembly by prosecutor Luisa Ortega Díaz, states: "Any person who, through a medium of social communication, discloses false news causing serious disruption to public tranquility, panic or anxiety among the populace, disrupted public order, or damaged the interests of the state, shall be punished with imprisonment from two to four years." Ortega Díaz defines in the text the following as "media crimes": "The actions or omissions affecting the right to timely, truthful and impartial information, which attack social peace, security and independence of the nation, public order, stability of state institutions, mental health or morals, that generate a sensation of impunity or of insecurity and that are committed through a medium of communication."

Jorge Ramos and Co. have just dug this gem up: a December 5, 1998 interview with Hugo Chávez, the day before he was elected president for the first time. In sum, Chávez said that he would leave office after 5 years of rule, would not nationalize any company and would leave Venezuelan television channels in private hands. Oh, and he also called Cuba a dictatorship without any hesitation.

Looks like what El Presidente needs is a bit of the old Fletcher Reede treatment:

From the daily Correo del Caroní: The promise of improving domestic gas service was not compatible with the nationalization of gas vendors, as evidenced by the huge queues filling the entrance to the now state-owned PDVSA Community Gas Company. A long queue of buyers came forth Tuesday on Cisneros Avenue in San Felix in the state of Bolivar. Many consumers were there since before 5 a.m. and some recalled with nostalgia the days of so-called "estanteros" who sold the product in neighborhood grocery stores.

President Chávez announced the withdrawal of the ambassador to Colombia, Gustavo Márquez, and said he decided to freeze relations with Colombia in response to accusations that the Venezuelan government had supplied weapons to FARC rebels. "Faced with this new aggression from the irresponsible government of Colombia, I have ordered that our ambassador be withdrawn from Bogotá. We are going to freeze relations with Colombia. On the Colombian side, unfortunately, the government is not serious, we have made efforts, we have extended a hand, but enough is enough, we will withdraw not only the ambassador, but all senior officials, the economic relationships will freeze, we will replace imports from Colombia, none of this is indispensable," he said. "The next aggression against Venezuela, of this type or similar type of signal or accusation, will simply result in breaking relations with Colombia's government and we will prepare ourselves for that in every respect, economic trade, we will expropriate the Colombian-owned businesses here, Uribe, you expropriated Monómero over there, hang on to that, it's yours." He also warned that "we will be looking at every Colombian company that has a presence in Venezuela."

Mark Leon Goldberg interviews Peter Hakim of the Inter-American Dialogue for the UN Dispatch blog about the Honduras situation. Hakim calls the situation an aberration in the region and says it points more to the weaknesses of the OAS as it concerns regional governance. In response to a question about whether or not a new regional mechanism is needed to promote stability and democracy in the Americas, Hakim answers as follows, during 1:15 to 3:30 of the abbreviated interview here, which corresponds to 14:50 to 17:10 in the full interview, accessible here.

"What is clear is what the challenge is, what the problem is emerging for democratic rule in Latin America does not have to do with the kind of overthrow, the kind of coup d'etat that we saw in Honduras. What we are witnessing is a first for many countries, a deterioration of democracy in the sense that presidents have used the mechanisms of democracy - elections, referendums - to essentially acquire more and more power, centralizing power, become the center of decision making and fundamentally reducing the ability of opposition groups to function. In other words, it's more the erosion of democratic rule, the erosion of the rule of law and the centralization of power, and not the kind of abrupt coup d'etat that often happens over many years. We're witnessing probably its most egregious turn in Venezuela, where it's hard to call Venezuela a democracy anymore. But there was no one-day-to-the-next break the way we saw in Honduras where the leader was ousted or where from one day to the next the country moves from democracy to a form of authoritarian rule. Over the years we've seen Hugo Chávez certainly eliminate many of the elements that are normally considered essential for democratic governance."

At La Cañada de Urdaneta in the state of Maracaibo, the neighborhood was still asleep. A massive explosion, a cloud of dust and the movement of the columns supporting houses woke the neighbors up with a shock. They came to their windows and saw two houses disintegrated and their remains on the pavement. Nothing remained. Firefighters reported that the explosion was caused by the accumulation of gas. The tally : one dead and 15 wounded, two houses gone and seven others damaged.

Yon Goicoechea, a Venezuelan law student at the Universidad Católica Andrés Bello and one of the main organizers of the Movimiento Estudiantil Venezolano (Venezuelan Student Movement) takes the opportunity to pay homage to Judge Alicia Torres, recently suspended from her post for refusing to sign an illegal order to ban Globovisión television executive Guillermo Zuloaga from leaving Venezuela. Unlike a lot of the chatter in Venezuela, his opinion is short and to the point, which makes for nice reposting to this blog (see the original in Spanish here). And unlike a lot of the chatter in Venezuela, the piece is also notable for its reconciliatory underpinnings. Rarely in political environments as polarized as Venezuela's does one see someone from one side willing to acknowledge the good done by anyone from the opposing side. Precisely because it so difficult to find both of these characteristics present in so much of the dialogue (or monologue, as the case may be) in Venezuela, I thought it worth translating and posting the entire opinion here. And for those keeping tabs, we are entirely open to alternative suggestions for English translations of the word, "caudillo".

To Judge Torres

No matter if she supports Chávez or not, Judge Torres defended our freedom

Weeks ago, Judge Torres boldly went public with the revelation that she was pressured to sign a decree banning Guillermo Zuloaga from leaving the country. Her nervous statements on television showed a woman not grounded in politics but in the law and reminded thousands of lawyers (like myself) of the obligation to be an impartial judge.

Today, as in most of our history, the military sticks its nose in the Supreme Court's business, creating the legal paroxysm in which we live. That armed officers may be planted in a judge's court to force that judge to issue a ruling is a sign of a society without law. The most serious concern is that this fact affects just a few of us, but this can be explained. The majority in our country have never had access to the judiciary and for them the Supreme Court did not exist and does not exist today, so its independence is of little concern. Nobody defends what is not theirs.

In a country with famine, the lack of independent judges is an intangible concept. In the end, justice is elusive, not easily made for television viewing, full of archaic 19th century formalities and, in general, not very close to the daily reality of the average Venezuelan. For the Judiciary to be democratic, two conditions are necessary: independence and accessibility. Never in the history of Venezuela have these two conditions existed concurrently, so institutions such as the Supreme Court therefore have no foundation or social validity in the country and consequently are vulnerable to strong-arming.

There is no freedom without the rule of law, there is no rule of law without a constitution and there is no constitution without independent judges. In this regard, Judge Torres defended our freedom, and, regardless of whether or not she supports Chavez (internal sources say she does), she deserves recognition. In her statements, she said: my job is to "treat each case as it deserves to be treated."

With that, she reminded those of us practicing law that what we learned in college has not been lost.

Russia and Venezuela signed an agreement yesterday in Caracas that "will expand and better planning" to their bilateral military exchanges, which have increased markedly in recent years. The "Statute of the Russian-Venezuelan intergovernmental commission for military technical cooperation" was signed after a meeting held by President Hugo Chávez and Russian Deputy Prime Minister Igor Sechin. "This expands and enhances planning and regularizes cooperation between states. It not so much a client-supplier relationship, but a more formal level of binational cooperation," Chávez said. "We have no plans to attack anyone, only to defend ourselves," Chavez explained, without commenting further on the agreement. The agreement will interaction between the two countries' armed forces, to include everything from the sale of arms to the execution of joint maneuvers utilizing technology. "Military cooperation will now have a permanent and binational body whose task is to provide continuity and consistency and will extend cooperation beyond the mere acquisition" of weapons, diplomatic sources said.

On the heels of Spanish Foreign Minister Miguel Ángel Moratinos' tour through South America seeking contracts for an accompanying Spanish business delegation, Spanish journalist and political analyst Hermann Tertsch, a former member of the Euskadi Communist Party, has some rather forceful words to say about his government's willingness to engage with President Chávez. The original interview with Periodista Digital is in Spanish here, with what I consider to be the most damning commentary translated after the jump.

BBO Research chief Miguel Octavio has two new pieces in the Latin American Herald Tribune that are worth checking out, one on the latest Cadivi chatter regarding a "second" parallel market for dollars and the other on where Venezuela's fixed income financing antics are set to go from here on out. After the jump, I'm going to first quote what I consider the most noteworthy takeaways from these and then add my own observations at the end.

The foreign minister of Israel, Avigdor Lieberman, said that the "influence" of President Chávez in other South American countries "will strengthen the radicals in the region." "The interference (of Chavez) in the internal affairs of various South American countries, with money and funding of political campaigns in other countries, is a very negative influence. I think his intention is to exert dominance in South America," Lieberman said in an interview published yesterday by the Argentine newspaper La Nación. The diplomat, who between last Thursday and Friday met senior officials and businessmen in Buenos Aires, also characterized the government of Venezuela as a "radical regime" that maintains "close ties" with Iran, a country considered "a threat for the whole world. " The director general of the Israeli Foreign Ministry for Latin America and the Caribbean, Dorit Shavit, said last Friday that Caracas offers "false documents to the Iranians" for traveling through the region. Lieberman came to Argentina last Thursday, where the largest Jewish community in Latin America resides, and yesterday began travelling to Peru and then Colombia, the last leg of his tour of South America.

Edward Schumacher-Matos, who is the Miami Herald's ombudsman, calls for the ouster of OAS chief José Miguel Insulza in today's Washington Post, a day after Insulza himself defended the OAS's role in the very same pages. Insulza's chief offenses so far, according to Schumacher-Matos, are inflaming the Honduras crisis and embracing Cuba's admission to the OAS without setting the appropriate terms of admission. There are certainly more rabid anti-OAS stances out there but none (yet) calling explicitly for Insulza's resignation to my knowledge. The heart of Schumacher-Matos' argument comes toward the end:

I don't know what is in Insulza's heart, but I am more generous toward him. I have known him as a dedicated, sometimes shrewd public servant and democrat. He is limited by the need for consensus among the 34 members of the OAS and, it seems, by the trauma of the bloody military coup by Augusto Pinochet in his own country 36 years ago. He couldn't see that Honduras was different.

The outdated OAS Inter-American Democratic Charter, meanwhile, is designed to prevent coups, but it restricts the OAS from getting involved in internal maneuvers such as packing courts and gutting opposition parties under democratic guise that are the bigger threat in the region today.

The OAS, moreover, is a presidents club. Congresses and courts aren't represented. Presidents tend to be more sympathetic toward reelection and the use of measures such as plebiscites to expand their power.

None of that excuses the harm that Insulza himself has done in Honduras. He has shown no respect for its constitution or institutions. He has been tone-deaf to the need for trust and legitimacy for democracy to work.

Hondurans are right to worry that Zelaya, even if returned in a national unity government, will resort to more demagoguery, as Chávez did after he was temporarily ousted in a 2002 coup. What Insulza should be doing, but isn't, is searching for formulas that allow all the pieces to be put together again in a way that protects real democracy in Honduras and the hemisphere.

Rule of law and its total absence in Venezuela is not important because of political prisoners, nor because of opposition politicians barred from elections, nor because of silenced journalists or even seized property. The rule of law is so important in Venezuela because our assumption of its existence constrains our ability to engage successfully with Chávez. For examples, look no further than OAS Secretary General José Miguel Insulza who, after meeting with Ledezma and opposition members, said he couldn't pass comment on Chávez's deconstruction of state and municipal rights because "it's a decision of the courts."

The fact that Chávez has taken over the courts and brandished them as political weapons must be viewed in parallel with his treatment of the constitution and his methodology of power being projected outward. A new governing model has been created for export, which in the absence of separation of powers and constitutional legality is neither a democracy nor a dictatorship, but an authoritarian-style state which uses elections not for representation, but to lend popular legitimacy to institutional destruction. It may look and smell like a democracy to fawning movie stars and celebrity athletes of the vanguard left, but the core is rotten and lawless.

But nowhere in Venezuela comes close in abductions to Barinas, with 7.2 kidnappings per 100,000 inhabitants, as armed gangs thrive off the disarray here while Mr. Chávez's family tightens its grip on the state. Seizures of cattle ranches and crumbling infrastructure also contribute to the sense of low-intensity chaos.

Barinas offers a unique microcosm of Mr. Chávez's rule. Many poor residents still revere the president, born here into poverty in 1954. But polarization in Barinas is growing more severe, with others chafing at his newly prosperous parents and siblings, who have governed the state since the 1990s. While Barinas is a laboratory for projects like land reform, urgent problems like violent crime go unmentioned in the many billboards here extolling the Chávez family's ascendancy.

"The Organization of American States should not be a coroner of dead democracies, but rather should be devoted to helping them avoid dying, and that is what it is trying to do in Venezuela - kill our democracy." Clear and definitive were the three opposition leaders who met yesterday with OAS Secretary General José Miguel Insulza: Caracas Mayor Antonio Ledezma, and two of the five governors of opposition, Táchira governor César Perez Vivas, and from Zulia, Pablo Pérez. "Mr. Secretary General, the OAS has the opportunity to vindicate itself with America, to demonstrate that it can serve a purpose, that it is not reduced to a meeting of presidents who protect each other." This was the request of Ledezma, who at the beginning of the month went on a hunger strike of five days in front of OAS headquarters in Caracas to demand payment for City Hall employees and a meeting with Insulza. After delivering a document spelling out the violations of the Magna Carta and the Inter-American Charter by the Chávez government, the leaders demanded from the secretary-general "a statement about this risky situation that threatens the peace of Venezuelans and places democracy at a breaking point." "Venezuela's democracy seeks relief," was the unifying theme of the leaders, "it is at risk because it is being dismantled by a president who has perverted the virtues of democracy to handcuff democracy."

Caracas Mayor Antonio Ledezma, Zulia Governor Pablo Pérez and Táchira Governor César Pérez Vivas, accompanied by human rights lawyer Gonzalo Himiob, met with OAS chief José Miguel Insulza in Washington today. Following is a direct translation of the preliminary footage posted by Cadena Global:

Antonio Ledezma, Pablo Pérez and César Pérez Vivas Perez met with the Secretary of the OAS José Miguel Insulza, to demand answers on the democratic situation in the country.

According to the lawyer and human rights specialist Gonzalo Himiob, who is accompanying Pablo Pérez, César Pérez Vivas and Mayor Antonio Ledezma, the meeting with the OAS Secretary General Jose Miguel Insulza met the group's expectations of raising awareness of what is happening in the country.

The mayor of Caracas and two opposition governors on Monday asked the OAS to intervene in Venezuela to avoid the "constitutional fraud" perpetrated by President Chávez, before it turns into a crisis or social unrest. "We bring the problem to the OAS, they will have to find mechanisms to avoid a crisis and bloodshed," said the governor of Táchira, Cesar Pérez Vivas, at an event held by the think tank Council of the Americas in Washington. "Venezuela is a political and social time bomb", with a president who would be push forward a campaign of polarization that is "fertile ground for social unrest," said Pérez Vivas. The mayor of Caracas, Antonio Ledezma, who along with Pérez Vivas and the governor of Zulia, Pablo Pérez, will meet today with the OAS Secretary General José Miguel Insulza, said that in his country "an expansive constitutional fraud has been developing."

Following up on my discussion last week of PDVSA's petrobono, the second tranche of the 2011 issue has indeed auctioned for 190% of face value, bringing in $3 billion with it, for a total across both tranches of $5.6 billion. A few things to bear in mind at this point as we continue watching this:

• Hugo has made good on his pledge to raise $5bn in debt financing by September. While this is impressive from the standpoint that he actually convinced enough counterparties to lend that much money to the government, Miguel Octavio has pointed out that the majority of this is likely to be local banks looking for a hedge against continuing bolivar devaluation in the parallel market.

• Increasing indebtedness at some point will bring the bolivar down further, as Barclays analyst Alejandro Grisanti explains. As reported recently by Dow Jones:

While the country's debt levels in terms of GDP "is relatively low compared with its peers in the region, we think the increase in the space of a year is exorbitant," Grisanti wrote.

The increase in local debt this year could make a devaluation of the currency more attractive in order to "diminish the proportion" of bolivar denominated debt in its accounts, Grisanti said in the report. Barclays expects a devaluation of the bolivar, which is pegged to the dollar at an official rate of VEB2.15, in the first quarter of 2010.

• Still no word on how the bond issue will trade on the secondary market despite a pledge to have this up and running by today, July 20. But in the meantime the bolivar has continued declining in the parallel market.

We'll be able to draw some more new conclusions when we see how this bond prices in the secondary market. But realize that every time PDVSA ups the bid price on a particular bond issue, as it has done with this one (180% to 190% of face within weeks), it is tantamount to the government endorsing a continuing slide in the bolivar in the parallel market.

Mac Margolis examines Venezuela's brain drain in the current issue of Newsweek. Brain drain of course is not unique to Venezuela, nor is it new. What changes is the data. The latest:

• The outflow of highly skilled workers, ages 25 and older, from Venezuela to OECD countries rose 216 percent between 1990 and 2007, according to a study released by the Latin American Economic System, an intergovernmental economic-research institute.

• A recent study by Vanderbilt University shows more than one in three Bolivians under 30 had plans to emigrate, up from 12 percent a decade ago, while 47 percent of 18-year-olds said they planned to leave.

• As many as 4,000 former PDVSA staff are now working overseas following a disagreement with Chavez-installed leadership.

• Until 2003, researchers at PDVSA's Center for Technological Research and Development generated 20 to 30 patents a year. Last year it produced none, even though its staff had doubled.

• PDVSA produced 3.2 million barrels of crude oil a day when Chávez took control. Now it pumps 2.4 million, according to independent estimates.

• The number of papers published by Venezuelans in international scientific journals has fallen from 958 to 831, a nearly 15 percent drop, in just the past three years.

• An estimated 9,000 Venezuelan scientists are currently living in the U.S.--compared with 6,000 employed in Venezuela.

The Lebanese Islamist group Hezbollah has established a unit in La Guajira a province of on the northeastern Colombia near the border with Venezuela, said a senior official of the Israeli Ministry of Foreign Affairs. The director for Latin America and the Caribbean from the Foreign Ministry of Israel, Dorit Shavit, warned in an interview with the Bogota daily newspaper El Tiempo, published yesterday, that this cell corresponds with the policy of penetration in Latin America that Iran launched at a conference held in 2005. The penetration "includes the opening of embassies with many diplomats and the increase in number of diplomats in existing embassies, such as those in Uruguay and Chile, " Shavit said. The official said that "Iran opened embassies in Managua and in Bolivia, has one in Colombia and is making efforts in Panama and Peru." Also, "Iran has signed more than 200 cooperation agreements with Venezuela and uses this relationship to reach more countries," said Shavit. He noted that Iran, which is "strategic enemy of Israel" has "a line of direct flights between Tehran and Caracas" that seems "not commercial, because no tourist goes there, just technical personnel, diplomats and other types of persons."

In our recently published White Paper, we detailed a series of cases in Venezuela highlighting a severe pattern of abuse by government officials in judicial cases against political opponents and critics - only one of whom is Eligio Cedeño.  Often the victims of this political takeover of the courts are the prosecutors and judges themselves, who get caught in the crossfire between carrying out their ethical and professional duties as civil servants of the court, while at the same time facing threats to their careers, families, and physical safety.  Judge Yuri López, who was forced out of her job, threatened, and suffered an attempted kidnapping of her son, all because she admitted a legitimate order filed by Cedeño against the false testimony of government foficials, was recently in Washington to raise awareness of the pressures placed against judges in Venezuela.

Today, there is more unfortunate news from Venezuela.  The criminal justice Alicia Torres of the 13th Circuit has publicly denounced being politically pressured by the President of the Criminal Justice Circuit, Venice Blanco, to issue an immediate order to prevent Guillermo Zuloaga, the beleagured president of the opposition channel Globovision, from leaving the country (revoking his travel priveleges).  Below is a video of Torres's interview, followed by a translation of an article about the judges accusations against Blanco.

We should take a moment here to add that Venice Blanco also played a role in the campaign of persecution against Cedeño, as she was the control judge back in 2007 who obediently issued an illegal order for his imprisonment - based not only a complete lack of evidence, but unbelievably, prosecutors had not even formally charged him with a crime yet.  It is difficult to imagine such legal corruption and absurdity happening in too many other countries.

PDVSA President Rafael Ramírez continued his attack on opposition governors yesterday. He introduced a document to the public prosecutor that links paramilitary actions to Táchira's Governor César Pérez Vivas, whom Ramírez requested an investigation of said that he would eject from the regional government. Ramírez also went to San Cristóbal and participated with red party activists and officials in a march, guarded by police, that passed by the local government headquarters, painting walls and hurling objects at the building.

From the Press Office of the Governor of Miranda:

The facts

From 5:30 in the morning, a picket of the National Guard, composed of about 120 officers, violently took the headquarters of the Curiepe Police in the state of Miranda. The troops also launched tear gas and shots, beat several of the demonstrators, leaving several wounded, including an elder who was hospitalized after being seen seriously affected by the gases as well as a cameraman for RCTV, who merited 5 stitches in the face.

The governor of Miranda state, Henrique Capriles Radonski decried the events of Curiepe and stated that "Venezuela is the only country in the world where the National Guard comes to a police station to eject the police officers."

He reiterated that President Chávez said that in Honduras there is a "Gorileti", but Venezuela is a "Gorilonzo", referring to the commander of the National Guard. "Several times I have said, those who hide behind arms and the uniform - do not be cowards. I invite the commander of the National Guard to remove the uniform and become part of a political party. That is the sad reality of the Bolivarian National Guard serving as a militia of a political party "

The Secretary of Government of Miranda, Adriana D'Elia, said today that Miranda police will work from the headquarters of the Cultural Center of Curiepe. "We will not go and leave our people helpless, because the most important thing for the governance of Miranda is safety."

Complete photo coverage here from Noticiero Digital.

The Miami Herald is also carrying the story.

More than fifty newspapers around the country employing more than 800 people between journalists, administrative staff and workshop personnel are on the verge of a cessation of operations due to lack of paper, because during the last few months the Currency Administration Commission (Cadivi) has not cleared the outstanding debt with companies that import raw materials. So said the National Press Workers' Union in a statement to the media, in which it stressed that if Cadivi does not pay these debts to firms that import paper, the firms do not have the possibility ordering new imports. "This situation has put some 50 odd provincial daily newspapers at risk of stopping circulation and as a consequence at least 800 jobs. Several daily newspapers are already working with a small paper reserve," says the union.

There's been a lot of chatter lately about PDVSA's recent bond issue, all of it rightly concerned, some of it helpful and very little of it that effectively tells the entire story for those not following this closely. So I'm going to try to clear that up here, first reviewing the chronology of relevant events, followed by what makes this bond issue different from both what PDVSA has done in the past as well as how the rest of the world issues debt, and then I will conclude by building upon some observations others have made about this event.

Human Rights Attorney Gonzalo Himiob Santome exposed Venezuelan President Hugo Chavez's judicial corruption at a press conference at the National Press Club on Wednesday.

"Several cases... have proved that the judicial system in Venezuela has been deteriorating in order to be used as a weapon for persecution and intimidation of the opposition and the political dissidents," Himiob said.

Himiob was in Washington D.C to introduce a book he and attorneys Robert Amsterdam and Antonio Rosich wrote that documents the case of Eligio Cedeno, a victim of repeated human rights violations by the Venezuelan government.

Press Briefing/Congressional Hearing on Honduras from Inter-American Dialogue on Vimeo.

From the standpoint of New York, the Venezuela economy is in decline. At least that is the conclusion of the macroeconomic risk rating agencies Fitch Ratings and Standard & Poor's (S&P). Fitch's vision: In a telephone interview, Fitch Ratings warned of a 1.3% fall in Gross Domestic Product (GDP) at the end of 2009. "We've seen domestic production has been deteriorating, and the national accounts, especially private consumption, are weakened," said the sovereign risk analyst for Venezuela, Erich Arispe. For the end of the year, the agency estimates that the Venezuelan oil basket averaged $48 a barrel, based on Brent averaging $55. The vision of S&P: Standard & Poor's forecasts a 2% retraction of GDP this year, and a recovery of 1.5% in 2010. "Most of the growth of the private sector has contracted significantly," said Roberto Sifon-Arevalo, an analyst at S&P. He stated that inflation remains high, impacted by restrictions on access to official foreign exchange. "We are expecting an inflation rate of 32%," he said. He confirmed that the outlook on the rating of the country remains negative, both in the sovereign risk as well as for Petroleos de Venezuela (PDVSA), even though the oil company has for the first time found itself rated below the sovereign.

With darkly sarcastic wit, the opening of Woody Allen's 1971 satire "Bananas" featured a fictitious Central American country, the Republic of San Marcos, where a Howard Cosell-like sportscaster was providing the pre-event coverage of a presidential assassination as though it were a spectator sport.

"They're going to kill the president of this lovely country," the announcer beams, "and replace him with a military dictatorship. Everybody is about as excited and tense as can be."

Thankfully President Manuel Zelaya was not harmed during his ouster, but still, more than two weeks on from the Honduras coup, the sense of surreality has come back big time.  How else could one of Latin America's least popular presidents, coming from the highest echelons of the decrepit ruling elite from one of the continent's smallest, poorest, and most insignificant countries, become an overnight hero of international democracy? 

Complex Geopolitics

Lula displays appreciation for Chavez, a foreign policy that observers classify as nonconfrontational

By Sergio Leo in Brasilia
VALOR

In order to defend the insertion of Venezuela in Mercosur - action which was criticized and threatened to be rejected by the Senate - an ambassador devoted two days to visit congressmen in Brasilia. What was unheard of, in the diplomat's efforts to defend the Venezuelan, was his origin: he was not the ambassador of Venezuela in Brazil, but the office holder at the Brazilian embassy in the country presided by Hugo Chávez, Antônio Simões, who traveled to Brasília for the task. The senators were surprised - this is only an example of the Brazilian government's effort to keep the relationship with the neighbors in good shape.

Workers from Alcasa, Venalum, Bauxilum and Carbonorca remain in permanent assembly and for the second consecutive day planned new demonstrations until they receive answers from the authorities regarding labor liabilities and rescue plan for the companies. Union leaders and workers of the aluminum subsidiaries of the Venezuelan Corporation of Guayana (CVG) yesterday launched a wide protest, putting aside their political differences and taking to the streets of Puerto Ordaz, demanding investment, technological upgrading, and a general clean up of the management of the companies. They furthermore demanded their pension fund to pay social provisions, such as food, and for the right to take vacations, which have been suspended so far due to lack of resources.

It was a state secret in Colombia. A top official in the Colombian government confirmed to El Tiempo that the FARC would have gained at least 20 missile ground-to-air IGLA S24 missles. These are the latest generation missile developed by the Russian military industry capable of striking a plane at an altitude of 6 kilometers. The Colombian government has alerted the pilots of the Colombian Air Force. "In recent years we have grappled with the rockets (RPG). Many times we have seen, like a flash on the side of the helicopter, but a missile is another thing and we consider ourselves informed," said a military pilot. The source reported that some of these missiles have been purchased in Venezuela.

In a communique, the International Association of Broadcasting (IAB) criticized the revocation of concessions by Conatel from 240 AM and FM radio stations in Venezuela and described the measure as an "unprecedented" attack against freedom of expression. The IAB rejected the "legal precariousness" in light of the fact that the government has kept hundreds of radio stations, and said that the failure to provide the appropriate title transferrals pursuant to the Organic Law of Telecommunications since 2000, "constitutes a breach of the law by the authorities of that country, that our association has repeatedly denounced."

The following is a translation of a recent column by Teodoro Petkoff published in TalCual about the Venezuelan president's mishandled attempt to intervene in Honduras, "practically begging" for the empire to return Zelaya to power riding on top of a gringo tank. One note on the translation - "Chacumbele" is name given to Hugo Chavez by Petkoff, referring to a rather Pyrrhic character who is vanquished by his own ambitions in Cuban mythology.

The Pitiyanquis
By Teodoro Petkoff
Tal Cual, July 8, 2009

One thing that we hadn't yet seen on this banana continent is Hugo Chavez and Manuel Zelaya asking, almost begging, for the intervention of the empire in Honduras. For once in its long career of ousters against its "backyard," the empire is behaving with discretion and prudence, disassociating itself from the only Latin American military coup that they didn't bring about, and take note that the "anti-imperialist" Chacumbele demands that the empire stick its nose into Honduras. As he doesn't dare to attack Obama head on, he explains his conduct by pretending he is a "hostage to the empire" and that this is why he can't take action. Equally pathetic, if not more, is Zelaya. An old pitiyanqui, after all, like all of the oligarchs of his country, among whom he is one of the most conspicuous, having said nothing less than "Obama, who has so much power, must take action in Honduras." End of the world. Zelaya wants to return to power riding on top of a gringo tank.

Venezuela condemned the statements that U.S. Secretary of State Hillary Clinton made to a television channel, and described as a "clumsy and aggressive signal" from Washington to Caracas, the Foreign Ministry said in a statement yesterday. "At a time in which efforts are made to improve relations with the government of the United States" Clinton "repeated the old practice of judging Venezuelan democracy and the sovereign relations that our country has with other nations," according to the text. "The concepts issued by the Secretary are an awkward and aggressive signal from the United States to Venezuela, Latin America and the Caribbean," it continued. On Tuesday, in an interview with private television station Globovision, Clinton noted that the government of President Barack Obama advocates a "vibrant democracy" in Venezuela, one which "does not interfer in the internal affairs of other countries." However, the diplomat also questioned the political and economic alliance between Iran and Venezuela, which she said is "unintelligent" and "not appropriate to the interests of the world." Regarding Venezuela, she said "it is hard to believe that intentions to mend bilateral relations are sincere when they also calculate such unfriendly acts," which the Chavez government rejects as the "disrespectful gesture" and "merits a correction," according to the communiqué.

With the assurance that the secretary general of the Organization of American States (OAS), José Miguel Insulza, and the other members of the body "do not continue turning to the other side," the Mesa de la Unidad opposition coalition planted itself yesterday in front of OAS representatives in Caracas. In a complaint against the "blinded and deafened OAS," which included a hemispheric agenda item "deeper and older than that of Honduras, namely the recurrent violations" that President Chávez's government has committed against the constitution and the popular will. The gesture was in support of the Caracas mayor Antonio Ledezma (ABP), on hunger strike since Friday, for the deteriorating functionality he is suffering. "These [violations] the OAS does not see at all. Why does the OAS pay attention to some countries and not for others?" asked panel spokesman Henry Ramos Allup (AD), joined by authorities of the fourteen parties constituting the opposition alliance.

The 2009 Failed States Index has just been released, a fifth annual collaboration between Foreign Policy Magazine and the Fund for Peace, ranking 177 countries according to a range of economic, political and social indicators. Considering the ease with which some people tend to throw this term around, I am compelled to open the discussion here with some attempt at agreeing on just what it means for a state to be "failed". Robert I. Rotberg, director of the Kennedy School of Government's program on intrastate conflict and conflict resolution and president of the World Peace Foundation, offers this summary of what qualifies:

"Failed states have two defining criteria: They deliver very low quantities and qualities of political goods to their citizens, and they have lost their monopoly on violence."

I've spent a couple of days looking through the guts of this study, in part to put together an analysis of C.I.S. countries for the main page of this blog but have also reordered the rankings to zero in on Latin America. Pop out the box at the right to see the sample of countries in question or go to FP's website for the entire survey. More discussion of Latin America after the jump.

The opposition mayor of Caracas has spelled out the following demands in Noticiero Digital:

1. The OAS appoints, with urgency, a high-level commission to come to Venezuela to observe the plight of democracy in our country, how the Constitution has been violated and our national sovereignty been made a laughingstock.
2. Immediate delivery of salaries to mayoral employees whose jobs have been cut.
3. Immediate end to the process of decommissioning the Caracas Metropolitan Mayoralty.
4. Recognition that the legitimacy of the governors of Miranda, Zulia, Tachira, Carabobo, Nueva Esparta and the mayor of Metropolitan Caracas has been unjustifiably rejected.
   

The mayors of Chacao, Baruta and the Hatillo, along with the wife of the ex-mayor of Maracaibo, Evelyn Trejo de Rosales, called on the Organization of American States (OAS) to "turn its glance toward Venezuela", as an affirmation of respect for democratic governance in the continent. "The OAS is not only in charge meddling in the problems of other countries but also to ensure that democracy is fulfilled. I ask of those friendly with this organization to see to the problems of Venezuela", said Trejo. The former first lady of Maracaibo and the local authorities Emilio Graterón (Chacao), Gerald Blyde (Baruta) and Miriam Do Nascimento (the Hatillo) presented themselves to the Caracas headquarters of the organization to offer its endorsement of metropolitan mayor Antonio Ledezma, who has been on a hunger strike for more than 48 hours, in protest of the central government's rejection of Ledezma's legitimacy as mayor of Caracas. Ledezma and a group of workers confirmed this Sunday that they will not advance their protest efforts until obtaining a statement from the OAS.

As reported by Enrique Flor:

The Venezuelan government holds 26 political prisoners in jail for being opponents of President Hugo Chávez and dozens of persecuted who have been subjected judicial causes, according to Gonzalo Himiob, author of a recently published report that compiles these alleged violations.

Himiob visited last week in South Florida to discuss the report, entitled "Bolivarian Rule of Lawlessness".

According to Himiob, the case of Otto Gebauer, a soldier who guarded Chávez, his temporary removal from duty on April 11, 2002 and subsequent sentencing to 12 years in prison, and that of Eligio Cedeño, an opposition businessman jailed two years ago, are two cases that are emblematic of the repression in Venezuela.

"We are living with an absolute and permanent violation of human rights as state policy, there is more than sufficient evidence," said Himiob, who is Cedeño's attorney.

President Chávez will advance today the consolidation of his socialist model with the nationalization of the Banco de Venezuela, the third in the country, which, along with the rest of public bank holdings will guarantee to the State the management of 21% of deposits in the banking system. Analysts estimate that the transformation of the state into a powerful competitor in the banking sector will significantly increase the Chavez administration's influence over the economy. The importance that the government has given to nationalizations has been such that from 2007 to date some $23 billion has been provided, or 76% of the country's international reserves, for the acquisition of more than twenty companies, according to calculations by Econalítica, a local private firm. In the case of the Banco de Venezuela the government announced it will pay $1.05 billion (about 750 million euros) to the Spanish group Santander, which managed the institution since 1996 after its privatización. With this acquisition it is estimated that the government will dominate 16.8% of loans and 21.13% of deposits and will have 651 agents and a payroll of 15,340 employees, which will turn it into the largest bank in Venezuela by a wide margin.

The new president of Honduras, Roberto Micheletti, accused Venezuelan President Hugo Chávez today of being responsible for the current political crisis in Honduras. "The intervention of the Venezuelan government is clear and defined in the situation we have in Honduras," he said in a press conference. Micheletti, who on the decision of the country's parliament took office after the ejection of President Manuel Zelaya last Sunday. Micheletti asked why the OAS and other agencies "did not realize what was happening in Honduras," and said Zelaya was associated with drug trafficking from Venezuela, the frequent country of origin of planes landing in Honduras loaded with cocaine. "We have strength and faith in God that little by little, we will succeed in convincing the world that we had to make this decision for reasons of legality, by law and the Constitution of the Republic" he said.