<a href=www.vheadline.com>Venezuela's Electronic News Posted: Wednesday, April 02, 2003 By: Patrick J. O'Donoghue

Second National Assembly (AN) president, Noehli Pocaterra forecasts that the long-delayed truth commission will be up running within  15 days.  Pocaterra, who has been House truth commission liasion since the commission burst on to the House agenda a year ago, admits that there are still a few points to discuss. 

"There is still a problem of who will sit on the committee ... the opposition wants 9 members and the government bench favors 11." 

The government, Pocaterra says, proposes a representative from the evangelical churches to counterbalance the Catholic Church representative and another to represent universities in the provinces. 

Movimiento Quinta Republica (MVR) hack, Omar Meza will president the committee, which independent observers say, could become just another slanging match between government and opposition.

<a href=usinfo.state.gov>News from the Washington File 02 April 2003 (Acting Assistant Secretary at Senate Foreign Affairs Committee) (4910)

Although the Bush administration is currently engaged with events occurring elsewhere in the world, "this does not mean we are neglecting" the issues closer to home in the Americas, says Curtis Struble, the State Department's acting assistant secretary of state for the Western Hemisphere.

During April 2 congressional testimony in which he offered an overview of U.S. policies in Latin America and the Caribbean, Struble said the United States is deeply engaged in negotiating a hemisphere-wide free trade area, making significant contributions toward increasing regional security, and sustaining work to improve governance in the Americas.

Struble said the administration is using public diplomacy to broaden "public outreach" in Cuba, explain U.S. objectives in Colombia, conduct media campaigns in Haiti to deter immigration, and build support throughout the hemisphere for free elections.

The United States, he told the Senate Foreign Relations Committee, is working toward a "public diplomacy strategy of broad, continuous engagement with all levels and age groups" of societies in the Americas. While the administration has increased efforts to engage those who shape public opinion, Struble said, "we also need to reach out to the average voter and the successor generation in ways that will deepen the understanding Latin Americans have of the United States on a personal level."

This means, Struble said, "more vigorous information outreach programs, creating opportunities for person-to-person interaction, and actively listening to what our neighbors are saying."

Struble said the hemisphere is at a "critical juncture" in its economic and political development. The weaker and more vulnerable economies of the region have been badly hurt by the combination of a U.S. economic slowdown, a more risk-averse attitude among international investors, and the effect on tourism and hemispheric trade resulting from the September 2001 terrorist attacks against the United States, he said.

But at the same time, Struble added, "there are encouraging signs that the framework for success has been built throughout the region." As examples, he cited economic development in Mexico from the North American Free Trade Agreement, Chile's strong economic performance, and the predominance of democracy in the hemisphere, "which has brought freedom to every nation" in the region except Cuba.

Detailing U.S. help to several trouble spots in the region, Struble said Washington has provided Colombia with almost $2 billion since July 2000 to combat the intertwined problems of drug trafficking and terrorism. These resources, he said, have strengthened Colombia's democratic institutions, protected human rights, fostered socio-economic development, and mitigated the effect of violence on civilians. In addition, Struble praised the U.S. Congress for passing the Andean Trade Preference and Drug Eradication Act, which he said created new jobs and new hope for Colombia's people.

On Cuba, Struble said President Bush has made clear that a rapid, peaceful transition to democracy characterized by strong respect for human rights and open markets in that country remains one of Washington's most critical foreign policy priorities. Struble regretted, however, that U.S. efforts to encourage democratic reform and transition in Cuba were answered by the Castro regime's recent arrests of dozens of opposition leaders and representatives of independent civil society, "in the most significant act of political repression in years."

The situation in Venezuela also continues to deteriorate, Struble said, which undermines that country's democracy and economy while threatening regional stability. The only politically viable solution for Venezuela, Struble continued, is a peaceful, constitutional, democratic electoral process agreed upon by both the government and the political opposition. He added that the dialogue led by the Secretary General of the Organization of American States "remains the best hope for Venezuelans to reach such a solution."

Struble said democracy also remains at risk in Haiti. The Caribbean Community (Caricom), he said, has worked closely with the United States to restore a climate of security in Haiti, which will lead to a return to full democracy through fair and free elections.

The Bush administration is optimistic about the region, Struble said, "because our problems are not intractable. We can overcome existing challenges together and bring a free, secure, and bright future to all the peoples of the hemisphere."

The following is the text of Struble's prepared remarks:

.......The situation in Venezuela continues to deteriorate, undermining Venezuela's democracy and economy while threatening regional stability. We must help Venezuela find a solution to the current impasse to avoid further harm. The only politically viable solution is a peaceful, constitutional, democratic electoral process agreed upon by both the government and the opposition. The dialogue led by the OAS Secretary General remains the best hope for Venezuelans to reach such a solution. The proposals tabled January 21 by former President Carter -- either a constitutional amendment to enable early elections or an August recall referendum -- present viable options to break the impasse..........

(end text)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: usinfo.state.gov)

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By Daniel DeNoon WebMD Medical News Reviewed By Michael Smith, MD

March 27, 2003 -- It's important to keep up with what's going on in the news. But when is it time to turn the TV off?

On the day of the World Trade Center and Pentagon attacks -- and for many days thereafter -- Americans learned what it was to watch too much TV news. Some people even developed serious psychiatric problems from the trauma of it all. We wondered how much TV was too much. And we wondered how much our children should see. Experts warned us to limit viewing, and to keep track of what our kids were watching.

As the current war in Iraq stretches on, we are beginning to ask ourselves the same questions. Some of the answers are the same. But some things are different, says Paul Kettl, MD, professor of psychiatry at Penn State University's Hershey Medical Center and specialist on the psychological impact of TV disaster coverage.

"It's a matter of degree," Kettl tells WebMD. "It is certainly a good thing to know what is going on. But being glued to the TV is not good. People who spend all of their time watching TV news coverage can become more frightened, more withdrawn, and maybe even more depressed."

It can be like getting stuck in quicksand, agrees media expert Robert J. Thompson, PhD, director of the Center for the Study of Popular Television at Syracuse University, N.Y. Thompson remembers watching the news coverage of the tragic Columbine school shooting hour after hour until he finally snapped out of it.

"Be careful -- if you're sitting in front of war coverage for three hours, ask yourself if this is really what you want to do," he tells WebMD. "There is a quicksand effect to this stuff. So be aware how much it is informing you and how much you are just wallowing in it. Wallowing is not good. It sets up a relationship with this coverage that might not be healthy."

Kettl's advice is to keep informed, but to watch no more than an hour of TV news each day. Even if you then turn TV off, there's one more thing to do.

"Remember there are people in your house not as politically sophisticated as you are -- your children," he says. "You should talk with them about what we are doing over there, and ask them what their concerns are. Ask your children what they are worried about, and address those concerns. And be sure to tell them someone will always be around to help them."

That brings up an interesting point, Thompson says. We certainly must protect children from graphic images they are not mature enough to handle. But when news organizations show only abstract images, he says, we lose touch with the real significance of what we are seeing on TV. War is, after all, traumatic.

"We have the most sanitized ways of covering news of anyplace else in the world," Thompson says. "The result is a sense of abstraction. We have no way to connect with what this really means. We are not getting the full picture. On the other hand, what if we did get it -- how would that affect the mental health of the nation? A heavy dose of really serious warfare could be really harmful to some viewers. That would be one of the costs of delivering journalism that intimately."

Thompson says that to a large degree, Americans already protect themselves from getting an overdose of war coverage. He points out that even on the first night of the current Gulf War, a rerun of a Friends episode drew more viewers than war coverage.

"The public has found its own psychic equilibrium," Thompson says. "We watch a little war, then ease our minds with entertainment. We taste a little bitter war and then have the cleansing sorbet of situation comedy."

SOURCES: Paul Kettl, MD, professor of psychiatry, Hershey Medical Center, Penn State University, Hershey, Pa. Robert J. Thompson, PhD, director of the Center for the Study of Popular Television, Syracuse University, N.Y.

Nelson Lara

Durante el mes de mayo del año pasado la Coordinadora Democrática tomó la decisión de integrar en un solo equipo de trabajo las Comisiones de Estrategia de la CTV, de Fedecamaras, de Gente de Petróleo, de los Partidos Políticos y de la Sociedad Civil. En ese mismo mes se acordaron los mismos objetivos, los mismos tiempos, el mismo rumbo y los mismos medios para lograrlos. La conclusión fue el diseño de una estrategia, que hemos denominado de cerco. Una estrategia sustentada por principios legitimados en el documento firmado por todas las organizaciones integrantes de la Coordinadora Democrática el 5 de Julio de ese año y ratificados en el día de hoy en la lectura del Profesor Manuel Caballero.

El primer objetivo de nuestra estrategia es cambiar el presidente, pero no como sea. Y es aquí donde reafirmamos en la práctica nuestros valores democráticos, de libertad, pluralismo y convivencia pacifica, por ello tomamos la ruta electoral y apelamos al pueblo venezolano para que con votos ice nuevamente la bandera de la democracia en Miraflores. El segundo objetivo se refiere a la reconstrucción de Venezuela, a las difíciles decisiones públicas que habrá que tomar para avanzar hacia una calidad de vida digna de los venezolanos y en consecuencia hacer viable la gobernabilidad. Este objetivo está siendo intensamente trabajado en la actualidad para establecer un programa mínimo de consensos, que saque del debate político temas de primera prioridad nacional, como por ejemplo, la lucha contra la pobreza. Complementado con una sólida vocación de incluir a todos los venezolanos. El odio, la retaliación y el atropello que hoy sufrimos no permitiremos que se repita. Venezuela nos necesita a todos.

En tal sentido, empezamos afirmando que la Coordinadora Democrática no solamente ha tenido una estrategia claramente definida, sino que la estrategia de cerco sirvió de referencia para la toma de decisiones a lo largo del año 2002 y durante el desarrollo del paro cívico nacional. Es de cerco porque representa el efecto de una acción pro activa envolvente que se afinca en el terreno constitucional y que apunta al logro de los objetivos definidos. Es de cerco porque reacciona ante los incentivos que introduce cada Articulo violado de la Constitución y de las Leyes de la República, especialmente la Ley de Salvaguarda del Patrimonio Público, transformándose en una ofensiva de respuesta contra Chávez y su gobierno, expresada en protestas y denuncias formales apoyadas con gigantescas movilizaciones de calle ante la Fiscalía, Defensoría del Pueblo, Asamblea Nacional, Contraloría General de la República , CNE y Tribunal Supremo de Justicia, instituciones hoy suficientemente probadas en sus limitaciones de autonomía. El cerco aprieta también en el escenario internacional. Surge la solidaridad con el pueblo venezolano. La presencia del Centro Carter, del PNUD y del Secretario General de la OEA, impulsaron la constitución de la Mesa de Negociación y Acuerdos y luego la formación del Grupo de Amigos, lo que viene a configurar la ventana de la verdad, para a través de ella develarle al mundo la terrible verdad venezolana.

En el mes de Febrero pasado ajustamos la estrategia. Pasamos de la Estrategia de Cerco a la Estrategia de Cerco con Salida. Es conveniente subrayar que en ella no se descarta ningún instrumento electoral, ni tampoco ningún escenario constitucional. Se tuvo el cuidado de contemplar objetivamente los niveles de maniobrabilidad del tipo de jugador con quien se confronta, por lo que no habrán sorpresas. En éste marco estamos frente a una realidad y es que los tiempos establecen que faltan apenas 144 días para empezar a transitar la opción del Referendo Revocatorio. De allí que en los próximos días la Coordinadora Democrática iniciará un despliegue nacional de movilización de cuadros de trabajo para organizar la totalidad de la estructura en todas las mesas electorales. Una estructura electoral capaz de movilizar y defender cuatro millones de votos para cualquier tipo de elección.

Por otra parte, los tiempos del gobierno se acortan y la fecha 19 de Agosto como mitad del período presidencial actúa como un tic tac de una cuenta regresiva que exige la mayor eficiencia y efectividad de cada actor de la oposición. Por eso aprobamos la política de que no se quede una organización de la Coordinadora Democrática o una individualidad en toda Venezuela sin una responsabilidad especifica en la Estrategia de Cerco. 144 días, a lo largo de los cuales, estallará con más vehemencia el concepto “Chávez contra la sociedad”, expresado por una alta conflictividad económica, social y política, el hambre y el desempleo, el colapso de los servicios de salud, educación y seguridad, deudas públicas salariales incumplidas, represión y violación de los derechos humanos, terrorismo y narcoguerrilla, el ataque a los medios de comunicación social y el puntillazo final enfocado al aparato productivo, al sector comercio y a lo que queda de la industria petrolera. La respuesta es entonces “La sociedad contra Chávez”. Toda mujer, todo hombre, toda organización, debe asumir una posición de vanguardia en la lucha por la solución de los conflictos sociales. Cuando muere un niño por desnutrición o por falta de recursos en la Maternidad Concepción Palacios, Chávez enfrenta la sociedad, entonces vamos a darle una respuesta. Y es aquí es donde cobra especial relevancia la Red Nacional de Asambleas de Ciudadanos con las cuales se aspira incorporar a todo venezolano en oposición para establecerle su espacio de lucha por el rescate de la democracia venezolana y en consecuencia pasar de ser una multitud aislada a ser una multitud organizada. En pocas palabras, es transformar la fuerza en poder.

La estrategia de cerco necesita de una organización especial para su ejecución y por ello se dedicaron varias semanas de esfuerzo no sólo a su diseño, sino a reforzar el concepto de construir la unidad en la diversidad y es lo que permite hoy asegurar que todos y cada uno de nosotros empujamos en el mismo sentido, sin impaciencia, sin atajos, seguros de lo que hacemos, basándonos en la razón, ciudad por ciudad, pueblo por pueblo, caserío por caserío, hasta acabar con ésta pesadilla y devolverle la paz a Venezuela.

José Bové is going to be here, and Ignacio Ramonet of Le Monde Diplomatic, and Danielle Mitterand…a virtual who’s who of the most clueless strata of the antiglobalization movement. The occasion is the chavista commemoration of the glorious events of April 11th-14th, and the government sponsored festivity can be expected to dissolve into three days of feverish hero-worship for President Chávez.

Among the lesser known, but perhaps most dangerous, of the featured speakers is one Mark Weisbrot, co-director of the grandiloquently named Center for Economic and Policy Research. A member in good standing of the DC leftist think-tank community, Weisbrot strikes me as the most dangerous kind of chavista apologist, because the propaganda he publishes out of CEPR comes cloaked in the stylistic conventions of academia, and that makes it look to the uninitiated like more or less credible independent analysis. If you’ve followed the issues he covers, though, you can recognize his writing as more or less unadulterated government propaganda. In a sense, what’s most remarkable about his analysis is its failure to go an inch beyond tired old chavista arguments founded on misrepresentation and enjoying near-zero credibility among anyone who knows anything about the issues at hand.

Through his latest CEPR Briefing Paper, coauthored with Simone Baribeau, Weisbrot joins the chavista campaign to sling mud at Venezuela’s state oil company, PDVSA, and specifically at the way it used to be run in the pre-Chávez era. This he does with all the intellectual honesty of, well, a chavista.

Weisbrot attacks on several fronts, all deeply misleading. At the center of his critique is the claim that PDVSA’s fiscal contributions to the Venezuelan state are significantly lower now than they were immediately following nationalization in 1976, or when compared to other state-owned oil companies in the region. “In fiscal year 2001,” he writes “the state-owned oil company in Mexico, PEMEX, had sales of $46.5 billion and contributed $28.8 billion to the government budget. By contrast, in 2000 PDVSA took in $53.2 billion and paid only $11.6 billion to the government of Venezuela.”

This is, strictly speaking, true, but wildly misleading. It’s fantastically silly to compare PDVSA to PEMEX in this way, because the two companies are structured radically differently. While PEMEX produces 3.7 million barrels a day and sells almost exclusively oil produced in Mexico, PDVSA produces (or used to produce) about 2.3 million b/d and, more importantly, sells oil from all over the world. PDVSA is a major player in the intermediation business, meaning that much of what it does is buy oil from third-party producers (Ecuador, say, or Nigeria) and use its huge marketing and distribution network to sell it on in international markets. Indeed, in 2001, over half the oil PDVSA sold ($22 billion out of $43 billion in total sales abroad) was not produced in Venezuela.

Of course, intermediation and production are vastly different businesses, and not surprisingly production is vastly more profitable. Weisbrot and Baribeau’s trick is to conflate the two: they report PDVSA’s combined profit-margins for both intermediation and production and then compare that number with a company that’s all production and no intermediation. Apples and oranges. Had Weisbrot excluded the third-party produced oil PDVSA sells from the equation, he would have found that in 2000 PDVSA exported $26.7 billion worth of Venezuelan produced oil and contributed $12.7 billion to the government. That’s 48% of its Venezuelan sales going to the state, and that’s not that far off from PEMEX’s reported 62%.

So that’s trick number one, and it sets the tone of appalling intellectual dishonesty that permeates the briefing paper. However, you could argue that PEMEX still contributes 14 percentage points of its domestic sales more to the state than PDVSA. This, again, is true but misleading.

The reason is two-fold. In the first place, notice that while Weisbrot entitles his paper “What happened to profits?” what he’s actually talking about is not profits but fiscal contributions. PEMEX surely gave the Mexican government a lot of money in 2001, but it also yielded a $3 billion after-tax loss. This suggests strongly that its hefty contribution to the Mexican state was not a function of sterling management or world-beating profitability, but rather it was a function of getting milked by the Mexican government far beyond what is wise. (An appreciation that accords with PEMEX’s reputation as one of the worst-managed state oil companies around.) PDVSA, meanwhile, reported a modest after tax profit in 2000.

You won’t learn that from reading Weisbrot and Baribeau’s piece, though.

The second little bait-and-switch is tucked away in a footnote to the paper. Comparing the number of dollars the Venezuelan, Mexican and Brazillian governments perceive per barrel of oil produced, the paper reveals an anomaly. In 1999 and 2000, PEMEX’s fiscal-contribution-per barrel produced was actually higher than the market value of those barrels. A footnote handily explains that this is due to “revenue from downstream operations.” Elsewhere in the paper, Weisbrot and Baribeau slam PDVSA for the disastrous performance of its domestic downstream operations, noting that PDVSA’s losses in that business “have climbed from $75 million in 1998 to $1.35 billion in 2001.”

What’s this about? What are those mysterious “domestic downstream operations?”

From what I can make out, what he’s talking about is basically internal sales, especially gasoline sales. Once you make that connection, then the dilemma is pretty easy to understand. Gas is absurdly cheap in Venezuela ú about 21 cents a gallon (figuring it at the official exchange rate.) Just a couple of days ago, I filled up my old beater, which has a 19-gallon gas tank, for less than 4 bucks. In Mexico, you still get relatively cheap gas, but they at least charge you enough for PEMEX to recoup costs and even make a bit of profit. When you go through the two companies’ statements to the SEC, you find out that PDVSA was selling gasoline domestically at $7/barrel in 2001, while PEMEX was selling it at $35/barrel. The simple fact is that 7 bucks a barrel is far below the cost of production ú there’s a huge implied subsidy here, and somebody has to pay for it. In this case, it’s PDVSA.

Now, it’s a bit fresh to blame PDVSA for this situation ú it is, after all, the government that sets retail gasoline prices in the Venezuelan market. It’s especially fresh to use a 1998-2001 comparison period since it’s hard not to notice that this was a time when Hugo Chávez was in power. So lets see what’s happening here: Chávez takes power. Chávez forces PDVSA to sell gasoline on the domestic market at far, far below the cost of production, forcing PDVSA to absorb a billion-dollar loss on domestic gas sales. Follow me so far? Good, because here’s where it gets weird: Seeing this situation, philochavista first world economists criticize not the government for subsidizing the ecocidal overuse of fossil fuels, but rather PDVSA! You read dark mutterings about inefficiency, and they wonder how on earth the company could possibly lose all this money on “downstream domestic operations.”

I’m sorry, but this is just absurd.

In fact, if you factor out the gasoline subsidy forced on PDVSA by the government, the company’s fiscal contribution rises to 53% of Venezuelan barrels exported. And if you factor out PEMEX’s multibillion dollar after-tax loss from its fiscal contribution, (as a way of getting at what PEMEX could actually afford to contribute and still break even) you find that a rationally run PEMEX might have contributed 54% of its domestic oil sales to the government. Funny, huh? When you actually go through the numbers, you realize that the huge disparity between the two companies’ fiscal contributions that Weisbrot alleges are explained almost totally by bad fiscal policymaking in México, an absurd gas subsidy in Venezuela, and, more than anything else, by Mark Weisbrot’s rampant will to deceive.

So you start to get a feel for the guy’s modus operandi, for his blithe disregard for the basic standards of intellectual honesty one ought to be able to expect from a serious academic. I’m especially angered by his cowardly pussyfooting on the gas subsidy: this is, after all, an antiglobalization crusader, someone you might reasonably expect to see standing up against a policy as criminally stupid as subsidizing global warming. If he really feels that these domestic market losses are unacceptable, then he should come right out and say so. He should come clean and say, straight out, that there are far better ways of spending $1.3 billion a year than subsidizing gas.

Of course, advocating gas-price hikes is the ultimate political no-no here, a kind of third-rail in Venezuelan politics (and especially in irresponsible lefty/populist circles.) More seriously, arguing against the gas subsidy openly would put Weisbrot and Baribeau at odds with the idiotic Chávez administration policy of wasting billions of dollars subsidizing a toxic chemical used mostly by the middle-class. They couldn’t do that, clearly! So they hide behind a sterile sounding euphemism - “downstream operations in Venezuela” ú rather than criticizing the government decision to spend its scarce resources on a subsidy for car drivers.

But there’s more. Weisbrot devotes half the paper to a searing critique of the pre-Chávez drive to open up the Venezuelan oil industry to foreign capital, alleging that the higher operating costs and lower tax rates on these deals has taken a major bite out of PDVSA’s profitability. Again, his critique is so bizarrely warped, it’s impossible to understand it aside from an ulterior political motive.

First, you need a bit of background. In 1996, PDVSA found itself with a dilemma. While the country had gigantic oil reserves, most of the yet-to-be-exploited oil here was extra-heavy crude in the east of the country. This is not commercially attractive oil. Basically, it’s gunk, a semi-solid black sludge rather than the flowing syrupy black liquid you probably picture when you picture crude petroleum. Eastern crudes here are so thick and laden with impurities, geologists don’t even call it oil but rather “bitumen” ú not-quite-oil.

Meanwhile, much of the “good oil” in the country comes from wells in the West of the country that have been in operation, in some cases, since the 1930s. These are the highly depleted deposits known as “marginal fields,” or “squeezed-out oranges” as an oil exec once put it to me. The wells still have some exploitable oil in them, but not very much. Understandably, it takes far more effort, expertise, technology and investment to get oil out of these marginal fields than out of a brand spanking new oil field.

In 1996, PDVSA decided that it wanted to expand its production, to boost it all the way to 6.7 million b/d by 2007. Had the plan been carried out, Venezuela would have become the world’s second leading exporter after Saudi Arabia, and PDVSA would have been able to take advantage of the huge marketing and distribution networks it’s currently using to market third-party crudes. (In fact, much of the reason those extensive marketing and distribution networks were set-up in the first place was the expectation that, in time, Venezuelan production would expand enough that they could be devoted to selling high-margin Venezuelan oil rather than low-margin third-party oil.) However, without much in the way of fresh deposits of light or medium crudes to exploit, PDVSA had to expand domestic production through marginal fields, and through Eastern bitumen. That’s just the geological hand the country was dealt.

But PDVSA had neither the technology, the expertise, nor the financing needed to put these expensive-to-start-up projects into operation. The Eastern bitumen projects required building “upgrading facilities,” a new(ish) technology that amounts to pre-refining bitumen from a semi-solid gunk to something closer to standard crude oil (which receives the somewhat paradoxical name of “synthetic crude.”) PDVSA didn’t have the money or the technology to do this, but the foreign majors did, so PDVSA asked the big foreign companies to come in and build the upgraders. The cost of a barrel of synthetic crude would be significantly higher than that of nice, naturally light crude, but at around $9-10 a barrel it was still a pretty good deal.

However, these upgrader facilities would cost billions of dollars to build. The capital costs were so large that the pre-Chávez government realized it would need to sweeten the deal for the foreign companies to attract them. And the way they chose to do this was by dropping the royalty rate on these projects from the usual 16.67% to just 1%.

This decision comes in for particular scorn in Weisbrot’s piece, who seems to have no idea why the royalty rate was cut in the first place. He produces a handy chart showing how much more money PDVSA would have gotten had it taxed these projects at the previous rate, or at the Petrobras or Pemex rates. It’s a fun bit of mental-masturbation, but meaningless ú these projects wouldn’t have been built if the government hadn’t dropped the royalty rates, because they would not be profitable at that higher rate. There would have been nothing to tax.

Pushing absurdity and intellectual bad faith to the limit, the paper then turns around and slams PDVSA for its rising capital costs during that period ú precisely the time when the costly high-tech upgrader facilities were being built. Perhaps Weisbrot and Baribeau aren’t quite clear on the concept of investment, but it’s usually meant to denote a one time expenditure meant to generate profits over a long period of time ú some 30 years, for these projects. So looked at in context, their argument dissolves into utter meaninglessness, something like: it costs a lot of money to build expensive things meant to pay off in the long run. Gotcha…why is that bad again?

(Weisbrot and Baribeau also criticize a tax-reform effort carried out in 1992 that’s too boring to go into here, but on that score too their critique is highly misleading.)

The authors then segue into a critique of the marginal field operating contracts, where foreign companies were hired to squeeze out the last few remaining drops from old, worn out fields. Here, as far as I can tell, their argument boils down to an impassioned denunciation of the fact that more-expensive-to-operate oil fields are less profitable than less-expensive-to-operate oil fields. It’s a “well, duh!” moment, though that doesn’t stop them from regaling us with all kinds of facts, figures and charts detailing the scale of this outrage.

The argument is so silly, even Weisbrot seems to realize it, admitting that these marginal fields are still profitable, but arguing that “it is questionable if it is worth it for PDVSA to produce such high-cost oil, since it presumably counts as part of the country’s OPEC quota and displaces other oil that could be produced at much lower cost.” But this rejoinder only makes sense if a-you think staying within OPEC makes any sense (which I don’t) and b-you have some kind of spare capacity in low-cost, high-margin fields which you could substitute for the marginal field production, which Venezuela doesn’t. And why doesn’t it? Due to underinvestment and dropping capacity figures in the Chávez era, as a result of Chávez’s policy from squeezing every last dollar from PDVSA until the company could not afford to even maintain production capacity at previous levels.

Weisbrot and Baribeau then complain about the rise in overall production costs ú saying from 1997 to 2001 the cost of producing a barrel of oil or equivalent increased by 35.6%, from $2.33 to $3.16. This is the one part of his argument that is not total bunk: PDVSA’s costs have indeed been rising way too fast, and part of this is due to PDVSA mismanagement, particularly to the company’s bloated payroll.

However, even when they get it right, they get it wrong ú this time by omitting key parts of the reason for this cost-increase. They casually paper over “details” like the fact that the Chávez administration’s mismanagement of collective bargaining negotiations with oil sector workers in 2001 is a major contributor to PDVSA’s rising cost structure over the past few years, as a Fedepetrol strike backed the government into having to offer a much higher than usual pay rise and setting the industry miminum wage at over three times the legal minimum wage (but that’s Chávez’s fault, not PDVSA management’s, so shhhhh!)

They also fail to mention the way the government’s broader macroeconomic mismanagement made the bolívar more and more overvalued from 1997 to 2001, making the cost of everything you did in Venezuela increased alarmingly…in dollar terms! (Note to the macroeconomically challenged: that’s what it means for a currency to be overvalued.)

(It’s also fun to note that if you go back to the much vaunted PEMEX - which elsewhere in the paper the authors treat as the model of a highly profitable state oil company ú their 2001 per-barrel production costs were $3.34 ú 18 cents more than PDVSA’s.)

I could keep going, picking apart other, similarly warped aspects of this dreadful paper, but why bother? It’s very hard for me to believe that anyone as bright as Mark Weisbrot who sets out to analyze PDVSA’s performance in good faith, freed from the drive to blacken the company’s reputation for ideological reasons, could have gotten it so, so wrong. Weisbrot and Baribeau are the very worst sorts of pseudo-intellectuals ú using the stylistic conventions of academia to produce political propaganda that has the look-and-feel of a serious, respectable policy-paper.

So if you find the tone of this critique somewhat over the top, all I can say is that people like Weisbrot and Baribeau, who refuse to play by even the most stripped down rules of honest academic discourse, forfeit their claim to civility from those who criticize them. They treat reality with disrespect, and deserve nothing but disrespect in return. They are propaganda-mongers mascarading as analysts, and they have become accomplices in the unbelievably misguided drive to dismantle the one institution in the Venezuelan state that, for all its undeniable faults, used to work more or less properly.

Francisco Toro Caracas, Venezuela

Dear Ford Foundation,

I am writing to you with regard to the Center for Economic and Policy Research, a think tank I understand the Ford Foundation helps to fund. As an analyst of some of the same topics that CEPR's co-director, Mark Weisbrot, customarily analyses, I've been shocked by the poor quality and, in many cases, questionable intellectual honesty of some of Mr. Weisbrot's recently published papers. I would like to call your attention to this matter, and to request your particular attention to the latest paper on CEPR's website, which can be found at: www.cepr.net

The analysis is riddled with serious distortions that call into question Mr. Weisbrot's competence, to say the least, and - more frankly - his professional integrity.

Below, you will find a critique I've written detailing some of the incomprehensible SNAFU's in this piece. You will find its tone lighthearted, but its content dead serious.

I am confident that the Ford Foundation demands a high standard of professionalism and integrity from the organizations it funds. I encourage you to reconsider whether Mr. Weisbrot's CEPR meets those standards.

Yours sincerely,

Francisco Toro Caracas, Venezuela