VENEZUELA - 'The Devil's Excrement' Perez Alfonzo's different name for oil.
www.fortune.com
FORTUNE
Tuesday, January 21, 2003
By Jerry Useem
"Ten years from now, 20 years from now, you will see," former Venezuelan Oil Minister and OPEC co-founder Juan Pablo Perez Alfonzo predicted in the 1970s, "oil will bring us ruin." It was an oddball statement at a time when oil was bringing Venezuela unprecedented wealth--the government's 1973 revenues were larger than all previous years combined, raising hopes that black gold would catapult Venezuela straight to First World status. But Perez Alfonzo had a different name for oil: "the devil's excrement."
Today he seems a prophet. When it hit the jackpot, Venezuela had a functioning democracy and the highest per-capita income on the continent. Now it has a state of near-civil war and a per-capita income lower than its 1960 level.
Far from an anomaly, Venezuela is a classic example of what economists call the "natural resource curse." A 1995 analysis of developing countries by Jeffrey Sachs and Andrew Warner found that the more an economy relied on mineral wealth, the lower its growth rate. Venezuela isn't poor despite its oil riches--it's poor because of them.
How could that be? For the same reason so many entertainers go bankrupt. Showered with sudden windfalls, governments start spending like rock stars, creating programs that are hard to undo when oil prices fall. And because nobody wants to pay taxes to a government that's swimming in petrodollars--"In Venezuela only the stupid pay taxes," a former President once said--the state finds itself living beyond its means.
A cycle begins. The economy can't absorb the sudden influx of money, causing wages and prices to inflate and the nation's currency to appreciate (by an average of 50%, according to a World Bank economist's study). That makes it harder for local manufacturers to compete. Incentives, meanwhile, become wildly distorted. When free money is flowing out of the ground, people who might otherwise start a business or do something innovative instead busy themselves angling for a share of the spoils. Why slog it out in a low-margin industry when steering some oil business toward a contact could make you a millionaire? Thus a doubly deadly dynamic: a ballooning public sector, a withering private one.
Eventually you're 16th-century Spain. It, too, once struck it rich on gold (not the black kind) from the Americas. Its monarchs spent like loons, expanding the army 15-fold, creating an elaborate patronage system and sending conquistadors in search of El Dorado. (Spanish gold also financed Columbus's discovery of Venezuela.) While inflation and currency appreciation slowly killed industry and agriculture, a parasitic class of noblemen lived off gold money (think of Saudi Arabia's idle princes), waiting for the next ship to come in. By the time ships stopped coming, Spain wasn't able to feed itself, forcing it to declare bankruptcy eight times and finishing it as a world power.
But the Midas myth dies hard. "This is a country that can never, ever sustain itself on oil," Terry Lynn Karl, author of The Paradox of Plenty: Oil Booms and Petro-States, says of Venezuela. "But everyone from the President to the poor believes it can." And therein lies the trap. President Hugo Chavez rode popular rage into office by focusing on corruption. But what neither he nor anyone else will face up to is this: Oil is not an economy. Creative economic activities have spillover effects that become self-sustaining. Oil spills only into a barrel--and from there usually into the hands of a favored few. That's the real reason Venezuela's productivity growth has been roughly half the Latin American average.
Can the curse be avoided? A few smaller countries--Malaysia, Norway, Mauritius--curbed its worst effects by spending slowly and using the money to diversify their economies. In Venezuela oil still accounted for 80% of exports before a devastating strike made even that scarce. As a 16th-century Spanish economist said of his homeland, "What makes her poor is her wealth"--a suitable lament for Venezuelans who have been waiting so long for their ship to come in.
From the Feb. 3, 2003 Issue
The attitude of the Venezuelan opposition is simply embarrassing
www.vheadline.com
Posted: Friday, February 07, 2003 - 2:56:30 PM
By: Kira Marquez Perez
The attitude of the Venezuelan opposition is simply embarrassing
Date: Fri, 07 Feb 2003 18:01:59 +0100
From: Kira Marquez Perez marquez@uni-duesseldorf.de
To: editor@vheadline.com
Subject: personal ambitions of power and money
Dear Editor: I am a Venezuelan chemist, who is actually finishing her PhD in Germany. My whole family lives in Venezuela. I have been working in a sandwich program with the Universidad de los Andes in Merida and have therefore remained in contact with my country and my family the whole time I've been in Germany (3 years). I spend a lot of time in Venezuela and travel there on each vacation. I was there in December and stayed there until the end of January (I was there the whole time during the "strike"). I have written a text describing some of my experiences during this time which I have included below:
With concern and a deep feeling of powerlessness we observe how the political conflict in Venezuela has been radicalized. Each day the threats against peace and tranquility arise in a nation that has been always characterized, throughout its history, by its tradition of respect, tolerance, co-existence, public spirit and liberty.
It is not so difficult to find out which are the motives hidden behind the current situation in Venezuela: there is a group of people that are using us all to satisfy their personal ambitions of power and money.
It's very easy to identify the propitiators of violence in Venezuela, the promoters of hate and division. It's them: the same people from the past, the so-called "friends of the bi-partisanship" ... those who have been sacking Venezuela and have become easily rich and illegally using the country's money during the last four decades ... the same ones that have found a "gold mine" in Petroleos de Venezuela (PDVSA) ... our oil company ... which they, of course, do not want to lose ... the same ones that do not care about diversification in Venezuela's economy or about development and improvement in agriculture, education, technology or tourism, because their business is based on creating dependence. Those are the same ones that have been evading taxes and supporting acts of corruption for years and that (not having enough with all the harm and pain that they have already caused the country) would like to continue doing so...
The worst of all is that these people (who by the way have already shown on many occasions that they are capable of doing anything, without measuring consequences, in order to achieve their goals) have started an unbearable psychological war that is affecting the health and wellness of Venezuelans.
They have reached the limit in which they manipulate and use the media (almost 24 hours a day) for presenting only subversive and violent programming.
Has anybody thought about the children in Venezuela and about the consequences of these irresponsible actions of the media? I believe not...
However, we can already see what they have achieved: they have created a climate of violence and hate in which even the children (who, above all, have the right to be loved, educated and made happy) have been involved...
What makes me even more sad, is to see that these people would really be willing to drive such a beautiful and wonderful country like Venezuela to the paths of ruin and war only to satisfy their personal interests.
One of the main persons involved is Mr. Gustavo Cisneros (owner of the TV-channel Venevision), who, since a long time ago, has set his sights on Citgo, the North American affiliate of PDVSA. It is enough to observe the daily programming of Venevision ... as well as the amount of space dedicated to sending messages of violence ... in order to realize that this gentleman does not know any limits.
The programs for children were eliminated and replaced by war, and this shows that these persons had absolutely no scruples. Additionally, there is evidence of the use of subliminal information (flash images) with messages of subversion and war. We can not accept that children are being involved in this problem, for which they have absolutely no responsibility.
The worst of all is that other commercial channels ... like Globovision, Televen and RCTV ... follow the same pattern, many people being manipulated in this manner. By the way, I would like to know who was financing these channels, since they had not promoted one single product in several weeks.
It is enough to observe the mechanisms that these people have been using in the last months to see what they are capable of doing: in April last year, Venezuelans were victims of the shortest, most despotic extreme right-wing dictatorship in their history. For a few hours Mr. Pedro Carmona Estanga (who was, at that time, president of Fedecamaras, the Venezuelan Federation of Industrialists) was imposed in the Presidency after a coup d'etat supported and organized by the same people that promoted the "strike" in December, meant to ruin Venezuela.
We must remember personalities such as Carlos Ortega (the "representative" of the CTV, the Venezuelan Worker's Confederation, but who does not have any support whatsoever from Venezuelan workers, is working for the first time in history on the side of, and probably even paid by, the industrialists). However, we must remember that Mr. Ortega was directly involved in the events of April 2002, and it is really surprising that such people have not been investigated and prosecuted (in any other country in the world these persons would be already behind bars).
Ortega was one of the main culprits who at the last minute diverted an opposition demonstration on April 11 ... this deliberate action produced street conflicts that caused at least 19 deaths in the surroundings of the palace of government ... most of the dead were supporters of president Hugo Chavez and it is now known that the Policia Metropolitana, controlled by opposition leader Alfredo Pena, was responsible for most of the deaths.
Additionally, the snipers shooting from the roof of the Hotel Asonia on April 11 and who had been captured by the crowd, were set free by Dictator Carmona Estanga the following day and left the country immediately. I think this is a very good evidence of a cooperation between the Dictator and the snipers.
The massacre was preceded by a general strike, quite similar to the one in December. At that moment (as well as today) we were victims of media montages and lies ... and they even invented that President Chavez Frias had resigned, promising to show a supposed resignation document signed by him, which, of course, did not exist (that means, they wanted to show us a falsification).
Today, these montages and falsifications are a normal activity of the opposition as we have seen recently when several commercial channels presented a live New Year's message sent by Mr. Carlos Fernandez (current president of Fedecamaras, the same organization that was headed by the Dictator Carmona Estanga in April last year). However, it has now been proven that Mr. Fernandez was actually in Aruba at that time. That means: they filmed the message several days before and presented it (with the complicity of the media) as a "live" transmission. But this is not new. There are many other cases, the majority of them having been already exposed.
Another example is the montage in which they intended to bind one of the persons involved in the shooting in Plaza Altamira on December 6, with government personalities by presenting them together in a public meeting. However, it could be shown that this person (a Portuguese) was not even in Venezuela at the moment at which this meeting took place. Furthermore, it's quite curious that somebody takes a plane and flies more than eight hours from Lisbon to Caracas just to go and shoot at a couple of demonstrators (the opposition has obviously a very good financial support).
Additionally, one of the national newspapers: El Nacional, declared that a PDVSA worker Alirio Carrasquero (who did not join the strike and had been working normally in the oil company), had died in an accident due to operational errors. A few days later, this gentlemen appeared to show all his IDs (personal ID and ID from PDVSA) to prove that he was alive. Can you imagine how his mother felt as she read these lies about her son's death? Isn't this really a scruple less? They invented his death just to show that the people that were still working at PDVSA to be "incompetent."
At this point, I would like to mention that Mr. Carlos Ortega is a very good friend of Mr. Carlos Andres Perez, one of Venezuela's most corrupt presidents, who abruptly ended his second period in the Presidency when he was dismissed and prosecuted over acts of corruption. Mr. Perez was sentenced to 28 months in jail. He currently lives in the USA and, from there, he participated actively in the April 2002 coup.
But there is something even worse on ex-president Perez' conscience: the February 27 (1989) massacre in which over 2,000 Venezuelans were killed by the military during a series of demonstrations against the serious economical crisis to which the country had been driven by him and his people.
Well, let's continue talking about the April coup. Within a period of 28 hours, Mr. Pedro Carmona and his people (including Isaac Perez Recao, from whom illegal weapons, fake ID and passports were confiscated) dissolved all democratically-elected institutions, removed all Governors and Mayors from office, initiated pursuit and attacks in several Venezuelan cities and suspended our participation in OPEC. Fortunately, at that time our democracy, which represented ... as it still does today ... the wish of the majority, could be rescued.
Today, they are trying to do the same thing again at any price.
Little by little, the desperate efforts of these people to destabilize Venezuela's democratic system increased considerably after President Hugo Chavez announced a series of reforms in December 2001 that would possibly affect their interests and that would put in danger some of the benefits that they have had for years. The reforms include the Lands Law (Ley de Tierras) against which the big landowners, supported by many opposition Governors and Mayors have expressed resistance. In January 2002 several members of designated commissions to investigate idle lands in states like Zulia or Merida were murdered by unknown killers ... I think it is not really difficult to guess who is behind these deaths, is it?
Other reforms that have caused opposition desperation are: The Hydrocarbons Law (Ley de Hidrocarburos) that allows the government to act to manage spheres entrenched in PDVSA as well as the control and automation of Customs & Excise and a more rigorous monitoring of the payment of taxes. In 1976, the year in which oil was nationalized, the Venezuelan Treasury received 74.4% of total income of PDVSA in fiscal receipts ... but in 2000 it received only 23.2% of total income. According to PDVSA directors, the rest of it is used to overcome "operational costs."
The current conflict shows that one of the main goals of the so-called PDVSA "executives" is to try to keep PDVSA management away from any control or monitoring by the Venezuelan State.
All these reforms introduced by the current government would be actually quite positive for common Venezuelans, since they would contribute to the diversification of our economy (a very important point, considering that our oil reserves will not last forever and we have to start thinking what we are going to do afterwards). Additionally, we can't forget that in the main industrialized countries, millions of dollars are invested each year to develop alternative sources of energy ... so we shouldn't be so confident that oil is going to provide all we need to be happy. It is necessary to promote and support education. It is necessary to encourage agriculture. It is necessary to develop the manufacturing industry. It is necessary to improve the infrastructure and promote tourism, and it is necessary to orientate towards alternative and more environmental-friendly forms of energy.
We have to take action today in order to guarantee our future and that of our children.
Unfortunately it is true that these individuals are prepared to do anything to reach their goals. However, to achieve this it is necessary that many people, absolutely innocent, support them without understanding which disastrous consequences these actions can have. Believe it or not, the organizers of this sabotage were born and have grown up in and loved this country, they enjoy it when they see how Venezuelans confront each other.
It was unbelievable to hear how Carlos Ortega and the two Fernandez (Carlos and Juan) said with satisfaction that the "strike" had been a success? How could that situation be a success for Venezuela? It was destroying all of us! The country lost billions of dollars in those days! Furthermore... it was enough to see the happiness with which these personalities talked about the severe lack of supplies that affected all Venezuelans as a consequence of their "fabulous strike" ... many of the people who stopped working did not do it voluntarily, but as the result of the sabotage and permanent aggressions that these "gentlemen" initiated against public and private property. These actions included: sabotage to several installations and damage of scientific and plant equipment (mainly in PDVSA), psychological pressure, threats, outrage and aggression on workers or merchants that did not join the "strike," contamination of fuel, damage to valves in order to produce oil spills, blocking of the import of medicines (an assault against people's health), manipulation of information, montages and promotion of panic within the population for personal purposes, threats and aggression (in some cases even with bombs and guns) against the embassies of foreign countries, some of which offered help to solve the oil problem in Venezuela (i.e., Brazil, Argelia, India, Cuba, etc), blocking coasts, roads and avenues, obstruction of transportation and supply of goods, illegal retention of our money by the banks, sabotage to education in schools and universities, order of "cessation of the Christmas activities" in Venezuela and a permanent and open incitement to carry out violent and criminal activities, such as tax evasion.
Actually, what these people did is absolutely illegal and even criminal, since public services were not guaranteed (they even threatened to block water and electricity supplies) ... and the worst thing is that they did it consciously and happily.
Some day in December, full of satisfaction, Carlos Ortega claimed: "be prepared because a critical lack of foodstuffs is coming in the next hours ... the standstill of all services will immediately aggravate."
Can it really be possible that all this represented a source of happiness and fulfillment for Mr. Ortega?
Besides, we all know what an environmental and ecological threat it was to have several loaded oil and gasoline supply ships anchored off Venezuelan coasts ... this could even be considered, among many of the other activities mentioned above, as an act of terrorism, because millions of liters of gasoline could have blown up a considerable area in the event of a fire, turning these ships into bombs at any minute. We also know that we will start to suffer the economic consequences in the next months ... but they don't seem to care about that either. We're convinced that there is no limit for these people ... our economy was strongly hit by their plans, and whatever is happening now in Venezuela, like exchange controls is mainly their fault.
- What's more amazing is the urgency with which these people want to "get rid of Chavez immediately and at any price."
From a logistic point of view it was practically impossible to organize hurried elections for the February 2nd and over 30% have turned out to be illegal: fake, double or scanned.
So ... what do these people really want ... and why this urgency?
We all know that our Constitution establishes that "all elected offices and magistracies are revocable" once the public official has reached half of his period ... that means that Chavez can be submitted to a revocatory referendum in August 2003. The same law is applicable to all Mayors and Governors who have reached half of their periods (including Mr. Alfredo Pena, who has participated openly in many sabotages).
The problem is that these groups are obviously not sure about their own capabilities, strengths and summons ... they want to call an immediate consultative referendum, because they know they do not satisfy the minimum requirements that are needed for a revocatory referendum (on February 2 they collected signatures and after a few hours claimed that they already had 4 million ... a number which I honestly do not believe. I wouldn't be surprised if they came up with another of their traps, or with a brand new lie. However, we all agree to go to a legal revocatory referendum after August and then we'll see.
Before any elections take place, it is necessary to "clean out" the National Electoral College (Consejo Nacional Electoral, CNE) which must be an impartial organization. There was evidence of irregular activities at the CNE. For instance, several members of the Council ... such as Mr. L. Pizzani ... had been working actively for the opposition. Dead people, even well known ones such as Dr. Arturo Uslar Pietri and others, still appear in the voter lists. Who was going to vote for them?
A referendum under these conditions would be totally illegal. Besides which, it is necessary that an international committee of observers to monitor the process is named. This committee must include foreign observers and not only from the USA, since the responsibility and support of the United States of America during the coup in April last year has still not been discarded. Moreover, the way in which events have been taking place reminds us of Panama and Nicaragua in the 1980s, or the case of Chile in September 1973, where USA participation has been totally confirmed.
At this point, I would like to mention that I absolutely agree that an electoral solution would surely satisfy the expectations of national and international communities, although (unfortunately) the opposition has shown day after day that they are not prepared to accept any solution other than the one they are demanding. The only "democratic" solution that the opposition seems to be prepared to admit is the imposition of their own criteria.
Several other organizations in Venezuela must also be revised ... one of them is the Supreme Court of Justice (Tribunal Supremo de Justicia, TSJ) ... the only organization in the whole world that declared that there was no coup-de-etat in Venezuela on April 11, and that although a democratically-elected President was forced out of office, kidnapped and put in jail while the parliament and all other democratic state institutions were dissolved ... the group of military coupsters were acquitted by the TSJ which is now openly participating in conspirations against the State ... a situation that is really unbelievable.
The attitude of the Venezuelan opposition is simply embarrassing. It is true that President Chavez Frias has displayed a lack of tact, refinement and diplomacy when interacting with his opponents ... but this does not give them the right to attack and ruin us all; and it does not justify their criminal activities with dark and ambitious purposes. Is this opposition really against the government ... or is it against Venezuela? In this country, we need a critical and constructive opposition that respects the people.
Concerning President Chavez Frias, one must accept (in spite of all the things that they might say) that his period has been one of the most democratic and participative ones in our entire history.
Let's think again about ex-President Carlos Andres Perez and his massacre (the so-called Caracazo) in 1989 or ex-President Rafael Caldera and the closing of the Central University of Venezuela (Universidad Central de Venezuela, UCV) in 1970 to force students to remain silent.
Let's remember that person who was put in jail for several months in the 90s because he predicted on television that ex-President Caldera would probably not end his second period.
Let's remember that ex-President Carlos Andres Perez was minister of internal affairs during the Presidency of Mr. Romulo Betancourt and that he at that time headed the Political Police (Policia Politica), which was responsible for many deaths and forced disappearances.
Let's remember that time, during the Presidency of Mr. Jaime Lusinchi, when an opinion program was closed due to a commentary that was made concerning Ms. Blanca Ibanez, who was at that time the President's lover.
By the way, do you know that the Judge Jules Spodek from the US State Supreme Court prohibited a pacific strike organized last December by the Transport Workers Union (TWU) in New York? The judicial statement included that the workers would be penalized two days salary for each strike day and could even get prison for disrespecting authority. Additionally, the Mayor of New York, Michael Bloomberg, asked the court for authorization to impose penalties of $1 million on the Workers Union and fines of $25,000 for each employee that did not go to work. In spite of all this, they call themselves democrats ... or not?
On the other hand, here in Venezuela we have had people that have been grouped for more than a month protesting in a public square, we have had strikes, demonstrations and stoppages, people that have not only stopped working but that have also hindered other people's work, people that have tried to obstruct and block all social and economical activities in the country... but, believe it or not, many of these persons have not been punished. Fortunately, some of the conspirators from PDVSA have now been fired.
In the past, several Venezuelan newspapers, radio and TV stations have been either closed or censored. On the other hand, during this Presidential period, everybody has been able to say what he or she wants and (unfortunately) some individuals have taken advantage of this freedom to distort the freedom and even used it for personal interests against Venezuelans. These persons have gone beyond any limit of what is acceptable and we think that one of the main faults of this government has been its excessive tolerance towards sabotage.
It is time to do something about these abuses and it seems that President Chavez Frias has finally decided to act, since legal processes against some commercial channels have recently begun.
We only ask for peace, tranquility, unity and respect for all Venezuelans.
We are tired of so much disrespect and so many manipulations ... it would be unworthy of a country like ours, with a tradition of civism, democracy and liberty, and with the majority of Venezuelans loving peace, co-existence, respect and tolerance, to allow that this historical and distinctive element of our behavior as nation ... that has been an example of democracy for Latin America and the entire world ... could be affected by a violent minority.
All we want is the well-being of all Venezuelans and respect for our Constitution.
Kira Marquez Perez
marquez@uni-duesseldorf.de