www.vheadline.com Posted: Tuesday, January 28, 2003 - 3:29:52 PM By: Patrick J. O'Donoghue

PROVEA human rights group shows signs of pessimism in its latest report on human rights in Venezuela.

Intolerance and deaths continue.

The group cites four deaths since the beginning of the year, 70 persons asphyxiated with tear gas and 30 injured in a fight between government and opposition supporters in Los Proceres and 25 injured in Valles del Tuy. The death of Wilmer Campos Perez (45) and injury of 12 persons on January 23 in a grenade explosion near a government rally has still to be clarified.

Impunity, PROVEA pessimistically reports, continues to hold sway and the Venezuelan human rights organization spotlights a number of cases of daily intolerance, such as the beating up of indigenous actress Elsa Morales by women at Plaza Altamira ... dubbing her a Chavist ... and attacks on Christian Socialists (COPEI) and Movimiento Al Socialismo (MAS) activists in Caracas as they placed anniversary wreaths at the foot of Simon Bolivar’s statue.

PROVEA maintains that, in particular. the Statehas the main responsibility to prevent, investigate and penalizing all such incidents of intolerance.

• As for the negotiating process, PROVEA is again pessimistic ... "new scenarios and few results in more than two months of negotiations." 

PROVEA argues that the only way to stop the violence and create a favorable environment for human rights is through negotiation which must take place on two levels: At the negotiating table discussing the themes of disarming, electoral consultation and investigation into acts of violence

Recognition of the existence, strength and legitimacy of the other side, importance of mutual respect within the constitutional framework along with the imperious need to prioritize measures to overcome Venezuela's main problem of social exclusion.

www.cfcnplus.ca POSTED AT 3:17 PM Tuesday, January 28

Don't expect a break at the pumps any time soon. The price of oil is still over the $30 mark.

It has now been over that mark for more than three weeks. On Tuesday, oil closed at $32.67 US per barrel.

One factor driving up the price is the uncertainty over Iraq, but according to international experts there's a more dominant reason.

Dozens of economists, political scientists and oil-industry officials from around the world are meeting in Calgary this week.

Julian Lee is a senior analyst at the London-based Centre for Global Energy Studies. He said there is no doubt uncertainty over Iraq is helping push up the price of oil.

“The world is short of oil and is afraid it's going to become shorter still,” said Lee.

But, he believes the biggest stressor is Venezuela. A general strike there is in it's ninth week. It means more than two-million barrels of oil a day isn't getting to North American markets.

Venezuelan oil is cheaper, easier to refine and takes five to six days to deliver. Middle East oil takes five to six weeks to deliver.

“The Venezuelan disruption is here, and it's real. The Iraqi disruption is potentially in the future,” said Lee.

Whatever drives up the price, we're the ones paying at the pumps.

Mike Lynch, a political scientist at the Center for International Studies, MIT, said OPEC won't allow the price to stay high for long because we'll stop spending.

“They are concerned about that, because in the end they are the ones who lose the sales,” said Lynch.

Even when the Venezuelan and Iraqi situations are resolved, Lynch said spikes in oil prices are something we'll have to get used to.

“The market has changed in certain ways in the last few years, where you no longer have a lot of surplus capacity acting as a buffer against unstable supply or demand,” explained Lynch.

On top of what's readily available to take out of the ground, Lynch said oil companies have also cut back on inventories.

High inventories are costly and when demand increases, having oil on hand keeps the price down. That eats into profits.

www.vheadline.com Posted: Tuesday, January 28, 2003 - 1:44:01 PM By: Patrick J. O'Donoghue

Opposition Asamblea de Educacion group , which has been acting as coordinating committee for private and public sector schools that joined the national stoppage, is recommending a return to classes. The group’s director, Leonardo Carvajal admits that many private schools have re-opened their doors because of pressure from parents and representatives.

• The National Private Education Association has called on members to start classes on Monday, February 3.

According to Carvajal, Universidad Central de Venezuela (UCV), Andres Bello Catholic University (UCAB) and the Caracas Teachers Training Institute are scheduled to re-open next week.  He concludes that there doesn’t seem much point to continue the stoppage now that the consultative referendum has been called off and that any future elections will take time to organize.

The Asamblea de Education, Carvajal adds, will be monitoring possible retaliations against teachers and professors, who joined the national stoppage… “we will defend teachers’ labor rights and we are asking that the issue be placed on the opposition negotiating team’s agenda.”

www.vheadline.com Posted: Tuesday, January 28, 2003 - 1:48:24 PM By: Patrick J. O'Donoghue

There were a reported 83 homicides throughout Venezuela last weekend, according to the Police Detective Branch (CICPC).

• 40 violent deaths took place in Caracas with Libertador Municipality, as usual and despite Mayor Freddy Bernal, taking the lead with 28 murders compared to Sucre (8), and Baruta (4).

In the provinces, 43 murders were reported with 10 in Zulia, 8 in Carabobo, 8 in Aragua and 5 in Anzoategui.

According to the CICPC body count, 25% of the deaths occurred in shootouts with the police … 18 deaths were attributed to settling of scores and 10 to victims resisting mugging.

www.vheadline.com Posted: Tuesday, January 28, 2003 - 1:05:45 PM By: Gustavo Coronel

VHeadline.com commentarist Gustavo Coronel writes: The number of Venezuelan State owned enterprises keeps changing, mostly upwards ... over 100 of them share some undesirable characteristics:

1. They all lose money,
2. They are all extremely inefficient and fat with political clients, and,
3. Most are corrupt.

From State Banks to industrial agglomerates ... from social service agencies to Universities ... from military run social programs to custom offices ... from tax collecting agencies and lotteries and race tracks, the government shows an appalling capacity to waste money.

How much is this money and where is it coming from?

The government has received about $100 billion in the last four years. About 70% of this money comes from the petroleum industry. After the costs and the required capital investments of PDVSA are deducted, the contribution from PDVSA to the government represents about 30% of  GDP and 35% of National Budget ... a budget of about $30 billion ... only second in size to the Brazilian, although we are only 23.4 million people.

• The other main sources of government income are taxes and indebtedness (our debt is of about $35 billion).

It would seem logical to assume that the main concern of the government should focus on the host of unproductive, corrupt, money losing State enterprises ... concern about the bankrupt Industrial Bank ... about the $45 billion sunk in Guayana industries without one cent of profit ... about the chaotic and corrupt military "Bolivar 2000" program ... about the tragedy of the 200,000 or more street children who wander about in our cities ... about the obscene mediocrity of State Universities (with one exception) ... about the high criminal rate that has made of Venezuela one of the five most violent countries in the world.

We would certainly share those concerns and help in the solution of these tragedies ... but the government shows little or no concern for this gallery of horrors.

On the contrary, hardly a month goes by without the addition of another monster to this gallery: the Women's Bank, the Poor Bank, a projected Military Bank, another Steel Mill, a projected "Popular" university to operate in the Presidential Palace, a Caribbean Airline to go island hopping ... a never ending succession of inept, half-baked government projects.

The main, almost sole, concern of the government is reserved for PDVSA and her "unsatisfactory" performance ... precisely the only State-owned company which makes money ... the same PDVSA which was ranked second in 1998 in a group of 50 world petroleum companies by Petroleum Intelligence Weekly ... the same PDVSA that in 1998-2000 had more productivity per employee than SHELL, EXXON or British Petroleum ... the same PDVSA that in 1998 won first place in the ranking of the best managed State petroleum companies, made by the Petroleum Economist.

In order to attack PDVSA, the government has hired a group of mercenaries which has concocted a story mixing half truths and lies. According to this story, while in 1976 PDVSA gave 80% of total income to the government it gave only 20% in 2000. The reason being, according to the story, that the PDVSA managers are stealing this money from the government.

• This story is designed to promote hatred for those managers among the poor and uninformed population.

What the story does not say is that a comparison between the 1976 PDVSA and the 2000 PDVSA can not be done without the necessary explanations. In 1976 PDVSA was a production company ... it did not invest one cent other than in production costs, since foreign companies had ceased investing due to the imminent nationalization.

In 1976, reservoirs were young and productive ... in 1976 there was no exploration and reserves were only of 18 billion barrels, good for only 20 more years ... in 1976 refineries were obsolete and produced mostly fuel oils.  There was no marketing done directly ... there was no tanker fleet ... there was no research being conducted.

The mercenaries fail to mention that the government's fiscal take was based on a mechanism called the Fiscal Reference Price, which obliged the industry to pay taxes at a government imposed price per barrel, which had nothing to do with the real price.

Example: If the FRP was $10, the company paid taxes like if it had sold the barrel at that price when, in reality, the sale price had been, say, $6 per barrel. Obviously this artificially inflated the government take. This mechanism disappeared soon after nationalization as its existence was senseless under new ownership.

After 1976, moreover, the government had to do something that was previously done by the foreign companies, i.e. INVEST ... in exploration, production secondary recovery, modern refineries, a new tanker fleet. As a result of this huge effort, Venezuela today has reserves for more than 100 years. The refineries produce mostly gasolines and other light products ... what a difference from the PDVSA of 1976!

• But the mercenaries openly lie when they say that PDVSA's contribution to the government (actually, to the nation) is only 20%.

The direct contribution, made up of income tax, royalties and dividends is higher than 40%. There are other substantial indirect contributions, including some $200 million per year for the communities where PDVSA operates and some $300 million per year in gasoline subsidies, since the government forces PDVSA to sell gasoline in the domestic market below production costs and, even worse, below international prices.

A gallon of gasoline sells in Venezuela for $0.20 while in Colombia it is several times higher ... this promotes huge smuggling operations to Colombia and Brazil, which further erodes PDVSA's financial results.

There is still another artificial restriction on PDVSA's financial performance.

Since OPEC has imposed a quota on Venezuela, and PDVSA has won markets which are vastly greater, it has to buy in the open market the oil it could produce internally at some $7 per barrel for around $20 ... this is what could be called punishment for being efficient. When these considerations are properly added to the story it is clear that PDVSA's performance has been exceptional.

What is the reason for Chavez' merciless attack on the only productive State-owned company? Very simple: CONTROL.

PDVSA had become a pebble in Chavez' left shoe. It was in the hands of managers, not politicians ... in the hands of "counter revolutionary" technocrats ... they had to be swept out.

What the Chavez government is doing to PDVSA is a crime which will not go unpunished.

PDVSA, as we knew it, is rapidly ceasing to exist, being replaced by a mediocre, third world outfit complacent to the ideological salad put together by the President, now self-named as "Oil Commander-in-Chief."

• With the collapse of PDVSA we are witnessing the collapse of the country ... when the time comes, if I am still around, I hope to be a witness for the prosecution.

Why? Because when I was building pipelines for a better PDVSA, Ali Rodriguez, the current President of the "revolutionary" PDVSA, was blowing them up, as the main dynamite expert of the Cuban-supported guerrilla which failed in Venezuela during the 1960s.

Gustavo Coronel is the founder and president of Agrupacion Pro Calidad de Vida (The Pro-Quality of Life Alliance), a Caracas-based organization devoted to fighting corruption and the promotion of civic education in Latin America, primarily Venezuela. A member of the first board of directors (1975-1979) of Petroleos de Venezuela (PDVSA), following nationalization of Venezuela's oil industry, Coronel has worked in the oil industry for 28 years in the United States, Holland, Indonesia, Algiers and in Venezuela. He is a Distinguished alumnus of the University of Tulsa (USA) where he was a Trustee from 1987 to 1999. Coronel led the Hydrocarbons Division of the Inter-American Development Bank (IADB) in Washington DC for 5 years. The author of three books and many articles on Venezuela ("Curbing Corruption in Venezuela." Journal of Democracy, Vol. 7, No. 3, July, 1996, pp. 157-163), he is a fellow of Harvard University and a member of the Harvard faculty from 1981 to 1983.  In 1998, he was presidential election campaign manager for Henrique Salas Romer and now lives in retirement on the Caribbean island of Margarita where he runs a leading Hotel-Resort.  You may contact Gustavo Coronel at email ppcvicep@telcel.net.ve