Letter from a reader to Yves Engler on Venezuela: A Canadian Perspective
PETROLEUMWORLD Caracas, Jan 4
Caracas, Venezuela, January 2, 2003
Mr. Yves Engler Vice President Communications for the Concordia Student Union
Dear Mr. Engler,
We have read your December 15th article on Venezuela, published by Petroleumworld.com. We believe it does not adequately reflect the critical political and economic situation we are facing in Venezuela. Actually, we feel you are misinterpreting what is happening here.
What you call "a general strike" is really "civil disobedience". It is allowed by the Venezuelan Constitution under Article 350. Chavez practically wrote that article into the Constitution in 1999.
Popular discontent in Venezuela is rooted in the tradition of Thoreau, Ghandi, and Martin Luther King. Perhaps, we could even go back to Antigone, in ancient Greece. What really matters is that "the strike" is sending a clear message : the Venezuelan people simply got tired of empty promises, bullish language, and bad government by the person who, as you point out in your article, was elected by a vast majority in 1998. Let us not forget that Chavez came into power after unsuccessfully trying to overthrow the government, twice, in 1992. That government had also been elected by a majority of the people but Chavez claimed it had lost legitimacy. This is exactly what is happening to him, now. He has squandered the largest political capital ever awarded to a Venezuelan. His campaign promises to fight corruption, reduce poverty, and rekindle economic growth became hollow words. He was only interested in political control. He rewrote the constitution and proceeded to gain absolute control of the Congress, the Supreme Court, the office of the Attorney General, and other authorities which, under the constitution, should be independent. The fact is, he has done away with all "checks and balances", which is not exactly democratic. Is it so difficult to understand why opposition against him has grown from a trickle in 1999 into a tidal wave of popular protests that have led to the kind of "civil disobedience" never before seen in our country?
We do not want to tire you with details. However, please look at the facts. A partial list would include the following :
(a) in the four years since Chavez came to power, the economy has been wrecked, capital flight has increased, private investment has significantly diminished, and unemployment has grown. You can get the figures from the Central Bank of Venezuela. A key indicator to watch is per capita GDP. True, it had been coming down in previous years but under Chavez, it has taken a nosedive. As a result, poverty has dramatically increased (do read the Study on Poverty by the Universidad Católica Andrés Bello in Caracas). Central Bank figures show that for the first nine months of 2002, total real GDP came down by 6.2%. Estimates for the year as a whole range from - 8% to - 9%;
(b) despite record-high petroleum prices, the government has posted a fiscal deficit every year since 1999. Fiscal mismanagement has increased to a level never seen before. As a result, domestic national debt has ballooned (it tripled since 1999);
(c) the unemployment rate has increased to 16% but, in addition, 52% of the labor force belongs to what is euphemistically called "the informal economy", meaning, no insurance, no labor law benefits, no training, no medical assistance. Picture what this means for international competitiveness in an age of globalization;
(d) it is not true that one million students have enrolled in primary school under Chavez and, yes, minimum wages have been increased but then every previous government in Venezuela had done the same. This has become common political practice in our country.
(e) inflation did subside for a while but only because the currency was artificially "anchored" (pegged) to a foreign-exchange "band". When that system collapsed in February of last year, the currency was allowed to float. It experienced an 84% depreciation, in just ten months. Inflation jumped to 31% for the year. The market has lost faith in fiscal and monetary policies; thus, devaluation will continue if Chavez stays.
(f) land distribution under Chavez is a myth but private farmers are being scared away by land-confiscation threats. As a result, agricultural production is down.
Need we continue? You should get the facts and figures that will allow you to make a more comprehensive appraisal of economic and social reality in Venezuela.
Finally, the oil industry.
The Venezuelan oil industry is paralyzed. On December 15 you wrote : "though the strike seems to be withering, in the key oil industry disruption continues." On December 30, 2002, total crude production was down to 150,000 barrels (compared to 3.1 million barrels per day in late November). Exports are down to a trickle and what little is being shipped is coming out of storage. Yet government sources claim that "oil operations are practically back to normal". Gasoline is being imported from Brazil at extremely high prices. Such imports are basically intended to get media attention abroad. The few service stations which are still open are getting gasoline of very poor quality, usually mixed with water. Hundreds of vehicles are already stranded as a result. But, do come to Venezuela, drive around, stand in line at a service station, talk to the people. Most Venezuelans in line will tell you that "this is the price we have to pay" to recover our national dignity.
It will take weeks to repair the damage already done to the efficiency and morale of the oil industry. But, it may get worse. Look at what is happening : (a) PDVSA?s President Alí Rodríguez (a former guerrilla fighter in the 1960?s) has fired the top 90 managers of the Corporation but workers have not flocked back to work; (b) already, 23 oil-industry accidents have been reported in the past 29 days because the people being used by the government to man operations simply are not qualified; (c) army personnel with limited experience are being appointed to top administrative positions in the industry; (d) the large refineries are down to the minimum level necessary to avoid collapse; (e) force-majeure has been invoked by PDVSA on oil export contracts.
As a result of "civil disobedience" in the oil industry, fiscal income from oil will be sharply reduced. Thus, the fiscal deficit in 2003 will be larger and extremely difficult to manage. Since 2001, Venezuela has lost access to international capital markets and the Government can no longer tap domestic debt markets. The foreign-exchange implications are no less ominous. Notwithstanding the fact that exchange markets virtually shut down in December, total foreign exchange reserves dropped US$ 1.2 billion during the past 30 days. The government last week forced PDVSA to draw down (again) on the savings which the oil industry had accumulated at the special Investment Fund (FIEM). This is intended to finance the payment of PDVSA dividends to the Government, in violation of Fund rules and its spirit. PDVSA managers and workers are protesting against political interference, loss of corporate autonomy, and violation of trust. Remember that all PDVSA appointments made by the Chavez Administration have been based not on merit or experience but on political affiliation "to the revolution". Come to Caracas and check it out.
Will "civil disobedience" lead Venezuela to early elections? In your article you wrote : "according to the constitution, to remove Chavez, the opposition needs only to wait until August, half way through his term when a binding referendum can be held." True. But, at what cost? And, whatever happened to "listening to the voice of the people"? This used to be one of Chavez? favorite expressions, back in 1999. The "problem" is that, now, about 75% of the people want him out. So, instead of lending an ear, he takes refuge in the Constitution.
Have you sat through one of Chavez? four-to-five-hour weekly speeches? His rhetoric is impressive but defiant and conflict-prone. To Chavez, anyone who disagrees is a "traitor"; anyone daring to dissent simply "wants to overthrow the government"; anyone who is not for him is clearly a member of the "corrupt oligarchy". Yes, he was democratically elected in 1998. However, his government has lost legitimacy. It is time to go back to the people.
We wish you a happy new year. We hope we too can have a good year in Venezuela. Meaning, without Chavez. Without him, we can and will rebuild this country.
Sincerely,
Mauricio García Araujo Irene García de García
cc. The Editor, Petroleumworld.com
E-mail addresses : Mauricio García Araujo : mga23@telcel.net.ve Irene García de García : meganet@iamnet.com