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Venezuela trudged further down its road to serfdom when a sham election on May 20 returned Nicolas Maduro to the presidency for another six-year term. Venezuela's experiment with democratic socialism has now run its course from early optimism through economic dysfunction and now ever-closer to political tyranny.
A mere 20 years ago Hugo Chavez ran for president on a populist campaign promising socialist economic policies. He won the 1998 election with 56.2% of the vote in what was considered a fair election overseen by international observers, including former U.S. President Jimmy Carter.
Venezuela quickly became the poster child for successful socialism. Unlike the other socialist governments, Venezuela's was democratically elected and political freedoms were maintained. Incomes rose; poverty, illiteracy, and inequality all fell. Venezuela seemed to deliver socialism's promise unlike anywhere else in the world.
Leftists in the United States praised Chavez after his death in 2013. Salon.com claimed "Chavez racked up an economic record that a legacy-obsessed American president could only dream of achieving."
Bernie Sanders, Oliver Stone, Michael Moore and many others praised Chavez for his leadership and Venezuela's economic achievements.
Except it was all a mirage. Venezuela sits atop the world's largest proven oil reserves and Chavez cashed in on strong global oil prices. His socialist policies, meanwhile, caused dysfunction throughout the economy.
A 2016 study by economists Kevin Grier and Norman Maynard, published in the Journal of Economic Behavior & Organization, compared Venezuela's economic performance under Chavez to what it "likely" would have been if Chavez "had not been elected to the Venezuelan Presidency in 1998" and the existing policies had remained in place.
Their conclusion: "Although average incomes rose somewhat during his time as president, they lagged far behind where they might have been if Chavez had not taken office."
Venezuela Dies
The same held true in other key measures, such as life expectancy, infant mortality and poverty. Life expectancy improved, but by less than it should have. Infant mortality and poverty decreased, but by no more than would have been expected without Chavez's policies.
Venezuela's economic mirage collapsed when oil prices tanked and revealed an economy incapable of feeding itself.
The average Venezuelan lost 24 pounds last year — 19 the year before. Agricultural production is way down: rice, corn, and coffee by 60% over the last decade.
The cattle herd decreased 38% over the last five years. When Chavez came to power, there were more than 800,000 private businesses. Today, fewer than 230,000 remain.
Chavez's successor, Maduro, has resorted to the printing press to "pay" for import supplies. As a result inflation is skyrocketing. In March and April alone, inflation registered 18,000%.
Meanwhile, price controls make it unprofitable to produce anything. The result is the downward spiral Venezuela finds itself in.
It's hard to imagine any sitting president anywhere getting reelected when voters are literally starving amid hyperinflation. Yet Maduro claimed victory with a record 68% of the vote.
Not surprising, since the government had banned the largest opposition parties and had violently repressed anti-government protests. The election was a fraud.
Many voters went directly from the voting booth to nearby "Red Spots," where the government checked their IDs and handed out food rations.
The connection was not lost on them. It's hard to maintain your political independence when the ruling party hands out your food and determines your economic future.
Nobel Prize-winning economist Friedrich Hayek spelled out the intimate connection between economic freedom and political freedom in his 1944 book, "The Road to Serfdom."
He argued that only within a capitalist system is democracy possible and that when a country "becomes dominated by a collectivist creed, democracy will inevitably destroy itself."
Venezuela's democratic socialism is no more. Its socialist policies created economic dysfunction while curtailing economic freedoms. Now its citizens are losing their political freedoms while Venezuela joins the long list of totalitarian socialist regimes.
from the
Miami Herald
As Venezuelan President Nicolás Maduro seeks another six-year term on Sunday, it’s clear that he — like the rest of the country — is running on empty.
Oil-rich and wealthy just a few years ago, Venezuela today is being gutted by hyperinflation, food shortages, collapsing infrastructure, international sanctions, growing protests and an exodus of the desperate.
Maduro, 55, is expected to win Sunday’s vote, which is being decried as fraudulent by the international community, amid opposition calls for a boycott.
And analysts expect that will mean more pain, trouble and repression for the struggling South American country.
“Nations don’t reach bottom. There is always further to fall,” Phil Gunson, an analyst with the Crisis Group, said at a conference at the Adrienne Arsht Latin America Center in Washington, D.C., Thursday. “But it does seem like life as we know it in Venezuela will be impossible unless there is a radical change.”
And yet it’s hard to imagine how that change might come.
On the campaign trail, Maduro has vowed to use his next term to pull out of the economic death spiral that many people blame him for starting in the first place.
"I am going to lead great economic changes, and I am going to create an economic revolution that will shake the world," he said at his closing campaign Thursday. "Whatever it costs, however long it takes, I will do it."
But during his campaign, he's been doubling down on the same failing policies, taking over the country’s largest private bank, Banesco, forcing companies to slash prices and expropriating others.
It's hard to imagine Maduro, a former transportation worker, changing his economic playbook after the election, Gunson said.
“Maduro, the bus driver, is going to drive the bus over a cliff,” he said.
Maduro’s main rivals in the race are Henri Falcón, the former governor of Lara State, and Javier Bertucci, an evangelical pastor.
While some polls give the men the lead, their chances are being hurt by opposition calls for a boycott. Many in the opposition see Falcón and Bertucci as electoral fall guys, in the race to grant legitimacy to a deeply flawed process. And the international community is treating Maduro’s victory as a foregone conclusion. The United States, Canada and the European Union have said they won’t recognize the election results.
If Maduro was hoping the election might buy him some breathing room, he’s badly mistaken, said María Corina Machado, a former opposition deputy and presidential candidate who has been barred from running for office — along with many of Maduro’s serious rivals.
“If he had any legitimacy left after he supposedly won in 2013, that’s gone beginning on Monday,” she said. “For me, the only thing Maduro is gaining with this election is the illusion of stability. But it’s not sustainable, and the [elections] are going to unleash more repudiation both inside and outside the country.”
It’s hard to imagine things getting much worse in Venezuela.
Five-digit inflation has decimated purchasing power and led to widespread hunger. International sanctions are keeping the government from renegotiating its debt. Oil production — the country’s economic lifeblood and virtually only source of foreign revenue — has collapsed about 40 percent since Maduro took office. Amid the cash crunch, water and power outages have become commonplace. Hospitals often have little more to offer than aspirin. Crime is rampant.
“The economic situation is unbearable, and it’s getting more difficult as [each] day passes,” said Juan Andres Mejia, a Venezuelan congressman with the opposition Voluntad Popular party. “The government will reach a point where it won’t be able to respond to basic needs.”
Maduro is hoping to quell the crisis by calling for talks with the opposition or, perhaps, forming a “unity” government that might include dissenting voices.
But the opposition has been burned in the past by such offers. Negotiations last year in the Dominican Republic helped take the pressure off Maduro, but produced no tangible results. And a unity government would only work if Maduro agreed to obey the constitution and signaled his willingness to abandon power, Mejia said.
Sunday’s elections have also shined a light on the opposition’s internal divisions: While some are backing the boycott, others have decided to support Maduro’s long-shot rivals.
Eldery Alfonzo, a 30-year-old administrative assistant in Caracas, said he was going to vote for Bertucci, despite opposition warnings that such votes legitimize a broken electoral system.
“You never know if your vote will be counted but at least those of us who vote know in our hearts that we tried to do something,” he explained.
But if the opposition wants to be truly viable again it needs to rebuild its organization, craft a clear message and find new, younger and “inspiring” leaders, said Óscar Vallés, the head of the political science department at the Metropolitan University in Caracas.
“Without those three elements, the Venezuelan opposition will continue wandering through this hellish desert,” he said.
Power Struggle?
Barring a strong opposition, Maduro’s biggest threat the next six years may come from within.
The ruling United Socialist Party of Venezuela is packed with capitalist interests. And as these politically powerful business people see their finances eroded by Maduro’s economic incompetence, it may force divisions, analysts said. In particular, many suspect that former Vice President Diosdado Cabello has his eyes on the Miraflores presidential palace.
“I’m not absolutely sure Maduro’s power will be consolidated on Sunday,” Gunson said. “I’m not sure the elections will resolve the deep problems he has with governability, which is not just to do with the opposition, but also the stresses and strains within the ruling coalition. And those may come to the fore after the elections.”
What is certain is that if Maduro wins the race, the international community will keep tightening the screws. Washington has already slapped more than 60 current and former Venezuelan officials, including Maduro, with financial sanctions. And it has suggested that more may be coming after the election, including a freeze on Venezuelan oil imports.
On Friday, the U.S. Treasury slapped Cabello — along with his brother and wife — with sanctions, accusing him of money laundering and drug trafficking.
Mejia, the opposition deputy, said that sanctions might not have an immediate impact but that they’re critical to keeping pressure on Maduro and his cronies.
“In general, it is important that those who violate human rights in Venezuela, and those who have robbed our country and are responsible for the economic crisis, should know that they will not be able to enjoy their money and travel around the world freely,” he said.
Mejia said that if Maduro does win on Sunday, the opposition needs to redouble its efforts to build a broad coalition and push back against defeatism.
We need to “remind people that we do not deserve to live this way,” Mejia said, “that there is a different possibility.”
from
Bloomberg
Military officers are joining the exodus of Venezuelans to Colombia and Brazil, fleeing barracks and forcing President Nicolas Maduro’s government to call upon retirees and militia to fill the void.
High desertion rates at bases in Caracas and the countryside are complicating security plans for the presidential election in 13 days, which by law require military custody of electoral materials and machinery at voting centers.
“The number is unknown because it used to be published in the Official Gazette. Now, it is not,” said Rocio San Miguel, director of Control Ciudadano, a military watchdog group in Caracas. She said soldiers are fleeing for the same reason citizens are: “Wages are low, the quality of food and clothing isn’t good.”
Last week, officers who rank as high as general were called in and quartered for several days at their units. Retired officials and militia members were also contacted by their superiors, according to one retired officer who asked not to be named for fear of angering the regime. Government officials are training these fill-in personnel for the election, said a second retired officer.
The shortage of troops comes as hundreds of thousands of Venezuelans flee a societal collapse, crowding cities and makeshift camps throughout the region in the largest mass emigration in modern Latin American history. Hyperinflation has made the currency virtually worthless, and malnutrition is endemic. Almost 2 million Venezuelans are living outside the country.
Amassing Power
As the once-prosperous nation fell apart, Maduro consolidated power by creating an all-powerful assembly to bypass the national legislature. The regime jailed and banned opponents and launched a wave of arrests before the May 20 vote. The U.S. and regional organizations have refused to recognize the balloting as legitimate, and the main opposition coalition has promised a boycott in the face of what it says will be a rigged contest.
Venezuelan elections are overseen by its military, the strongest force in the country and one increasingly intertwined with Maduro’s regime. The rush to fill out units is required by the so-called Plan Republica, the security deployment of the Defense Ministry that begins on the eve of election day and lasts until the day after. By law, the armed forces are guarantors of peace and security, guarding ballots and voting machines at all 14,000-odd voting sites. They transport these materials and machinery to each voting center, often a school, and guard it.
Silent Treatment
But the level of desertion from the Fuerza Armada Nacional Bolivariana has grown exponentially in the last year, especially among troops at lower ranks. At least 10,000 soldiers have asked to retire, Control Ciudadano’s San Miguel said in March.
“Since 2015 there has been an increase in military detainees accused of treason, desertion and other crimes,” she said. “Our estimate is that there are 300 people who are imprisoned, mostly troops. A few are senior officers, others are civilians linked to the military.”
A spokesman for the armed forces didn’t immediately reply to a request for comment on the desertions.
High-ranking members of the military are barred from much contact with the lower ranks . Lines of young military men asking for retirement are long, said the first retired officer. The officer tried to chat with one, but officers running the barracks forbade them from talking to each other. The retiree said top officers fear too much conversation will permit officers and enlisted solders to form alliances for a coup.
“Those who ask to retire are put into arrest for a week at the military counterintelligence headquarters,” said Gonzalo Himiob, director of Foro Penal, a human-rights group. “That’s how worried the government is.”
He said most leave the country after they are released. Himiob said that so many have tried to resign in recent days that the regime has no room to jail them, and many are allowed to quit.
from
Reuters
HOUSTON/CARACAS (Reuters) - U.S. oil firm ConocoPhillips has moved to take Caribbean assets of Venezuela’s state-run PDVSA to enforce a $2 billion arbitration award over a decade-oil nationalization of its projects in the South American country, according to three sources familiar with its actions.
The U.S. firm targeted facilities on the islands of Curacao, Bonaire and St. Eustatius that accounted for about a quarter of Venezuela’s oil exports last year. The three play key roles in processing, storing and blending PDVSA’s oil for export.
The company received court attachments freezing assets at least two of the facilities, and could move to sell them, one of the sources said.
Conoco’s legal maneuvers could further impair PDVSA’s declining oil revenue and the country’s convulsing economy. Venezuela is almost completely dependent on oil exports, which have fallen by a third since its peak and its refineries ran at just 31 percent of capacity in the first quarter.
The Latin American country is in the grip of a deep recession with severe shortages of medicine and food as well as a growing exodus of its people.
PDVSA and the Venezuelan foreign ministry did not respond on Sunday to requests for comment. Dutch authorities said they are assessing the situation on Bonaire.
Conoco’s claims against Venezuela and state-run PDVSA in international courts have totaled $33 billion, the largest by any company.
“Any potential impacts on communities are the result of PDVSA’s illegal expropriation of our assets and its decision to ignore the judgment of the ICC tribunal,” Conoco said in an email to Reuters.
The U.S firm added it will work with the community and local authorities to address issues that may arise as a result of enforcement actions.
PDVSA has significant assets in the Caribbean. On Bonaire, it owns the 10-million-barrel BOPEC terminal which handles logistics and fuel shipments to customers, particularly in Asia. In Aruba, PDVSA and its unit Citgo lease a refinery and a storage terminal.
On the island of St. Eustatius, it rents storage tanks at the Statia terminal, owned by U.S. NuStar Energy, where over 4 million barrels of Venezuelan crude were retained by court order, according to one of the sources.
NuStar is aware of the order and “assessing our legal and commercial options,” said spokesman Chris Cho. The company does not expect the matter to change its earnings outlook, he said.
Conoco also sought to attach PDVSA inventories on Curacao, home of the 335,000-barrel-per-day Isla refinery and Bullenbay oil terminal. But the order could not immediately be enforced, according to two of the sources.
Last year, PDVSA’s shipments from Bonaire and St Eustatius terminals accounted for about 10 percent of its total exports, according to internal figures from the state-run company. The exports were mostly crude and fuel oil for Asian customers including ChinaOil, China’s Zhenhua Oil and India’s Reliance Industries.
From its largest Caribbean operations in Curacao, PDVSA shipped 14 percent of its exports last year, including products exported by its Isla refinery to Caribbean islands and crude from its Bullenbay terminal to buyers of Venezuelan crude all over the world.
PDVSA on Friday ordered its oil tankers sailing across the Caribbean to return to Venezuelan waters and await further instructions, according to a document viewed by Reuters. In the last year, several cargoes of Venezuelan crude have been retained or seized in recent years over unpaid freight fees and related debts.
“This is terrible (for PDVSA),” said a source familiar with the court order of attachment. The state-run company “cannot comply with all the committed volume for exports” and the Conoco action imperils its ability to ship fuel oil to China or access inventories to be exported from Bonaire.
At the International Chamber of Commerce (ICC), Conoco had sought up to $22 billion from PDVSA for broken contracts and loss of future profits from two oil producing joint ventures, which were nationalized in 2007 under late Venezuela President Hugo Chavez. The U.S. firm left the country after it could not reach a deal to convert its projects into joint ventures controlled by PDVSA.
A separate arbitration case involving the loss of its Venezuelan assets is before a World Bank tribunal, the International Centre for the Settlement of Investment Disputes.
Exxon Mobil Corp also has brought two separate arbitration claims over the 2007 nationalization of its projects in Venezuela.
