Saturday, February 9, 2008

n Venezuela, Faith in Chávez Starts to Wane

It is difficult to understand what is going on in Venezuela, and why Chavez is still on power......
vdebate reporter
Venezuelans waited to buy subsidized food last month in San Antonio de Tachira.
The nation is facing food shortages.
Published: February 9, 2008
CARACAS, Venezuela — These should be the best of times for Venezuela, blessed with the largest conventional oil reserves outside the Middle East and oil prices near record highs. But this country’s economic and social problems have become so acute lately that President Hugo Chávez is facing an unusual onslaught of criticism, even from his own supporters, about his management of the country.
In a rare turnabout, it is Mr. Chávez’s opponents who appear to have the political winds at their backs as they reverse policies of abstention and prepare dozens of candidates for pivotal regional elections. Mr. Chávez, for perhaps the first time since a recall vote in 2004, is increasingly on the defensive as his efforts to advance Venezuela toward socialism are seen as failing to address a growing list of worries like violent crime and shortages of basic foods.
While Mr. Chávez remains Venezuela’s most powerful political figure, his once unquestionable authority is showing signs of erosion. Unthinkable a few months ago, graffiti began appearing here in the capital in January reading, “Diosdado Presidente,” a show of support for a possible presidential bid by Diosdado Cabello, a Chávez supporter and governor of the populous Miranda State.
Outbreaks of dengue fever and Chagas disease have alarmed families living in the heart of this city. Fears of a devaluation of the new currency, called the “strong bolívar,” are fueling capital flight. While the economy may grow 6 percent this year, lifted by high oil prices, production in oil fields controlled by the national oil company, Petróleos de Venezuela, has declined. Inflation soared by 3 percent in January, its highest monthly level in a decade.
In fact, some economists see a slow-burning economic unraveling playing out in a country flush with oil revenues. But as Mr. Chávez embarks on his 10th year in power, it is becoming harder for him to blame previous governments for the malaise.
This holds true especially in poor areas where voters failed to turn out in support of the president in a December referendum on a constitutional overhaul that would have vastly increased Mr. Chavez’s powers, a stinging defeat from which the president has yet to recover. “I cannot find beans, rice, coffee or milk,” said Mirna de Campos, 56, a nurse’s assistant who lives in the gritty district of Los Teques outside Caracas. “What there is to find is whiskey — lots of it.”
The contrast between revolutionary language and the consumption of imported luxury items by a new elite aligned with Mr. Chávez’s government, known as the “Bolivarian bourgeoisie,” has led to questioning of the priorities of his political movement. “Chávez’s revolution has stalled, but it can move forward if he can solve some problems,” said Daniel Hellinger, a political scientist at Webster University in St. Louis who follows Venezuela. “I don’t envy him the challenge of trying to make the country’s government more effective in people’s daily lives.”
Mr. Chávez highlighted the challenge after his defeat at the polls when he called for a year of “revision, rectification and relaunching.” He issued an amnesty decree for opponents who had been charged with supporting a brief 2002 coup and shook up his cabinet, replacing his vice president and ministers in charge of the economy and fighting crime.
But for each minor policy shift or good economic statistic from the government, Mr. Chávez has stirred deeper anxiety by intensifying threats to expand state control of the economy and society. For instance, Mr. Chávez warned Monday that he would nationalize large food distributors caught hoarding groceries.
Pedro E. Piñate, an agricultural consultant in the city of Maracay, said: “We live in two countries, one inhabited by officials who think they can alter reality by sending soldiers to intimidate citizens. The other country is where the rest of us live in fear of being killed or kidnapped or of our businesses being seized.”
This fear is reflected in a statistic that is illegal to publish in Venezuela: the black-market value of the strong bolívar, or bolívar fuerte, put into circulation at the start of the year to replace the old bolívar. Its value hovers around 5.2 to the dollar according to currency traders here, less than half at the official rate, 2.15.

For other domestic problems, Mr. Chávez’s approach has been equally erratic. After the recent outbreak of dengue fever, which reached into his cabinet to infect Culture Minister Francisco Sesto, the president did not shake up the public health system. Instead, he called for an investigation of claims that the disease may have been altered into a more virulent strain as part of an attack on Venezuela by unidentified enemies.
Enemies of Venezuela have rarely been more threatening than in recent weeks, according to Mr. Chávez, who has elevated a political dispute with President Álvaro Uribe of Colombia to the point of mobilizing troops.
Last month, Mr. Chávez claimed Colombian military officials were conspiring with American officials in Bogotá to kill him. It was the 25th time that Venezuela’s government said that Mr. Chávez was the target for assassination since 2002, according to Tal Cual, a newspaper here.
As these domestic and economic troubles accumulate, Mr. Chávez faces a new test this year in state and municipal elections, with a reinvigorated opposition. Mr. Chávez stands to lose some authority if opponents win just a handful of important states or cities, almost all of which are now controlled by his supporters. Even more unpredictable are the dynamics within the president’s own movement, with insurgent candidacies clamoring to challenge the status quo.
“Chavismo is most vulnerable at the local and state level,” said Steve Ellner, a political scientist at Oriente University in eastern Venezuela. “That opens great opportunities for the opposition to erode Chávez’s power and influence, beginning with big gains in the elections held at the end of this year.”
Amid growing calls for debate and the grooming of new leaders in the Socialist Party he created last year for his followers, Mr. Chávez is trying to instill discipline within its ranks. He called for party members to be expelled if they initiated candidacies too soon for coming elections. The rule apparently does not apply to Mr. Chávez, whose bid to remove term limits for the presidency, along with other proposals to transform Venezuela into the hemisphere’s second socialist state after Cuba, was rejected by voters in December.
He mentioned a proposal last month to hold a vote in 2010 to allow him to run for re-election in 2012, when his current term expires. Billboards proclaiming “Por Ahora” — “For Now” — have gone up in the capital, reminding Venezuelans that Mr. Chávez will not give up his quest to reconfigure society.
Mr. Chávez has also not given up on his efforts abroad to deepen alliances with like-minded leaders. For instance, even as Venezuela struggles with a shortage of oil-drilling rigs, the government has sent two rigs to Ecuador, whose president, Rafael Correa, is a Chávez supporter.
This foreign aid, once tolerated by Mr. Chávez’s supporters, is emerging as a source of resentment among those left out of the country’s oil boom. “I see Chávez traveling and traveling abroad, and the money ends up somewhere else,” said Jesús Camacho, 29, who sells coffee on the street in Catia, an area of slums here, making about $8 a day.
Mr. Camacho said he had always voted for Mr. Chávez but had recently lost faith in politics. “This situation will be fixed by no man,” he said. “Only God.”

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Tuesday, July 24, 2007

Political Clashes Shake Venezuela’s Strained Oil Industry

Interesting comment in this article"
“The longer Venezuela’s new partners wait to negotiate with seriousness, the more vulnerable Chávez becomes,” said Roger Tissot, director for Latin America at PFC Energy, a consulting firm in Washington.
Political Clashes Shake Venezuela’s Strained Oil Industry
The New York Times
CARACAS, Venezuela, July 22
Venezuela’s national oil company is being shaken by claims of corruption and by internal dissent, indicating fissures within the institution largely responsible for financing President Hugo Chávez’s widening array of social welfare programs and foreign aid projects.The problems at the company, Petróleos de Venezuela, have been compounded by a rare acknowledgment by Rafael Ramírez, the energy minister and president of the company, that it cannot hire enough drilling rigs, raising concern over its ability to halt declines in oil production.
“Our sovereignty is at risk if we allow Petróleos de Venezuela to remain in this situation,” Luís Tascón, a pro-Chávez lawmaker, said in a telephone interview. “We cannot allow this company to remain an indecipherable black box.” Mr. Tascón has summoned Mr. Ramírez to the National Assembly to respond to accusations of corruption against senior executives.
Mr. Ramírez has emerged as a focus of criticism amid claims of illegal deals with oil-services companies on his watch. The attacks on him are viewed as part of a power struggle among Mr. Chávez’s supporters, with ideological loyalists clashing with the relatively less radical technocrats in charge of the strained oil industry.
The tension within Petróleos de Venezuela follows other feuds within political institutions under Mr. Chávez’s control that began earlier this year when several political parties in his coalition resisted his move to gather supporters into a single Socialist party.The armed forces also experienced an internal uproar after Gen. Raúl Isaías Baduel delivered a speech as he prepared to step down as defense minister this month saying that Mr. Chávez’s Socialist-inspired transformation of Venezuelan society should not be contaminated by Marxist orthodoxy.
But the depth of problems within Petróleos de Venezuela, which is responsible for about half of total government revenues and three-quarters of Venezuelan export revenues, illustrates how the feuds within Mr. Chávez’s coalition may weaken his ability to carry out his plans.
In comments that jolted global energy markets last week, Mr. Ramírez, the energy minister, acknowledged that Petróleos de Venezuela had hired 40 percent fewer drilling rigs than its target for this year, in part because of new rules requiring contractors to donate 10 percent of the value of their contracts to social welfare projects. While difficulty finding drilling rigs is not limited to Venezuela at a time of growing exploration internationally, Petróleos de Venezuela is also grappling with internal labor disputes as the company is strained by plans to create an assemblage of new subsidiaries charged with activities like farming, shipbuilding and manufacturing.
Union leaders, sensing vulnerability among senior executives and complaining that management had reneged on various employment benefits, said they were planning protests at production facilities across Venezuela this week. Work stoppages could make the company’s production difficulties more acute.
Speaking before the National Assembly last week, Luis Vierma, vice president of exploration and production at Petróleos de Venezuela, described the company as being in an “operational emergency.” A company spokesman did not respond to requests for interviews with Mr. Ramírez and Mr. Vierma.Venezuela, with some of the largest oil reserves outside the Middle East, officially claims to produce almost 3.1 million barrels of oil a day, but institutions like the International Energy Agency in Paris put output at 2.37 million barrels a day, down about 230,000 from a year ago.
Other energy analysts say output problems are potentially even more broadly troubling. The country’s oil exports fell 15 percent while overall production dropped 7 percent in the first quarter of this year, said Ramón Espinasa, a chief economist at Petróleos de Venezuela in the pre-Chávez era and now a respected consultant, citing both the difficulties with hiring rigs and a surge in domestic fuel consumption driven by subsidized prices.
Combined with lower global oil prices during part of this year, Venezuela’s income from oil exports may decline by about 24 percent in 2007, to $45.6 billion compared with $60.4 billion last year, by Mr. Espinasa’s estimate.
Part of the strain on Petróleos de Venezuela relates to Mr. Chávez’s efforts to assert greater control over the oil industry this year, following decrees by the president enabling the takeover of oil projects from companies including Exxon Mobil, ConocoPhillips and Chevron.That has raised fears that employees of those companies who have been critical of Mr. Chávez’s actions could be fired. A report last week in Tal Cual, an opposition daily newspaper, cited documents showing how Petróleos de Venezuela had evaluated the political sympathies of engineers at Sincor, a venture whose control was recently ceded to the government from Total of France and Statoil of Norway.
Several engineers deemed disloyal to Mr. Chávez were fired, according to the report.With newer oil fields in the Orinoco Belt facing high production costs and technical challenges because the oil there is high in impurities, a smooth transition to government control is needed to keep production levels from falling.“We’re finishing a complex process,” Bernardo Álvarez, Venezuela’s ambassador to the United States, said in a telephone interview, referring to the nationalizations.“We remain committed to supplying oil to the United States,” he added.
Venezuela remains one of the leading suppliers of oil to the United States, and the volume of oil bound for the United States has remained steady. Petroleum exports to the United States in April were 1.4 million barrels a day, the most recent figures available from the Department of Energy. Mr. Chávez is betting that new ventures with national oil companies from China, Iran, Vietnam and Belarus will allow Venezuela to lift production. Yet while production costs soar and uncertainty persists as to treatment of foreign investors, companies in most other countries have been hesitant to invest heavily in Venezuela.
“The longer Venezuela’s new partners wait to negotiate with seriousness, the more vulnerable Chávez becomes,” said Roger Tissot, director for Latin America at PFC Energy, a consulting firm in Washington.
So far, Mr. Chávez has not publicly intervened in Petróleos de Venezuela. Instead, he seems to be placing his faith in a recent increase in oil prices, which hit an 11-month high of $78.40 a barrel in London trading last week.
“Oil is going straight to $100; no one can stop it,” Mr. Chávez said last week during a visit to Nicaragua.

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