Oil Wars

The Venezuelan middle class keeps cruising along. A little while back I mentioned how automobile sales have increased dramatically over the past couple of years in a clear indication of how well the middle class is doing. Today we got another indicator. Venezuela’s shopping centers, frequented by the middle and upper classes, have seen their sales go up by 25% to 30% percent during the first half of this year. This statistic comes from Arnold Moreno, president of the Venezuelan Chamber of Shopping Centers (Cavececo), who added “we have seen an increase of 20% in the number of visitors to these establishments”. Also according to Moreno “we estimate that sales could come to 6.5 billion dollars this year or a little more which would put them at levels above those of 2001, and in that way we would have had not only a recovery but a sustained increase”

Moreno further added “if the situation of the country continues to be peaceful, its possible we could close the year with an increase of sales of 35% compared to 2004”

Indeed, it is nice to see how well Venezuela does with a little calm. With the middle class enjoying the benefits of an economy that is clearly doing quite well maybe they will continue to behave and allow the government to do what governments are supposed to do – run the country.

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One bogus accusation often leveled against the government is that they don’t prosecute cases of corruption. Not only is it said they don’t prosecute any cases of corruption under this government it is claimed don’t prosecute any from the notoriously corrupt Fourth Republic. This is completely false. For example, just this week and ex-banker involved in the early 90s banking scandal (for those needing a brush up on the Venezuelan banking scandal see here) was sentenced to jail for defrauding deposit holders. Here is the article from Ultimas Noticias:

By decision of the Supreme Court, Rafael, Martin Guedez, ex-president of Banco Amazonas, is sentenced to 11 years in prison for having used funds given by Fogade [Venezuela's deposit insurance entity like the FDIC in the U.S.] for purposes other than helping depositors.

The now defunct Banco Amazonas was loaned by Fogade almost 8 billion bolivares between March 29 and June 10 of 1994, money which was used in high risk financial transactions for the benefit of companies related to the bank. This was strictly prohibited by Fogade and this use of the money prevented many depositors from ever being paid their money.

In addition to the crime of diverting money given by a public entity the banker was sentenced for publishing financial statements that didn’t reflect the true financial situation of the entity.

So here we see that the Chavez government is dealing with corruption, enforcing the law, and giving jail sentences when called for. Of course, there are other big fish out there that they could go after – some who made immense fortunes off their political connections through corruption and many of whom are closely tied to the anti-Chavez opposition. I just hope that when the Chavez administration does go after them the opposition is supportive of these criminals being brought to justice and doesn’t scream about political persecutions.

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Lastly, there is yet more positive news on the poll front for Chavez. Previous polls recently mentioned on this blog have put Chavez’s level of support anywhere between 60% and 80%. The other day Datanalisis came out with another poll that put his support at 71.8%. Maybe Datanalisis does what I do when confronted with this type of contradictory information – it just splits the difference. In any event, Datanilisis, which is strongly anti-Chavez, did give one ray of hope to the opposition – the Presidential elections are still more than a year away and Chavez’s popularity could fall by then. True, but it ins't much for them to hang their hats on.
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Today the Venezuelan State oil company, PDVSA, presented its audited financial statements for 2003. Why is this the topic for a post? A couple of reasons. First if you listen to the opposition very much (not recommended for people with a low tolerance for B.S.) you have certainly heard them complain that PDVSA hasn’t finished its financial statements and that therefore no one knows what is going on with the company’s finances. You will also have heard that this tardiness in reporting is an embarrassment to the country and it is Chavista mismanagement that is to blame.

This is complete nonsense. It is true that the 2003 financial report was over a year late. But what they fail to mention is that virtually the entire finance and accounting department of PDVSA went on strike in December 2002 and had to be fired. As a result almost all the people having first hand knowledge of PDVSA’s finances and how to prepare its financial statements are gone. So a significant delay in wrapping up all the accounting was to be expected.

To make matters worse most of the data processing for PDVSA’s finance and accounting departments had been outsourced to a private company, Intesa. That company also joined the strike depriving PDVSA of all its computerized accounting systems and data. Despite court orders Intesa never turned over the computers and data and when they got a final order from Venezuela’s Supreme Court insisting they turn everything over they claimed they couldn’t because they had discarded it. So the true culprits responsible for the tardiness of the financial reports are the former PDVSA managers and executives who sabotaged the company in 02/03.

Speaking of sabotage, that brings me to my second point. In the financial statements the outside auditors apparently quantify the damage to PDVSA from the strike at $13 billion!!! This is obviously a very large number – larger than I have previously heard. Further, this is only direct damages to the oil company through sabotage and lost sales. Given that the shut down of the oil company threw the economy into a severe depression it is safe to say that Venezuela as a whole suffered losses on the order of tens of billions of dollars!

These kinds of numbers would be large in any context. But remember this is a small, poor country we are talking about in which such sums are huge. Further, this money is irretrievably lost – those lost oil sales can never be regained. Those in the Venezuelan opposition who, in their desperation to be rid of a democratically elected president, participated in the “strike” bear complete responsibility for these immense losses. The reader may wish to keep this in mind the next time he/she hears someone in the opposition complaining about Chavez spending some money on TeleSur, his aiding Caribbean countries with their oil purchases, the money spent to hire Cuban doctors or any of the other things the opposition bitches about. When Chavez spends millions on legitimate expenditures the opposition is apoplectic. Yet when they do tens of billions of dollars of damage to the country in an attempt to overthrow the government somehow no one is supposed to be upset about that. And then they wonder why they are so widely despised!
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I bet some people in D.C. responsible for spinning the war in Iraq got indigestion when they read this little gem from the Sunday paper:

They just keep getting stronger.

Despite months of assurances that their forces were on the wane, the guerrillas and terrorists battling the American-backed enterprise here appear to be growing more violent, more resilient and more sophisticated than ever.

A string of recent attacks, including the execution of moderate Sunni leaders and the kidnapping of foreign diplomats, has brought home for many Iraqis that the democratic process that has been unfolding since the Americans restored Iraqi sovereignty in June 2004 has failed to isolate the insurgents and, indeed, has become the target itself.

After concentrating their efforts for two and a half years on driving out the 138,000-plus American troops, the insurgents appear to be shifting their focus to the political and sectarian polarization of the country - apparently hoping to ignite a civil war - and to the isolation of the Iraqi government abroad.

And the insurgents are choosing their targets with greater precision, and executing and dramatizing their attacks with more sophistication than they have in the past.

Strange, didn’t Cheney say recently they were in their last throes?

But the Americans concede the growing sophistication of insurgent attacks and the insurgents' ability to replenish their ranks as fast as they are killed.

"We are capturing or killing a lot of insurgents," said a senior Army intelligence officer, who spoke on condition of anonymity because he was not authorized to make his assessments public. "But they're being replaced quicker than we can interdict their operations. There is always another insurgent ready to step up and take charge."

Keep this in mind the next time you hear a bogus body count. And the insurgency doesn’t have recruiting problems? Maybe U.S. Army recruiters should tag along with some of the insurgent recruiters for a few days and see how they do it. Then again, maybe its not technique. Maybe the insurgent supporters actually believe enough in what they are fighting for to join up – unlike the ChickenHawks in the U.S.

At the same time, the Americans acknowledge that they are no closer to understanding the inner workings of the insurgency or stemming the flow of foreign fighters, who are believed to be conducting a vast majority of suicide attacks. The insurgency, believed to be an unlikely mix of Baath Party die-hards and Islamic militants, has largely eluded the understanding of American intelligence officers since the fall of Saddam Hussein's government 27 months ago.

So basically they don’t know anything more about the insurgency than they knew about W.M.D. before they invaded Iraq. If they don’t know who they are I wonder how the ChickenHawks feel so certain in labeling them Islamofascists?

And in the case of the bombing in Musayyib, Iraqi officials said the gas truck, owned by the Oil Ministry, had been hijacked by insurgents on its way from Baghdad to Falluja several days before the bombing. To get to Musayyib, the truck probably passed through numerous military and police checkpoints, yet somehow, it reached its destination.

So a gas truck was hijacked and missing for three days. It passes through through military and police check points before it is finally used as a bomb to kill scores of Iraqis. Yet none of these well trained, well equipped, and highly motivated Iraqi troops bother to stop it. Kind of makes me wonder which side those Iraqi troops are really on.
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