Venezuela: “Underperformance” doesn’t begin to describe it

October 14th, 2014

Even when the Venezuelan government has not allowed its own numbers to be verified for almost a decade, and stopped reporting various standard economoic indicators several years ago (practices which all started during Chavez’s administration), the numbers that it does report confirm The Economist’s appraisal of the country as Probably the world’s worst-managed economy.

Right now the government,

facing deteriorating economic conditions at home, is quietly slashing imports to cover foreign debt payments amid a severe hard-currency crunch.

Carmen Reinhart and Kenneth Rogoff write on Venezuela’s Spectacular Underperformance 

Maduro, of course, rules over a major oil-exporting economy that is so badly mismanaged that real (inflation-adjusted) per capita GDP today is 2% lower than it was in 1970, despite a ten-fold increase in oil prices.

The relevant reality now is the long-term plight and dwindling standard of living of the average Venezuelan citizen. Over the past 45 years, as Venezuela’s real per capita GDP fell, US per capita GDP roughly doubled and Chile’s per capita GDP nearly tripled. And neutral observers project that 2014 will be even worse for Venezuela – not surprising, given the chaos of the country’s policy fundamentals.

Venezuela repeatedly has defaulted on the moneys it owes on pharmaceutical imports, food, airlines, oil suppliers and joint-venture partners; Reinhart and Rogoff ask

historically there have been many external defaults without domestic defaults, the converse is not true: nearly all domestic defaults are “twin defaults” that also involve external creditors. Will the Venezuelan case be different?

In other words, the two things go hand in hand, and it’s only a matter of time before Wall Street bond-holders are treated like foreign airlines.

However, Francisco Toro points out that

in the technical sense that’s relevant in market terms, Venezuela is not in domestic default.
. . .
This is the crux of the Great Venezuela Macro Debate of 2013-2014: to what extent can the government’s patent inability to meet its obligations be ascribed to a basic inability to pay, and to what extent is it just the Nth insane distortion you get when the government makes it illegal to pay a penny more than 77 cents for a $10 bill?

So, while we split hairs on exchange rate misalignments and the like, Venezuela undoubtely becomes a land of political killings and gang turf wars.

Related: Venezuela: The Left vs. reality



Why Venezuela should not have a seat at the UN Security Council

October 13th, 2014

Mary O’Grady explains,
THE AMERICAS
A Test for Obama on Venezuela at the U.N.
Cuba’s pawn wants a seat on the Security Council. We should work against it, as we did in 2008.

De facto control of Venezuela by Cuba ought to trouble all peaceable nations. Cuba violated a U.N. embargo on arms shipments to North Korea in 2013 when it put a load of weaponry on a North Korean vessel headed for Asia. The Venezuelan National Guard is a partner of Colombia’s drug-trafficking terrorists. Numerous terrorism experts warn that Venezuela is working closely with both Iran and Hezbollah to make trouble in the West and that the country has become a transit point for Iranian agents seeking to gain a foothold in the Americas.

Permanent members Russia and China would gain a reliable ally on the Security Council by adding Venezuela. It is true that the U.S. has veto power to block dangerous moves by a member. But Venezuela could influence the discussion agenda and would undoubtedly employ Cuba’s legendary propaganda tactics to do so.

Symbolically the elevation of Venezuela to the council would be a win for U.S. foes, and Venezuela knows it.

I don’t see the Obama administration doing anything about it. Instead, I say it’s very likely Chavez’s daughter Maria Gabriela Chavez will soon be sitting next to an American diplomat at the United Nations Security Council.

Could capitalism save the Arabs?

October 12th, 2014

I am very skeptical, but Peruvian economist explains his thesis in The Capitalist Cure for Terrorism
Military might alone won’t defeat Islamic State and its ilk. The U.S. needs to promote economic empowerment
.

De Soto has a lot of experience in developing economies, but not in societies where the will of the individual is subjugated to a cult of violence. I hope he is right.



Mexico: Government paying its citizens to avoid deportation from U.S.

October 11th, 2014

Because it’s cheaper than to solve Mexico’s systemic problems,

Mexico Pays To Help Its Citizens Avoid Deportation From The U.S. (h/t Breitbart) for the fees under the “dreamers act”, DACA.

The Mexican Embassy in Washington, D.C., does not keep track of how many DACA applications the consulates have funded nationwide, according to Julian Escutia, head of the embassy’s consular coordination and Hispanic affairs section.

Said Julian Escutia, head of the embassy’s consular coordination and Hispanic affairs section, unironically,

“Our main objective is the well-being of our nationals wherever they are,” he said. “So what we want for them is that they are successful and really continue contributing to this country [the U.S.].”

Which is more than what the U.S. has done for Andrew Tahmooressi.

Also at NPR,
43 Missing Students, 1 Missing Mayor: Of Crime And Collusion In Mexico

The case highlights the corruption and collusion between politicians and drug traffickers in many parts of rural Mexico today.

So much for “the well-being of our nationals wherever they are.”

Venezuela: Exxon wins $1.6 billion settlement

October 10th, 2014

Back in 2005, then-dictator Hugo Chavez started to expropriate assets in Venezuela’s energy, mining and telecommunications industries under the pretext of development and sovereignty.

Energy companies were given until late-2007 to accept proposed contract and compensation terms from Chavez’s government or risk having their assets seized.•

Exxon and ConocoPhillips rejected the terms, and Exxon took Venezuela to the World Bank’s International Center for Settlement of Investment Disputes, or ICSID. The ICSID ruled for Exxon, which Chavez promptly, and predictably, rejected. At the time there were 20 other cases against Venezuela at the World Bank’s tribunal, all triggered by the wave of state takeovers.

Now Exxon Wins $1.6 Billion Settlement for Venezuela Seizure

The ICSID award includes $1.4 billion for expropriation of the Cerro Negro project, $179.3 million for expropriation of the smaller La Ceiba project and $9 million in compensation for production and export curtailments, ICSID said. It will incur compound interest of 3.25 percent dating back to June 2007.

In a similar complaint, the ICSID ruled Sept. 23 that Venezuela must pay $740 million to Spokane, Washington-based Gold Reserve Inc. (GRZ) for taking its Brisas gold and copper project in 2008. Gold Reserve said on July 23 that it was seeking $2.1 billion for the nationalization.

About 28 cases filed by mining and oil companies remain unresolved at the ICSID, including those filed by Phillips 66 and Highbury International AVV.

Venezuela calls it “a favorable end for the republic,” (h/t Caracas Chronicles)

Which tells you Venezuela has no intention to pay Exxon. The thing is, the country must honor ICSID rulings to avoid default of sovereign bonds. The only certain outcome in the short term is that a lot of lawyers are going to make a lot of money.

Just don’t expect any payments any time soon.

No More Che Day

October 9th, 2014

4 ISIS Terrorists Arrested in Texas

October 9th, 2014

Border security is national security.

JW Confirms: 4 ISIS Terrorists Arrested in Texas in Last 36 Hours

Islamic terrorists have entered the United States through the Mexican border and Homeland Security sources tell Judicial Watch that four have been apprehended in the last 36 hours by federal authorities and the Texas Department of Public Safety in McAllen and Pharr.

JW confirmed this after California Congressman Duncan Hunter, a former Marine Corp Major and member of the House Armed Services Committee, disclosed on national television that at least ten Islamic State of Iraq and Greater Syria (ISIS) fighters have been caught crossing the Mexican border in Texas. The veteran lawmaker got the astounding intel straight from U.S. Customs and Border Protection (CBP), the Homeland Security agency responsible for guarding the 1,933-mile southern border.

Additionally,

In late August JW reported that Islamic terrorist groups are operating in the Mexican border city of Ciudad Juarez and planning to attack the United States with car bombs or other vehicle borne improvised explosive devices (VBIED). High-level federal law enforcement, intelligence and other sources confirmed to JW that a warning bulletin for an imminent terrorist attack on the border has been issued. Agents across a number of Homeland Security, Justice and Defense agencies have all been placed on alert and instructed to aggressively work all possible leads and sources concerning this imminent terrorist threat.

The feds denied it, HOMELAND: No Islamic State fighters coming from Mexico…

If you are not concerned about what Obama called the jayvee team, A top U.S. general admitted that a potential Ebola outbreak in Central America is a real threat to the United States and a scenario which could result in a mass migration across the U.S./Mexico border, as thousands would attempt to flee the deadly virus. Kelly said that,

if Ebola did reach Central America, it is likely to expect the virus to expand exponentially and to “rage” as it has in West Africa where officials now believe up to 1.4 million may contract the disease before 2015.

I’d call that “the kiss your a** good-bye scenario.”

And don’t forget enterovirus D68 (EV-D68): ATTKISSON: Outbreak of virus first idenfitied in cities with ‘significant number’ of relocated immigrants…

In other immigration news,

U.S. GENERAL: AL QAEDA WORKING WITH LATIN AMERICAN DRUG CARTELS. Not just any general,

The commander of the U.S. Southern Command said al Qaeda raises “a lot of money” by allowing Latin American drug cartels to traffic cocaine into Europe through West Africa, explicitly associating the two enterprises.

“We know that the cocaine that flows out of Bolivia and Peru, the number one and number two producer, feeds the cocaine habit around the world,” said U.S. Marine Gen. John Kelly, commander of Southcom, during an October 7 speech delivered to an audience at the National Defense University in Washington, D.C.

NM MAYOR: ‘ALL OF A SUDDEN’ FEDS RELEASING ILLEGALS AT 4-TO-1 RATIO…

Four smugglers arrested after fatal rollover…

Chris Matthews urges Obama to quit ‘pandering’ to ‘ethnic groups’…

Meanwhile, Mexico’s President Enrique Peña Nieto said the anti-immigration views of many Americans is racist.

That’s a funny statement for Nieto to make considering that Mexico bars immigrants based on race. And a hundred other reasons.

Tonight’s podcast

October 8th, 2014

I’m in Silvio Canto’s podcast, US-Latin America stories of the week. Live at 8PM Eastern, and archived for your listening convenience.

Ecuador’s “dirty hand,” and Mia Farrow’s greased palm

October 8th, 2014

My latest article, Ecuador’s “dirty hand,” and Mia Farrow’s greased palm is up at Da Tech Guy Blog.

Don’t expect the case to be over, either.

Mexico: 43 students missing since September 26

October 8th, 2014

#HastaEncontrarlos

Vigilantes in Mexico students search
Hundreds of members of self-defence groups join the search in the Mexican town of Iguala for 43 missing students who disappeared almost two weeks ago.
None of the missing are known to have crime connections:

The students, from a teacher training college in Ayotzinapa, travelled to the nearby town of Iguala to protest against what they perceived as discriminatory hiring practices for teachers.

After a day of protests and fundraising, they wanted to make their way back to their college.

Accounts of what happened next differ.

Members of the student union say they hitched a lift aboard three local buses, but the police says the students seized the buses.

In the hours which followed, six people were killed when armed men opened fire on the three buses and that of a third division football team which they presumably mistook for one carrying students.

Three students, a footballer, the driver of one of the buses and a woman in a taxi were shot dead. Many more were injured.

Municipal police gave chase to the students, and are believed to have fired at them.

Twenty-two officers have been detained in connection with the shooting.

But there are also reports of other armed men opening fire on the students. Eight people not belonging to the municipal police have also been arrested.

Disappearance
Following the incident on the night of 26 September, 57 students were reported missing.

On 30 September it was announced that 13 of them had returned to their homes.

One name was found to have appeared in the list of the missing twice, leaving 43 students unaccounted for.

On 4 October, prosecutors announced they had found six shallow graves containing the remains of at least 28 people.

Authorities are investigating the possible involvement of a local drug gang called Guerreros Unidos (United Warriors, a pun, since the state’s name is Guerrero), led by a thug nicknamed El Chucky, and are affiliated with the Beltran Leyva cartel. Additionally, Iguala’s mayor, Jose Luis Abarca Velazquez, his wife, Maria de los Angeles Pineda Villa, and the police chief have not been seen since the events on 26 September. However, so far the biggest suspect is Mexico’s Police

The state prosecutor investigating why the police opened fire on students from their vehicles has found mass graves in Iguala — the small industrial city where the confrontations occurred — containing 28 badly burned and dismembered bodies.

The prosecutors had already arrested 22 police officers after the clashes, saying the officers secretly worked for, or were members of, a local gang. Now they are investigating whether the police apprehended the students after the confrontation and deliberately turned them over to the local gang. Two witnesses in custody told prosecutors that the gang then killed the protesters on the orders of a leader known as El Chucky.

According to witnesses

More police officers arrived, accompanied by gunmen in plainclothes. Prosecutors have now identified these shooters as members of a cell of assassins called “Guerreros Unidos” or “Warriors United,” who work for the Beltran Leyva cartel. The cartel’s head Hector Beltran Leyva was arrested last week following the incident.

Federal agents are now in charge instead of local police.

Mexican President Enrique Pena Nieto has vowed to identify and punish those responsible for the recent disappearance of 43 students after clashes with police.

On one front, the September 26 murders of six people in Iguala, Guerrero, has plunged the conflict-ridden state south of Mexico City into renewed political turmoil.

Paco Almaraz features the governor of the state of Guerrero in the burn-out unit (in Spanish),