I must admit that I haven’t been posting much about Venezuela because of personal reasons.
I blog because I greatly enjoy blogging. I enjoy not only posting at this blog, but also receiving emails, corresponding with readers and bloggers from all over the world, talking to other bloggers over Skype, and meeting with bloggers in person. When my family is out of town I go to New York and meet with other bloggers.
Through blogging I am also able to allow my visitors to participate in my thought process, something this guy realized way before I realized it myself (which is probably why he writes with the name of three dead shrinks. But I digress). And he’s correct: a lot of times I figure out my own position on an issue as I write the post.
Obviously I’m not the most insightful of bloggers, but my research is solid and current, and I always welcome more information. As I said, I really enjoy what I’m doing. But some news do get me down.
Since I purposely try to convey a message of cautious optimism in nearly all of my posts, I have become most reluctant to post about Venezuela.
My reluctance, however, is also matched by my desire to continue to convey accurate information on a subject about which I have posted for the past 3 years. It is a subject of national interest, particularly in view of the current seditious leadership in Congress.
The feedback I get from people who are living in Venezuela, or have travelled recently to Venezuela, is uniformly glum. Things are bad with no end in sight. The prospect of another 50-year-long regime like Cuba’s is not, by any stretch of the imagination, a good prospect. Make no mistake, the road to perdition is well marked.
This morning I wasn’t planning on posting about Venezuela, but as I picked up the newspaper the headline, Farms Are Latest Target In Venezuelan Upheaval, continues to confirm that Venezuela is firmly positioning itself as Cubazuela:
Vicente Lecuna jabs a wall map of his Santa Isabel ranch so angrily that the map crashes to the floor. “I used to produce 10,000 tons of sugar cane a year,” says the 67-year-old Venezuelan cattleman. “Now it’s zero! Zero!” he shouts.
Two years ago, squatters seized about half of Mr. Lecuna’s 3,000-acre ranch, setting up a cooperative named “Re-Founding the Fatherland.” Far from being evicted, the squatters got loans and tractors from the government of President Hugo Chávez. They then uprooted the sugar cane and decided to try their hand at growing plantains.
Mind you, this is at a time where cane-sugar derived ethanol is increasingly becoming a resource for wealth creation.
By ruining the sugar industry, Chavez shot his country in the proverbial foot twice, not just because sugar-cane ethanol is now a commodity, but also because Venezuelan oil production declines as operational oil rigs are down.
But it’s all in the name of the revolucion
If the rhetoric smacks of the 1960s, it’s because Mr. Chavez dreams of transforming Venezuela just as Fidel Castro did Cuba. Mr. Chavez has already sharply cut private companies’ role in Venezuela’s lucrative oil industry, and uses the state oil company to funnel billions of dollars to his social projects. He has nationalized the leading telephone company and the main electric utility. He speaks of wanting to drive a stake through the heart of capitalism, limiting the role of money and installing a barter system.
Aside from destroying property rights, a cornerstone of democracy, one fact is ignored when dividing agricultural land into small parcels for the use of untrained people: Agriculture is a science, and as such it needs to be managed by well-trained personnel that know what they’re doing.
I learned this at a young age: my father owned a farm; my brother is an agronomist
Farming looks deceptively simple because so much of the work involved can be done by unskilled labor. But agriculture is a science that involves a body of knowledge and the application of tested practices that will not respond to a command economy like Chavez is trying to bring about:
The chaos in the countryside has contributed to shortages in basic items like milk and meat, a paradox in a country enjoying an economic boom traceable to high oil prices. Also spurring the shortages are price controls on certain foods that keep them priced below the cost of production. Meanwhile, 19%-plus inflation – as oil revenue foods the economy – spurs panic-buying: purchasing price-controlled and other goods the shopper might not immediately need for fear of having higher prices in the future or not finding the items at all.
The article goes on, explaining how thousands of slum-dwellers are paid a monthly stipend
to learn a hodgepodge of Marxism, “ancestral” Venezuelan farming methods, and Cuban fertilizer-making techniques
The Cuban fertilizer is known as humus de lombrices, and was highly praised in the film I watched last Friday at the PHRFF. It is nothing more than a pre-Medieval technique of growing worms in cow manure within a cement trough.
I assure you, worm humus does not sustain the large-scale farming necessary for a country such as Venezuela to feed itself.
More mismanagement had turned the Hato Paraima, a 120,000 acre cattle ranch, into fallow land.
A related article in today’s New York Times also mentions that there have been dozens of kidnappings of landowners by armed gangs in the last two years.
The bad news continues: Venezuela’s climbing GDP deemed to be unsustainable due to the lack of production and investment. Hardly surprising, considering how Nationalisation sweeps Venezuela
On 1 May, Labour Day, he took control of the last remaining private oil companies in the country.
Next are CANTV, the main telecom company; the electric company, Electricidad de Caracas; and the banks.
While nationalizing the banks, Chavez wants to branch out into international banking: apparently Chavez is going ahead with the proposed Banco del Sur, involving not only Venezuela but also Argentina, Brazil, Bolivia, Ecuador and Paraguay. The countries involved, however, might not share Hugo’s goals – particularly if Venezuela wants them to pull out from the World Bank and the IMF. As the article points out,
Pulling out of the IMF would amount to a technical default on Venezuela’s bonds and would raise the cost of future borrowing. Leaving the World Bank would tear up bilateral investment treaties that Venezuela has signed with other countries (and which use the bank’s investment-dispute machinery).
While the Minister of Finance stresses that “No trouble or inconvenience is expected with regard to Venezuela’s scheduled repayment of the external debt, amortizations and interests to bond holders for an amount near USD 22 billion” if Venezuela leaves the World Bank and the International Monetary Fund, it begs the question as to whose trouble and inconvenience.
The ministers involved have decided that the Banco will be just a development bank.
Update, Friday 18 May: The Wall Street Journal does Yaracuy, and The New York Times does Yaracuy. Don’t miss Daniel’s excellent essay on Land seizure in the bolivarian revolution
Update, Sunday 20 May: Hugo Chavez approaches the Mugabe level of economic mismanagement
Update, Monday 21 May: WSJ Americas columnist Mary Anastasia O’Grady predicts a gloomy outlook for Hugo Chavez’s price controls