Caracas Chronicles

Ever notice how chavismo's instinct, when facing a clear policy failure, is always to see how they can patch it up?

Take SITME - the Central Bank's baroquely controlled alternative to the just-as-baroquely-controlled CADIVI foreign exchange control system. SITME amounts a patch on the old parallel dollar market, which the government tolerated as a patch on the sclerotic CADIVI system which was itself a clumsy patch against inflation pressures. (What was that phrase they used again?...the "Forex Anchor".)

Well, it turns out that SITME - the patch on the patch on the patch on inflation - needs a patch!

The proximate cause is that Venezuela's banks are fast running out of the types of bonds that SITME requires (and whose valuations SITME distorts) in order to transmogrify bolivars into dollars.

I'll start out by admitting that I find SITME - the Central Bank's tightly controlled replacement to the old parallel Forex market - quite confusing. Briefly, SITME allows you to trade bolivars for dollars by asking your bank to take your bolivars, buy Venezuelan (or PDVSA) bonds with them, resell the bonds for dollars, and then credit the dollars to an off-shore account.

The kicker is that your bank has to document every step of that operation to the Central Bank, which is thereby empowered to effectively control the implicit price you pay for each dollar, and the total amounts involved.

That, as I grasp it, is the short version.

Now, it seems very clear to me that this mechanism is bound to distort the market for Venezuela's sovereign debt.

Under the old permuta system, Brokers were also supposed to go through this whole bond-swapping rigamarole. In practice, though, they often didn't. They faked the paperwork and just sold dollars for bolivars - which is why a bunch of them have ended up in trouble with the law.

It had to come to this. The renationalized SIDOR Steelmaker has started hitting up the Central Bank for emergency loans.

The BsF.2 billion bailout announced today is a throwback to the insane economic policies of the 1970s and 80s, when Venezuela dug its own macroeconomic grave by devoting more and more of its scarce oil-revenues to propping up loss-making nationalized companies. This economically senseless scramble was responsible for much of the calamitous collapse in living standards between 1975 and 1995. 

What's tragic is the Institutional Alzheimer's inherent in all this.

Say you're in the middle of a fútbol game when, all of a sudden, one of the members of the other team randomly picks up the ball with both hands and starts running with it, rugby style. You instinctively turn to the ref to ask for a foul but, instead, you get a red card for dissent.

As you see the opposing team running, ball-in-hand, towards your goal, you could be forgiven for concluding that somehow, in the last few minutes, the game you were playing had changed. You may still be wearing soccer uniforms, there may still be 11 of you on a field against 11 on the other side, but irreducible aspects of what it means to play fútbol no longer apply. You are, at best, playing a twisted facsimile of soccer - a bizarroworld iteration that you neither trained for, prepared for, nor can be expected to be competitive at, because the new rules being enforced are intrinsically unfair.

Hearing chavistas rant recently, it's easy to see what their strategy is going to be ahead of September's parliamentary elections: talk incessantly about the unemployed. Not the unemployed in general, mind you...just two of them: George W. Bush and (the by-then-to-be-unemployed) Alvaro Uribe.

Chávez or Uribe-Bush? That, in the chavista playbook, is the issue...

It's been brought to my attention that it's really confusing if I write under my real name in some places and under my nickname (Quico) in others. So, to avoid confusion, I've decided to re-brand my byline here as "Francisco Toro".

Just so we're all clear, I'm still me (if that makes sense.)

Reading yesterday's scorching comments section, it seems to me a key component was missing: the creeping Venezuelanization of FARC. In crafting a response, the Venezuelan opposition should treat this, primarily, as a domestic issue. 

Because, from a Venezuelan point of view, what we see on our Western border is a racketeering mob given carte blanche to do its worst.

As Juan Carlos Zapata shows vividly in his under-rated, under-read book on his hometown, Guasdualito, nothing moves in Apure State without FARC's say-so. You don't get a job without FARC's blessing. You don't stay un-kidnapped without kicking up some money to FARC. You know full well that, in case of a problem, the civilian authorities won't be able to help you.

Yet, far from combatting the armed groups running these extortion rackets, the Venezuelan government abets their criminality. Chávez has shown again and again that he's no more interested in cracking down on the choros in Perijá than he is in cracking down on the choros in Petare. That's the message we should be hammering away on. 

This is the transcript of Venezuelan ambassador to OAS Roy Chaderton's response to Colombia's detailed, extensively documented allegations of Venezuelan collusion with Colombian narco-guerrilla rebel groups:

It takes some doing to make Eva Golinger, doyenne of unembarassedly pro-authoritarian chavista boosterism, look good. But the U.S. State Department is doing just that. By continuing to pour money into Venezuela's beleaguered dissident press, Foggy Bottom just makes it too easy for her - and, in the process, creates many more problems for the opposition's credibility than their funding can solve. 

As I wrote in my Memo to then president-elect Obama, almost two years ago now,

If you haven't yet, you really owe it to yourself to read The Washington Post's groundbreaking investigative series on the U.S.'s sprawling, comically dysfunctional, creepily hyperempowered National Security bureaucracy. It's the kind of journalism that we all need more of: smart, important, scrupulously researched and very very readable.

A few things jump out at you reading this stuff:

Dear Dr. Mier Hoffman,

The next time you decide to float a hare-brained conspiracy theory about an (unnamed) U.S. war ship sailing up the Magdalena River to murder Simón Bolívar to justify exhuming the guy's remains, kindly remember to delete from your website your earlier conspiracy theory about how Bolívar committed suicide, choosing the date for its historical resonance.

Kindly,
La Dirección

So after some consultations with cross-border bloggers, a clearer picture seems to be emerging on Thursday's dramatic and explicit Colombian accusations of Venezuelan connivance with FARC and ELN: what this signals is a serious rift between Uribe and his erstwhile protegé, Juan Manuel Santos. 

The president elect was moving strongly to let bygones be bygones and relaunch the until-recently flourishing trade relationship along Colombia's long border with Venezuela. Uribe, who is a proper hardliner, warned him both privately and publicly against it. When it seemed clear that Santos was going to go ahead anyway, Uribe did what he could to make the move politically difficult for Santos. 

It's been a good six hours now since the Colombian government levelled at Venezuela some of the most serious accusations one government can level at another and, from the Venezuelan state media...crickets. VTV is still leading with some non-story about Election observers they don't like. AVN leads with an upbeat piece on the nationalized Banco de Venezuela.

And the massive international crisis brewing right on the border? Bien gracias...

The key thing to grasp about the Two Tweeters facing 11 year jail sentences in Bolívar state  is that these people had zero influence. Luis Enrique Acosta seems to have had fewer than 50 followers on his Twitter account at the time he published his Banned Thought, and Carmen Cecilia Nares may have had less than 10. (It's still not clear what, if anything, she wrote.)

On this blog, we've been fairly dismissive about the proliferation of Noticias24 clone sites: a desperately crowded bandwagon full of news aggregators doing the same thing as Noticias24.com, but badly. LaPatilla.com is, at first blush, just an also-ran in this sad parade. To its credit, though, The Watermelon does seem to be carving out a moderately useful niche for itself by leaking polls like there's no tomorrow. 

According to Google - you can go right ahead! GoogleMaps displays a dozen Caracas Metro stations that don't exist yet. You can expect tourists relying on the service to show up for rides from stations that are years from completion, some on lines that haven't even been started yet. 

How does something like this happen?!

[HatTip: Oh captain my captain kane...]

Yesterday, after 30 days of football-fueled oligophreny, Andrés Iniesta gave me my brain back for another 47 months. Good of him, that.

It pays to spend some time reading chavismo's controversial new bill for a Communes' Law. Politics aside, the thing that jumps out at you is that chavistas are just as mindlessly bureaucratic in trying to build their Utopian Socialist state as they are in trying to stifle the capitalist economy. The proposed new "communes" are burdened down with a baroque accumulation of committees and more committees charged with implementing a neverending succession of admirable intentions until the finished product is so irredeemably top-heavy with regulation it's more or less guaranteed to be sclerotic and paralysed from day one. Even if you made a good faith effort to implement all the requirements in the bill in your local community, you probably couldn't. 

Guess whose radar screen we're on now...

Pak Ui Chun Greets Venezuelan FM
Pyongyang, July 5 (KCNA) -- Democratic People's Republic of Korea Foreign Minister Pak Ui Chun Monday sent a message of greetings to his Venezuelan counterpart Nicolas Maduro Moros on the independence day of the country.

Pak in the message wished the foreign minister of Venezuela great success in his work for defending the Bolivarian Socialist Revolution and the international prestige of the country from foreign forces' moves for aggression, and expressed belief that the ties of solidarity between the foreign ministries of the two countries would grow stronger.

More hilarity here.

I tell you, it's coming. The Pyongyang moment is coming.

As far as I can see, there are three takes on the case of Nelson Mezerhane - the part-owner of opposition broadcaster Globovisión who got the hell out of dodge after his Banco Federal was taken over by regulators last month. The first two are the same old same old: as far as María Alejandra López is concerned, the guy's a Freedom of Speech Martyr brutalized by a thuggish government solely for dissenting; and as far as the government is concerned, well, pretty much the exact opposite.

So far, so predictable.

So the June Consultores 21 snapshot poll leaked, creating a bit of a commotion among the commentariat. And for good reason: it shows Chavismo heading into September's parliamentary elections in an extremely tough opinion climate, with comfortable majorities rejecting chavismo's rhetorical mainstays, its scapegoating attempts, and Chávez himself.

In question after question, it's a massacre:

I've long had this hunch - just a hunch, really - that sooner or later, in a fit of ideological fervor, Hugo Chávez is bound to align Venezuela with North Korea. It just seems like the logical end that his long record of lunatic statements, far-over-the-top posturing, and senseless maximalism has been building up to for all these years.

It takes a moment to digest the chart Setty puts up in his latest post.

Overall, the Electricity Rationing measures the government imposed in the first half of the year did basically nothing to cut down electric consumption. They annoyed everybody, created this vaguely MadMaxish atmosphere of impending doom, but, overall, just didn't cut consumption. (In fact, the notable savings achieved by just shutting down aluminum and steel production in Guayana were offset by rising usage elsewhere!)

The one measure that did work? Commemorating the crucifixion of the son of God. 

Oh, admit it: you didn't watch the whole thing either. Who would!? Chavez's blood pressure raising hour-long tussle with the BBC's Stephen Sackur never risked showing us anything we didn't already know. In a long series of evasions, ad hominem attacks, and sheer question begging tomfoolery, Hugo Chavez merely confirmed what we already know: that this guy just ain't cut out for the cut-and-thrust of democratic debate.

For my money, the only thing that was really interesting about this interview is how rare it is: Chavez almost never gives this kind of access to interviewers, especially in terms of allowing them to ask follow-up questions. Rarity breeds interest.

But just think how sad it is that the only hint of accountability we get, the only time we can actually see our leader pressed for answers on the affairs of the body politic, is when Chavez's adviser's blunder badly and allow an independent journalist access to the guy.

By now you've heard the news: that bank that the half owner of Globovision runs got taken over. The bank is Banco Federal, the guy is Nelson Mezerhane and, for once, this is not what it looks like.