Earlier today I came across this thread by Rice University’s Francisco Monaldi. It stopped me in my tracks. Reading it, I realized the one thing nobody has done this week is analyze the TSJ’s Decision 156 as what it actually is: a catastrophically misconceived oil privatization measure.

Seen in those terms, the decision is, if anything, even more shocking than on constitutional grounds:

Monaldi is onto something.

The constitutional crisis of the last 96 hours, lest we forget, was the unintended byproduct of something entirely different: an attempted backdoor oil privatization scheme rushed through in a last minute panic by a government that’s run out of minimally reasonable ways of raising cash.

To younger readers who’ve grown used to a government of public treasury arsonists, this barely raises an eyebrow.

But I’m old, coño. I remember a simpler time when fighting oil privatization was the Venezuelan left’s whole reason for existing. I came of age, politically, listening to those arguments: I can never forget them. 

The principled, passionate rejection of oil privatization was at the core of their political vision.

Back in 1996, when Aristóbulo Istúriz was the 43 year old, first-term Causa R Mayor of Caracas pictured above, I was a 21 year old kid thinking about politics seriously for the first time.

I could see the country was hideously run, and only the left seemed to be asking tough questions about why. I spent a lot of time then hanging out with these guys: with Aristóbulo, and with Alí Rodríguez (who had hair back then, imagine!) and Pablo Medina and General Müller Rojas. The whole gang. I agreed with them. Hell, I joined their party!

I believed them.

In the mid-1990s, the principled, passionate rejection of oil privatization was at the ideological marrow of their rhetoric.

Specifically, the rejection to the Aperura Petrolera —the 1990s joint-ventures with foreign companies to develop the vast extra-heavy oil reserves in the Faja del Orinoco— was the leitmotif to the type of nationalist left they were trying to build.

Their rejection of foreign intervention in the oil industry had, at times, a devotional flair to it. The left built its whole sense of mission around this issue. To be a leftist in Venezuela in 1995-96 meant, first and foremost, to viscerally reject any move to sell off the oil industry to the foreigners. To be sickened by the very thought. 

In speech after speech, rally after rally, Aristóbulo, Alí, Pablo, Arias Cárdenas and the rest of the guys slammed the Apertura. They rolled their eyes at the considerable care Teodoro Petkoff and Luis Giusti had taken to design Apertura schemes that would maximize the take to the Venezuelan taxpayer. They had zero patience for the minute attention paid to ensuring bidding was scrupulously transparent and fair.

“Window dressing!” they railed.

“They’re selling off our lifeblood! Le están vendiendo la patria al mejor postor!!”

Reading Monaldi’s tweetstorm, I found myself thinking back to those years. And as I did, I found myself shaking —shaking— with rage.

Soon, I was mulling sci-fi scenarios —or childish revenge fantasies, depending on your point of view— where I hop on a time machine, go back to 1996, and show that young, idealistic firebrand what his life would become 21 years later.

I’d sit Aristóbulo down and give him 20-25 minutes to read Decision 156. 

Then I’d briefly explain what YouTube is and have him watch this:

Sí, Aristóbulo. For real. That’s you 21 years from now. You get fat, dude! Funny, huh? 4 out of 5 Venezuelans will lose weight in 2017 because they won’t be able to afford enough food. No worries, though: won’t be a problem for you.

That’s you, Aristóbulo. This is what you will become. This is what power will do to you.

And yeah man, that video? That really is you defending that decision. ¡En serio, chamo! That’s you passionately defending a Tribunal saying the President can rewrite the Hydrocarbons Law on his lonesome, ignoring an elected assembly, without authorization from anyone. That’s you giving the government cover to dish out chunks of the oil industry to anyone, under any terms, without even having to disclose them first if they don’t want!

That’s you, Aristóbulo. This is what you will become. This is what power will do to you.

And you want to know the crazy thing, Aristóbulo? You wanna hear the part that really doesn’t make sense?

No, it’s not that you’ll applaud an autogolpe staged to allow the president to vender la patria.

It isn’t that you’ll back a privatization held not so we can build schools or hospitals for the poor, but so we can pay back a gaggle of fat cat capitalists on Wall Street.

It thing isn’t even that you’ll do it all in desperate straits, facing horrendously unfavorable conditions that end up costing starving Venezuelans hundreds of millions of dollars Or that you’ll back that decision for the benefit of some multi-billionaire foreign oligarch closely tied to a far-right Russian dictator who has nothing but scorn for your ideology.

No, the crazy thing comes later. The crazy thing comes after you applaud that judicial autogolpe designed to allow the president to sell out the patria not to build schools but to pay off Wall Street to the benefit of a Russian dictator and his cronies.

The crazy part comes when, having done all that, you then look around for bits of patria you can sell off in a hurry for a substantial sum and find…well, guess what you’ll find when you do that, Aristóbulo?

Hamaca, chamo!

Sí, dude, one of the four Faja extra-heavy oil upgrading projects Luis Giusti is talking about setting up in 1996. You know, up in Jose, in Anzoátegui. Specifically, the one with ConocoPhillips and Chevron alongside PDVSA — a Joint Venture they’ll officially call Ameriven but everyone will still refer to as Hamaca.

Because here’s what you don’t know, Aristóbulo. You’re going to fail in your bid to stop the Hamaca project, and thank God for that. The gringos are going to build it —fancy, high-tech syncrude upgrader and all.

It’ll be a huge success.

It’ll look like this by the time they’re done with it:

By 2017, your long hoped-for revolution will have ruined the country as it staggers towards the end of its second decade in power. The upgrader will still be there, though they’ll have changed its name by then.

They’ll call it Petropiar, but everyone will still know it’s Hamaca.

They’ll call it Petropiar, as part of some doomed nationalist gesture, but that won’t fool anyone.

Everyone will still know it’s Hamaca. Everyone will still know that ConocoPhillips and Chevron built it and that it’s always been hugely profitable: one of the crown jewels of the Apertura Petrolera and an enduring symbol of your shortsightedness.  

By then they’ll have expropriated ConocoPhillips —at enormous cost at international arbitration— but Chevron will still be around with a 30% stake.

And you know what? After 18 years in power, the socialist revolution that will make you fat while the common people starve will have done so little for Venezuela, it will have built so little of actual value, Aristóbulo, that the bit of the patria that you’re going to be desperately trying to pawn off to some Russian oligarch to avoid total bankruptcy is…Hamaca! 

And so the day will come, Maestro, when —graying around the temples— you are going to go on television and champion shutting down Venezuela’s elected legislature to defend the right of a foreign billionarire to buy up Venezuelan oil assets that only exist because your multi-year campaign against them failed.

And that, Aristóbulo, you miserable piece of shit…that is the crazy thing.

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  1. And now, the young liberal firebrand, Francisco Toro, has come full circle and is now the conservative. Funny how that works…

  2. Congratulations to Mr. F. Toro for this article. It is admirable that he has retained his democratic convictions when others like comrade Isturiz flip over into defenders of dictatorship.

    I think it’s the fault of the Leninist Party and its Leader Principle. Once you join PSUV or an analogue, the leading role of the party, democratic centralism and the need for a single Great Leader all convey you towards a contempt for elections and electoral bodies. The Constituent Assembly gets shut down.

    I think that’s what happened to Isturiz.

    • “when others like comrade Isturiz flip over into defenders of dictatorship”. ??
      They did not flip over. Ali Rodriguez and Isturiz were not defending democratic convictions in the 90’s. They were as disruptive as they are today. Rodriguez used to blow up pipelines the nation used to transport its oil. They were bandits then and they are bandits now.
      The APERTURA has left Venezuela with valuable upgraders for the heavy Orinoco crude oil and increased the production of light oil in marginal fields PDVSA could not afford to operate. Rodriguez and Isturiz did not do a damn for the oil industry.

      • Ýep. They were all thugs from day 0. Get out of here with that nostalgic tone of the 90s left.

        You could show this article and all he’s done to past Aristobulo and he would get giddy at all the $ he knows he will steal.

      • ” Rodriguez used to blow up pipelines the nation used to transport its oil.”

        And it’s disgusting how Rodríguez Araque wasn’t rotting into the basement of the Helicoide since he was openly betraying the homeland.

        The destruction of Venezuela begun in 1959 when Castro took over Cuba and inmediately wanted to steal Venezuela’s oil for his regime.

  3. As I said to Emiliana in reference to her yesterday’s article, thank you ! This is a huge blunder. There must have been a good reason for it and there you have it. Esta es la guinda. Unfortunately, nobody knows whether “this” opposition will be able to seize the moment.

  4. If the pueblo could bottle that outrage – over, basically, people claiming to be for la patria, but in fact selling out the country in the most shameless fashion – Chavismo would fall in a week. Stir the embers, bro. The pedantic look at all of this insanity makes me want to scream some times.

    • Er…El pueblo is only preoccupied with one thing now: finding enough to eat and surviving. Meanwhile the heist continues.

  5. I was there.. I saw it all from 2001 for 14 years. Ameriven was the 4th upgrader built and the last since the revolution arrived in May 2007. Each of the 4 projects learned from the previous, innovating. Pdvsa engineers earned a comfortable $15,000 a year then. They now earn about $2000, so about 90% have left to live from Abudabi to Alberta, New Jeresy to New Zealand, some living legally, others illegally, a few as engineers, others waiting tables, Uber’ing, setting up food trucks. To be safe and with a future for their families.

    The continual, repeated disasterous decisions made by Chavez/Maduro, Ramirez, Del Pino, Figuero, down to the corrupt advisor and hard core psuvista GM destroyed the empressa mixtas. The braindrain is so dramatic that future Faja projects, real profitable technically sound projects are vitually impossible. While previously mentioned persons own ranches in Texas, to the advisor owning 2 apartments in Miami. I got a thousand stories that if told would put dozens in anyother country in prison.

    I never understood the Venezuealan obsession with the patria for oil. It is a resouce to be optimized with other parts of the economy to bring prosperityThose int’l oil companies brought more than investment dollars and technology. They brought stabilty, in finances and ethics. Since they left and pdvsa took full control of these, and it has contributed to misery, corruption and starvation.

    Btw, Rosneft has nothing to offer except DolarsToday, you will pay dearly in the future.

  6. This proves that massive corruption existed way before Chavismo made even even worse. El pajarito comandante eterno grabbed power in 1999. All through the 90’s, 80’s, and before with AD & Copey, Venezuela’s history of briberies, embezzlement, ‘favorcitos’ and flat out theft is well documented. As Gustavo Coronel will

    My point here is that it won’t get much better when the maladroits of the MUD things won’t get much better at all. My suspect more than half of them are already ‘ensalsaos’ by now, and they don’t even have any power yet. Say Capriles wins the 2018 elections.. ophhh the mess he will inherit!! Perhaps he, himself, is one of the few honest people left in Kleptozuela, but his cabinet, ministers, gobernadores and empleados publicos.. PDVSA thugs, they will still be there, as they’ve always been, way before Chavismo got in.

    Even if Leopoldo or MCM became presidents.. ay papa!! what will they do if 3/4 of the entire Venezuelan population live for Guisos, Tigres y Chanchullos? What will they do with the massive debt, low oil prices, very high corruption (perhaps not top 10 in the World anymore, but surely top 20..) a destroyed economy, no infrastructure, after the devastating 2 million professionals Brain-Drain (who, like you the reader, will not return) what will they do about the corrupt military, police, guardia, replace them all? With whom? Everyone is corrupt anyway..

    Ok so they replace the heads of PDVSA, Corpoelec.. Agitan esos avisperos.. They would have to fire 90% of the personnel too.. todos en el guiso.. same with every ministry and institution. Can the MUD start controlling inflation, effect better economic policy, get rid of controles de cambio y de precio? Sure! Raise gasoline prices? Certainly! Get a massive FMI loan? Perhaps. But at what social cost? Restore separation of powers and a semblance of democracy, sure.. Control crime a bit better? Yeah,, 15,000 dead per year instead of 25,000..

    Can’t wait to see that ‘berenjero’ with the MUD in power.

    • You could make the possible parallels between the needed government and CAP’s 2nd, people sort of have figured out the problem with the political structure, there is no hard belief in any given party so a political hit a la Accion Democratica maybe harder to ensure, we however whould be more scared in the power the rich elites have over the country the same way most “bussinesmen” had back then, also the military which is waaaaay more fucked up than it was back then. It’s a scary future my friend, and sadly one i’ll have to see through, all I can do is try to inform in a proper way all the people I can, sadly those that I can reach to already have the main idea figured out, the problem is the marginalized, which by now is most of the population.

    • I must say, I spent a lot of time trying to understand what was the ‘truth’ about both the ‘old’ and the ‘new’ PDVSA. On a certain level, I have had an ‘explanation’ …

      But, really, there has been something truly “exceptional’ (Venezuelan exceptionalism? … wrt the rest of OPEC at least) in PDVSA both before and after Chavez et al.

      Look, in LIBYA! They can increase production in a civil war!
      In IRAQ, under OCCUPATION of their second largest city by ISIS (imagine Maracaibo occupied by ISIS!), they have significantly INCREASED production.

      In Venezuela it has been a life and death issue of survival of the regime for years now and they simply could not/cannot do it. This is unique to OPEC!

      But, when one talks to some of the old PDVSA guys, indeed they worked hard and were far more competent than the current lot, but very many have no self-criticism about what the hell it was they were doing and or how they were doing it that led to Chavismo.

      Sure, perpetual corruption is a part of it, but it is not just corruption, it had to do with many other distorted and problematic social and economic relations they seem to have been and remain blind to. Which means, the next PDVSA (i.e., the new, new PDVSA) will not have rectified the basic problems if these things are not honestly and frankly discussed and faced up to.

      • PDVSA has no need to go into any basic social problems, it needs yo just focus on oil production.
        One of the reasons it’s as screwed as it is, is it’s involvement in “social corncerns” or whatever the hell you wanna call it, that something the Gov needed to take care of without bringin PDVS into the mix.

  7. I have the feeling (perhaps lots more than that) that some of the oppo leaders are not as clueless as some people make them out to be , they have teams if people with lots of expertise working on very professional specific plans to address many of the problems that will have to be faced after a regime change , their efforts are not made public but they are there ………, they are fully aware of the obstacles both in terms of the manpower requirements and other resources and policies needed to get things right ……they know some ideas will initially fail but also have high confidence that many of them will succeed . You see they are knowhow people not holistic visionaries …..

    If you ask them whether they realize how difficult the path ahead is , they will answer sure , but if your dont start, if you just stay put and do nothing , there is no chance that things can improve and allow a better country to be built……!! So first things first , lets get the chance to work on improving things and begin using our plans to see how far ahead we can move ……but if you take a defeatist attitude and give up there is no chance that anything can be done for the country…..if we let the things be because there is corruption etc what will certainly happen is that things will get lots worse……that we know…!!

    The defeatists of course are people who knowingly or not collaborate with the regime in its efforts to perpetuate itself ….we know who they are ….!!

  8. Two comments:
    One. That the issue detected by Monaldi about the desperate situation of PDVSA’s finances is probably at the heart of this TSJ maneuver, which makes this action by the TSJ even worse, really Treason, and,
    that the point raised by Poeta Criollo about what the future holds for our country is , really, the main/critical issue. Venezuela will be left in ruins, but what can be done about repairing our spiritual and moral ruins will be the most important question mark for our future. I would like to suggest that a democratic Venezuela should embrace a massive program of civic education to try to convert gente into citizens, as one of the main recovery programs for our country. I have written a paper on this and I will be glad to send it to anyone who wants to see it, or I would be glad to send it for publication to CC, if there is interest. This program has the problem of being a long term one, is not a magical, overnight solution. I have found that most Venezuelans prefer a magical solution, such as….. Chavez. The program I outline would take one, two generations and can be done in parallel with other approaches.

    • I agree it is a long term quest but, if you do not stop oil revenues from being centralized in the government you will never be able to get citizens, no matter how many generations, you will only get vassals

    • Would you mind sending it to me? those kind of programs you don’t hear much about, from either side the civic aspect resolves itself suddenly, kinda makes you think it’s a problem they have no interest in solving :s.

      [email protected]

    • A couple of years ago, I saw such a Civics Education Program in Colombia. I was in a small town on a Friday night and was surprised to see a program of speakers on civics issues being presented in the plaza. The event was well attended and not by the city’s gentry. Based on dress, they were ordinary working class people. They were paying attention and participating by asking questions. Some of the speakers were even controversial, one pointing out (with statistics), that the most “religious and conservative” countries in the world also had the the highest crime statistics. Overall, the program was designed to help people understand what government is, what it does, and what its limitations are. Any new Venezuelan government would do well to reach out to the Colombian government to learn from their experience.

    • Indeed.

      I must say, it is pretty difficult to call a decision to change from allowing, what, 50-50 ownership to 40-60 ownership (in favor of PDVSA) ‘socialism’!!

      They whole ‘socialism’ and “soverenia petrolera’ thing of Chavez was pretty thin. It was about as small a ‘re-nationalization’ as was possible not to have been accused by the (then mostly sincere) theorists that Quico lists above of having ‘betrayed’ his commitment to ‘socialism’ and to killing the ‘neo-liberal aperatura’.

      What 40/60 it got him was OPERATIONAL control of PDVSA’s oil enterprises across the country, and as soon as he finally got a sufficiently compliant president of the estatal too, he could just call and ask for cash to be delivered to the presidential office or wherever he liked.

      If the foreign firms had retained operational control of the joint ventures as before, then that ease-of-use of PDVSA as his caja negra would have been more difficult.

      That’s about as far as Chavez/ understanding of ‘socialism’ went in the case of PDVSA. It was a cleptocratic/rentista understanding of ‘socialism’ and ‘sovereignty’. (Interestingly, some, like Mommer, argue, at least nowadays, that NOT nationalizing the sector at all in the first place would have maximized the state take and the integrity of the actual operations, and would be more in the national interests, etc.. (Hmm, sounds pretty hypocritical from him after what he facilitated Chavez to do!)

      So as not to be too one-sided here – to be fair – this was an understanding Chavez got growing up in Venezuela, a “Magical State” where this mentality goes back to Gomez, with varying intensities.

      If he had been from somewhere in the country where people work in the oil sector, perhaps he would also have gotten some appreciation of how the-goose-that-lays-the-golden-eggs has had to be cajoled and ‘respected’ to keep laying the eggs … but he came from another section of the country that just received golden eggs. (This last point reflects a point made by one of his most loyal chavista ambassadors.)

  9. “… the socialist revolution will have done so little for Venezuela…”. Actually nothing. They have done nothing since 2008 name only one thing they have done or built or create: the answer nothing. They stole completely the whole bonanza petrolera, borrowed money and sold every asset they could. They basically carried the biggest loot ever. Even bigger than the one that began Colon 500 hundreds years ago.

    • Margaret Thatcher’s famous quote; “Socialism works until you run out of someone else’s money.”
      In this case the wealth of the Venezuelan nation and everything that had been accomplished has been mortgaged or deteriorated.

  10. This post is incredible. I was actually fist bumping by the end! It’s the complete abandonment of any remaining vestiges of ideology or morality that’s truly astonishing, but also a source of hope? The government is in the gutter not only economically but ideologically; there is no re-invention they can make, no way to renew the Chávez brand, not even any moral authority to sketch out a leftist way out. And that is liberating for those of us who remain on the left—we can think our country and its social oppressions anew WITHOUT being burdened by allegiances to a government which nominally belongs in ‘our’ camp. These people are nothings: they stand for nothing but their own self-interest and caste, no ideas, no morals, no future they desire but the endless drudgery of their personally advantageous present.

  11. Of course things can improve. That’ s never been questioned. Well, at least no by me. Slowly but surely we can improve. You change the system, and then everything will change. Venezuelans are just like everybody else, you just have to give them the right stimullus. I don’t believe in tropical determinism. That is not the real issue here. The issue is how to take power. In fact, that is the only issue that is important right now and the one less discussed by everyone. Everybody is avoiding tha subject.
    The only way to improve is to take control.
    Even if you could somehow force the elections and win them, that is not enough, because economical power would still remain in the hands of the dictators and they would use that power in their favour and you would still be their puppets.
    And I don´t even consider it possible to take control without massive protests. The massive protests are needed even if they would agree to hold free elections without any pressure. If I received a call by Maduro, begging me not to call for massive protests, and promising me free elections, I would say, Ok, but I would still call for the protests, because it is important for strategical and symbolical reasons that those protests happen. It is better if they fall by force (by force I don’t mean a violent coup, but organized civilian action). So I can’ t understand why some people try so hard to prevent something that would actually we so benefitial to everybody. If we could make the regime crumble by unified massive protests that would be a lot better than to win dubious elections and have to still deal with powerful enemies with many resources to prevent true change. So insist, I don’t understand that attitude and never will. If they crumble because of protests and civilian pressure, we would be free to take some measures, that we would otherwise have to negotiate with armed thugs. Strategically, chavismo must become an exemplary tale for the next generations. Some would say, it is not ethical to call for protests, because many will die (I don’ t even think that is the case). I say it is not ethical not to call for protests, because many more will die if we don’ t act.The dictatorship cannot be allowed to survive in any way. All its structure must be taken down, bits by bits. Whatever happens to chavistas, I don’ t care, they simply have to understand who is in control. Some will become part of the transition, some will go to jail, some will be extradited, some will form new opposition parties, but no one will be speaking about Chavez anymore.
    And I will say something more, it is crucial to know everything about the bonds and about CADIVI. The only reason, I think, the oppo acts the way it does, is because it is dirty.

  12. That would assume that they had any real convictions back them. It reminds me of Tarek W., he created a name for himself defending human rights. When he got power, we all saw what happened. Human rights was a mean to an end (power). Defense of the “sovereign oil industry” was the same. just a way to call attention and get votes, cheap nationalism. None of them has convictions, just interests. Aristobulo has to be the one that has switched parties the most.

  13. Ha!!! 🙂 Well said. I love it.

    I do agree the TSJ decision was about letting Maduro/PDVSA sell a piece of Petropars to Rosneft, and also somehow connected to a loan they are hoping for from Sechin/Putin.

    However, I am not sure if the decision 156 was intended as some sort of ‘privatization’ per se.

    They can sell Rosneft a bigger piece of that joint venture without it being any sort of ‘privatization’. As long as it is no more than a 40% stake to them and Chevron combined, then it’s within the hydrocarbon law for the oil sector. It’s just that the sale needs to be approved by the AN (certainly not opposed by the AN) , and Madure is stuck there.

    If I were Sechin/Rosneft, I’d be concerned that my investment could be lost when the oppos comes to power and says it was illegal.

    But, perhaps there is something more, beyond this that makes it per se a ‘privatization’ that I am missing in the TSJ decision??

  14. The original apertura was not a political initiative , it was a Pdvsa managerial initiative , Pdvsa had to beg cajole , lobby the powers that be in the political arena and in govt to get it approved ….it was hard going and faced a lot of opposition from people who didnt understand what it was all about !! but finally it got a green light after some heated negotiation with ministers the president and some of his advisors …

    The problem was that there were huge parts of venezuelan territory with reasonable oil prospects which Pdvsa didnt have the money to explore unless it stopped many highly profitable and promising investments and cut short govt income , so they figured that they could get that huge piece of land explored using the money of international companies that wanted to add reserves to their financials and didnt mind putting the money and assuming the exploratory and commercial risk if things didnt turn out so nice…….

    The govt reluctantly said ok but one of the conditions was that no existing law could be touched because that would make the plan into a political circus every one playing to indignant galleries about how the countrys wealth was being sold to foreigners.

    A calculation was made , programs were run to make sure the right companies would enter bids ( those with the financial and technical capacity to make the needed investments) , it was decided that Pdvsa participation should be in the 35% range to make it a good business for both the companies and the country, more and Pdvsa wouldnt have the money needed to develop any discovered fields …..the idea was to concetrate Pdvsa resources on what was known to produce the highest yields.

    Because Pdvsa had spent money making some preliminary explorations or even discovering some fields it seemed fair to askt the companies to compensate Pdvsa for the money spent on getting the information the companies would use to calculate their prospects and guide their exploration ….!!

    Pdvsa saw that some years into the first decade the demand for oil would boom and if Venezuela got lucky and enough oil was found and exploited production could go up to 5 o 7 million bls a day and wealth would pour into Venezuela like never before …it never crossed their mind to tell the govt what to do with the income it would recieve , oil managers are NOT politicians so they didnt presume to dictate to the Govt (chosen by the people) how they should use the money to create the development of a modern less oil dependent economy , the boundary between the political and the managerial was sacred and could not be crossed ……

    There are lot of things left unsaid here , but there is no space , even educated people in Venezuela are often extremely misinformed about how things got done in this country at the time of the 4th republic, and also very ignorant of the OIl business which laid the golden eggs!!

  15. So Quico, you still favor government ownership of the oil in Venezuela even after witnessing how govetnment ownership has bankrupted and corrupted Venezuela. I find that remarkable. Even the Saudi’s are starting to monetize their holdings. Time may be passing you by.

    • Yes, Toro still opposes anything with the label “privatization” especially the ownership of mineral rights by private citizens. He still beams with pride at the thought of the expropriation of the prize Hamaca. You see, marxism is not the problem, the people (and results) are the problem. Never mind that marxism always produces the same destruction regardless of people, culture, geography, resources, poverty, era. He even wants to export marxism to all corners of the world. Useful much?

      • I sometimes have the fear that even if the doors are left wide open to invite every one to a capitalist feast , people who can really get things done and who have the capital and expertise and skills to make a go at it wont come to the feast …..the assumption that every one is a born capitalist , competent and resourceful enough to succesfully build and develop a business in a competitive market enviroment may be something of a myth , it doenst work always and it doesnt work everywhere . There are people who can do it with some encouragement but its not everyone and its not automatic….., we are lucky to have Polar and some other companies like them but lets not assumme that culturally we are sure to be capable of developing a first class capitalist economy .

        This is not to say that govt run things are always to be preffered , usually (but not always ) they are the worst. But lets not fall into the delusion that we are an American or Indian Economy waiting to happen………, the effort is not just one of doing away with govt but of refounding ourselves so that we can develop a capitalist economy from what we have …..and cant exclude also an effort to make to make public operations more honest and efficient which includes separating the operational aspects from the partisan aspects of govt and relying more on institutions than on ideological motivated hubristic conceits….!!

        There are no panaceas , no utopias and we should be cautious in expecting to create one thru the glorious thrust of liberal market ideals. We need market oriented policies but also a much better run professional public activity .

    • Even after witnessing how that has bankrupted and corrupted Venezuela, I still favor government ownership of the oil in Venezuela … for the following two reasons.

      First: Unless the privatization is extremely well managed and extremely transparent, leaving no doubts that it is not in the interest of the people to have it renationalized, it is going to remain an attractive target for the populists of tomorrow. But, unfortunately, the possibilities for the privatization being well managed and truly transparent are slim, considering that the short-term interests of the agents involved will not duly consider the long interest of the nation. For instance… as the “Apertura” was executed during the time when oil was for instance by The Economist believed to come down to US$5 per barrel and Yamani was predicating his return to the stone age story, the “Apertura” contracts did not account for what to do in the case oil passed for instance $30 per barrel. During Apertura days a Pdvsa chief economist even argued that a production of 5 million barrels sold at US$ 10 helped the internal economy to be more dynamic than the production of 2.5 million barrels sold for US$ 20.

      Second: Oil is a geo-strategic resource that sometimes needs an OPEP to defend it, for instance in Europe during the 1980’s-90’s the taxman got 400% more in revenues for each liter of gasoline sold at the pump, than the nation that gave up that non-renewable resource for ever. (And sometimes like in Germany and Spain, while taxing the gasoline, they still heavily subsidized their coal)

      But what I do know is that the net oil revenues should not be centralized in the governments. That causes bureaucrats and politicians to being from obnoxious besserwissers to outright bandits; and of course that impedes the formation of good citizens and produces only submissive vassals; and of course that guarantees that the most powerful and sophisticated networks, will be those developing the know-how on how to exploit these centralized oil revenues.

      But, what I also do know is that now we are in such a deep shit-hole, that we might have to sacrifice many of the what-we-should-do, only in order for our people to survive.

      • There’s not much to be done that can have any meaning. The outright bandits will continue to come to the black honey-pot, and El Pueblo will not magically become good citizens. Without a deep and abiding respect for others’ rights and the rule of law, private ownership is impossible. Without a complete change of culture we’ll only have a continuing slide into mob rule.

  16. If Venezuela would have raised its production to 5/6 million bls a day ( it was already producing over 3 million bls a day) then when (as foreseen) in the next decade the price of oil rose it would have risen probably not to $100 per bl but to about $ 80 bl which would have made less encouraging the pursuit of incremental production from other sources and kept the high prices going for a longer period , The benefit to Venezuela would not have been inconsiderable !! There were signs that China was underreporting its oil purchases and that Asian economic growth would push demand to a level where prices would rise significantly . No one knew how high….!!

    Venezuelas problem then as now is that it had such volumes of heavy oil reserves that when new technologies would make oil increasingly less needed (as we all knew would inevitably happen) Venezuela would be left with huge amount of unexploited reserves which would never get monetized …..Venezuelas gain would be to keep prices low to extend the life of the resources underground for as long as possible .This was the long term thinking behind apertura , i.e lets see if we can profit from this resource before it losses most of its value …!!

    Of course the above strategic view did not consider was what use would be made of the wealth thus created , Managers were not into telling the democratically appointed rulers what use to make of their take on the newly produced income ..that was for the People to decide by appointing the countrys rulers in a free democratic system ………….!! Now we know that the people aren’t always wise in the choices they make !! TOO BAD DEMOCRACY ISNT ALWAYS GOOD AT PRODUCING RESPONSIBLE GOVTS !!

    • “Venezuela would be left with huge amount of unexploited reserves which would never get monetized”

      And so perhaps then we would have a better chance of monetizing our human resources 🙂

  17. Maybe , or maybe they never get monetized at all for lack of the minimal capital means to create a productive system , all we have now is the result of oil , absent oil we would probably be an outsize Honduras or Dominican republic ……there is an interesting article to be found in internet , its title is The Role of Culture in Economic Development by Francis J Hezel SJ , it makes for enlightening reading……

    One thing which I do believe is necessary is to take the handling of public resources away from those in public office who might profit from its electioneering use and give it to professional non partisan institutions encharged with the execution of specific public plans ….., individuals are hopeless but well run independent organizations might have a chance…!!

  18. Quico, I’m curious to know about your current opinion on Oil Privatization. Obviously, let’s rule out “always in favor” and “always against”. Both of those, in my opinion, are foolish: some terms are worth it, some aren’t, but where do your thresholds lie? From what I gather here, you used to be much more towards the “Always against” side, but it seems you’ve opened up to the possibilities of projects like Hamaca.

    A disclaimer: I don’t know much about the subject, just curious.

  19. “give it to professional non partisan institutions encharged with the execution of specific public plans ….., individuals are hopeless but well run independent organizations might have a chance…!!”

    Forget it. That just another way how redistribution profiteers disguise themselves


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