MEMO TO MARK WEISBROT ET AL

Health services, a la Chavez.

In 2004 Weisbrot was already Chavez's spokesperson in Washington DC.

A street of Caracas, drowning in garbage.

Abandoned Venezuelan children sleep in the streets.

**** HOW CREDIBLE CAN THESE PEOPLE BE?

A paper published by Mark Weisbrot, Rebecca Ray and Luis Sandoval: “The Chavez Administration at 10 years, The economy and social indicators”, published by the Center for Economic and Policy Research, a Washington DC based organization, provides a clear example of how some intellectuals can put themselves, inadvertently or not, at the service of a rogue, failed regime, to try to make it look good in the eyes of international public opinion. The paper focuses on economic and social statistics (conveniently provided by the Chavez government) and forgets, also conveniently, the aspects about political corruption, abuse of power and mismanagement that have characterized the tragic Venezuelan ten years under Chavez.
The main conclusions presented by Weisbrot et al in the Executive Summary of the paper follow, with my comments:

“The Venezuelan economic expansion began when the government got control over the national oil company in the first quarter of 2003”.
What Mark Weisbrot et al call “control” has been a tragic story of corporate deterioration and managerial prostitution. Up to 2000 Petroleos de Venezuela, the state-owned petroleum company, had been a professionally managed organization. In ten years under Chavez it has had seven presidents and boards. The current president is also the minister of Energy and Petroleum and, as such, he supervises himself. With the exception of the first president named by Chavez, Roberto Mandini, who was a professional manager and only lasted six months, all others have been his unconditional followers, not managers at all but political appointees. In 2002 Chavez named as president of the company a Marxist professor, Gaston Parra, who was totally ignorant about the petroleum industry and, furthermore, had a pathological hatred of oil industry managers. As a result there was a big protest from the managers and technical staff of the company. In retaliation, Chavez dismissed 23,000 staff, without paying them what labor law establishes. This is what Weisbrot et al call “getting control of the company”. Under Chavez’s total political control the company has already lost 800,000 barrels per day of production capacity. When this huge loss in production is multiplied by oil prices prevailing during the last years it is easy to calculate the immense loss for the nation that has been generated by the politicization of the petroleum company. I estimate this loss for the nation in about $40 billion during the last six years. It shows ignorance and/or bad faith on the part of Weisbrot et al to say that getting control of the company started the economic expansion of the country. High oil prices have helped to compensate, partially, for the tragic deterioration of the company but there is no doubt that the company is now in crisis. Much of the oil income has been going directly into Chavez’ s pockets, bypassing the Venezuelan Central Bank, a process lacking transparency or accountability, to the point that Venezuelans simply do not know how much money the nation has or how the money is being spent. The little we know is horrifying: record levels of government corruption, populist social policies with only a short-term effect, $36 billion in handouts to ideological friends of Mr. Chavez in the hemisphere, almost $10 billion in acquisition of weapons from Russia, China and other countries. All of this makes up an orgy of financial waste never seen before in our country. Today the petroleum company is dedicated to non-core activities such as importing and distributing foods while its physical assets and human resources are at the disposal of Hugo Chavez.
“GDP has nearly doubled… growing 13.5 percent annually…. most of this growth has been in the non-oil sector of the economy”.
The doctor aboard the Titanic examined the passenger and told him: “Your good cholesterol has doubled… congratulations”. The Venezuelan GDP, say Weisbrot et al, has nearly doubled. The Venezuelan GDP actually fell almost 20 percent in 2002 and 2003 and the more recent growth of GDP has been essentially in services, as result of the huge government expenditure. Manufacturing contributes a poor 17 percent of this GDP, since almost 40 percent of Venezuelan industries have folded during the Chavez years. Agriculture only contributes a meager 7 percent, since Venezuela now imports two thirds of its food requirements. Petroleum contributes a hefty 28 percent of the GDP, since it represents the only significant export. Obviously, this is a highly distorted economy, characterized by one single export commodity and gigantic and inefficient government expenditure. The overdependence on oil as the sole mover of the economy has become deeper under Chavez.
3. “The poverty rate has been cut by more than half, from 54 percent of households in 2003 to 26 percent of households in 2008”.
Venezuelan economist Francisco Rodriguez, now the Head of the Team of the Human Development Report Office of the United Nations (so, he should know what he is talking about) says (Wesleyan Economic Working Papers; “How not to defend the revolution”, March 25, 2008) that “the performance of the Chavez administration in reducing poverty compares unfavorably with that of most other countries… the decline in poverty between the first semester of 2003 and the first semester of 2007 corresponded to a decline of roughly one percent in the poverty rate for every percentage point increase in per capita income, a ratio that compares unfavorably to that of most cross-national estimates”. The size of the income enjoyed by Chavez during the ten years in power, over $700 billion, for a relatively small population that averaged some 20 million people during the decade should have produced a much better performance than what our reality shows. Let me emphasize that the statistics of Weisbrot et al are provided by The National Institute of Statistics, a very unreliable, politicized source of information that has been known to manipulate these figures in the past. In 2005 this institute determined that poverty had actually increased. The head of the Institute, Elias Eljuri, received an immediate reprimand from Chavez and, within weeks, poverty numbers had drastically decreased, as if by magic.
“Inequality, as measured by the Gini Index, has also fallen substantially…”
Quoting Francisco Rodriguez again: “Venezuelan income has gone up since Chavez came into office, and in particular since the second semester of 2000, the moment in which Chavez gained control of all branches of government and was first granted enabling law legislation allowing him to approve laws by Executive Decree. In particular I cited the findings of a study by the Venezuelan Central Bank that found this deterioration [of the Gini coefficient] in the 2000-2005 period. Weisbrot takes issue with the comparability of the indicators used by the Central Bank”.
Of course he would! He insisted in using the data from the much more “flexible” Institute of National Statistics. Adds Rodriguez: “The series used by Weisbrot is highly problematic because it excludes from the calculations all households with reported income equal to zero, thus omitting the poorest households from the construction of an inequality index”. What Rodriguez is saying, in fact, is that social inequality has not improved, in spite of the enormous income received by the government.
“Social spending more than tripled from 1998 to 2006”.
Rodriguez also has something to say about this assertion by Weisbrot: “The only significant change that appears to have occurred in this period is an increase in social security spending. Indeed, if one takes out social security, the share of social spending in total [government] spending actually goes down from 32.0 to 29.8% between the pre-Chavez and Chavez periods”. Therefore, the increase in the share of “social” spending that Weisbrot presents as evidence of the government’s pro-poor priorities is completely driven by a more than doubling in the share of social security spending… Venezuelan social security spending is essentially spending on pensions”. In fact, Weisbrot et al admit in their paper that the social security beneficiaries have “more than doubled”. Again, this shows that social spending is not greater under Chavez and certainly not more efficient.
“_ over the decade, the government’s total public debt has fallen from 30.7 to 14.3 percent of GDP. The foreign public debt has fallen even more, from 25.6 to 9.8 percent of the GDP”.
The Venezuelan debt in 1998 stood at some $22-23 billion. Today, it is, by conservative estimates, over $50 billion, more than doubled in real, concrete terms. For a country with such a windfall oil income the doubling of the debt should be considered as a national disaster. It is weak of Weisbrot et al to present it in sugary terms, as being the equivalent of a smaller percentage of the GDP. The fct is that we now owe more money than when Chavez came into power, in spite of the huge income he has had at his disposal. This is a clear sign of incompetence and waste in the management of our national resources.
“_ Inflation is about where it was 10 years ago, ending the year at 31.4 percent. However it has been falling over the last half year (as measured by three-month averages) and is likely to continue declining this year in the face of strong deflationary pressures worldwide”.
This is not serious. Venezuelan inflation is the largest in the Western Hemisphere. In 2008 overall inflation was 35.3 percent while food inflation was over 50 percent. The inflation trend in 2009 is equally ominous.
“Venezuela has $82 billion in foreign exchange reserves”.
The only amount of foreign exchange reserves known by Venezuelans with some certainty is some $32 billion, in international monetary reserves at the Venezuelan Central Bank. Where are the other $50 billion mentioned by Weisbrot et al? This is one clear example of the chaotic situation of our national finances. Chavez has created agencies for his own purposes that no one knows much about. He almost certainly has money stashed away, but no one knows how much or what use he is giving them (except, apparently, Weisbrot et al). Agencies created by Chavez and controlled directly by him, such as FONDEN, BANDES, a Treasury Bank, plus some other assorted banks mostly gone bankrupt, like the Banco Industrial de Venezuela and the Women’s Bank, allow him to use national money with no transparency or accountability.
How can Weisbrot et al claim that Venezuela has $82 billion in foreign reserves? This, in itself, would constitute a criminal act, since national funds should be accounted and accountable for.Hyper-Corruption is a characteristic of this regime.
In addition to the murky organizations listed above there is a China-Venezuela fund where China has placed about $4 billion, to be paid back by Venezuela in oil, which is an irregular transaction. . Petroleos de Venezuela has stopped giving most dollars coming from oil to the Venezuelan Central Bank, giving it to Chavez instead. The Venezuelan Central Bank claims to have received $120 billion from the oil company between 2005 and the third quarter of 2008, whereas the oil income has been of more than $206 billion. (Victor Salmeron, El Universal, February 13, 2009). Where is the rest of the money, the $86 billion? Is this the money Weisbrot et al mention? It is clear that we are being ruled by an inept, corrupt, gang.

But, the Chavez story is not only about statistics.
“I learn a good deal by observing you..
and taking note of what you do not say”.
T.S. Eliot, The Cocktail Party, Act II
Weisbrot et al have closed their eyes to the horrors of our Venezuelan reality. What they do not say is much more important and incriminating to Hugo Chavez and his cronies than what they say. I will simply outline some of the political, social and cultural aspects of Hugo Chavez’s so-called revolution; in order to illustrate the disaster Venezuelan life is today.
Living in day-to-day Venezuela under Chavez.
Venezuelans go out very early in the morning to their jobs, or to look for a job, or to sell their small wares in a street corner (as “buhoneros”, informal economy laborers that make up about 50 percent of Venezuelans of working age) or to go to school. The lucky ones ride the still reliable Metro in Caracas or in the incipient one which exists in Valencia. The rest wait for buses or vans that may or may not show up. If and when they show up, they may or may not stop, depending on the mood of the driver. Just before becoming Foreign Minister, by the way, Nicolas Maduro was a bus driver in Caracas. This serves both as an illustration of “extreme” social mobility and an illustration of irresponsibility in staffing, which is typical of the Chavez regime. After the day is done Venezuelans hurry up home, before dark. Venezuela has the highest crime rate in the hemisphere and 98 percent of murders remain unsolved. Venezuela also has the highest rate of kidnappings in the world. Members of the police actually carry out many of the murders and kidnappings. The Caracas morgue is chronically overrun with corpses.
In public schools children are bombarded with political indoctrination. History is being re-written by Chavez and his followers to convert some historical villains into heroes and some heroes into villains. Zamora, who led a disastrous war of extermination of the white and rich in mid XIX century is now a main hero. Paez, an independence hero and Bolivar’s most able general, is now pictured as a villain. Chavez has created a commission to look into the death of Bolivar, since he claims he was assassinated in a conspiracy promoted by the United States. In Chavez’s version of history Bolivar is described as a mulatto, when in fact he was a “criollo”, a white aristocrat. Chavez gave Danny Glover $20 million to make a picture that would somehow enhance the role of the mulatto in the political history of the Americas.
In terms of formal education Chavez is a very ignorant man. He writes with frequent errors of spelling, he is not very good at math since he claimed on national TV that 8X7 equals 52. He also asserted on national TV that man had appeared on Earth 2000 years ago and told surprised Caribbean heads of state, at a meeting in Caracas some years ago, that Venezuelan petroleum was “formed by earthquakes”.
Chavez is also rude, vulgar and sexist. He sent this message to his (former) wife, also on public TV, “I’ll see you tonight, to give you what you want”. He suggested that Condoleeza Rice had “the hots” for him but added that he would not “do her the favor”. He called President Bush “a donkey, a drunkard and a genocide” in one of his “formal” speeches. During his ten years of authoritarian rule he has imposed on Venezuelans almost 3,000 hours of national TV and Radio hookups (cadenas), where he talks different and mostly irrelevant topics, from baseball to the intensity of his bowel movements.
If Venezuelans want to travel abroad they have to make do with an annual foreign currency allowance of $2500. Can anyone imagine what can be done today with that amount of money in Europe or the United States? In spite of the rigid foreign exchange control imposed six years ago, capital flight is of the order of some $40 billion per year and corruption flourishes in the financial sector.
Housewives will go to half a dozen or more food stores looking, often in vain, for their most basic needs: meat, milk, sugar, corn flour and the like. Venezuela now imports two thirds of all the food it consumes, due to the collapse of the agricultural sector. Thousands of acres of productive land have been taken over by Chavez’s mobs that install themselves in private property without working the land, sometimes killing milk cows for a cookout. The Chavez government has ordered the petroleum company to import and distribute food, giving this food for free or at low prices to the people. This looks good at first sight but constitute an example of handouts that deepen the political dependence of the poor in the paternalistic regime. The poor wait sometimes two or more hours in line to receive a can of milk and a bag of potatoes.
The dozens of government controlled radio stations; the government TV stations and hundreds of publications shower Venezuelans with slogans about the revolution. Posters of Che Guevara, Castro, Marx and Lenin dominate public buildings, avenues and streets, even in the smallest towns of Venezuela.

Chavez political and financial corruption.
Chavez is directly connected to political and financial corruption. He took money from a foreign bank for his presidential campaign and even after he was president. He has given or promised up to $36 billion of Venezuelan national funds to ideological friends in the hemisphere, including Cuba, Bolivia, Nicaragua and Argentina, without asking for authorization from the Venezuelan people. He has lent support and given cash and weapons to the Colombian terrorists, FARC. He has financed and is financing electoral campaigns in Bolivia, Peru, Mexico, Argentina, Nicaragua and El Salvador. Five of his ambassadors have been expelled from Latin American countries because of their intervention in the internal political affairs in those countries. He abuses his power and uses national assets as if they were his own (aircraft, money television and radio stations). His financing of Cristina Kirchner’s presidential campaign in Argentina has brought to light intense corruption. In the Miami trial of three Venezuelan government brokers, an extensive corruption network connected to three of his ministers and two governors has been uncovered. In particular, one of his former Finance Ministers, Tobias Nobrega, has been mentioned in the trial as receiving kickbacks for over $25 million. The U.S. government has named a minister (Ramon Rodriguez Chacin) and armed force officers (Hugo Carvajal and Henry Rangel Silva) as collaborators of the Colombian terrorists, FARC.

The prostitution of the Venezuelan armed forces.
Under Hugo Chavez the armed forces have been forced to become loyal to a man, not to the country. In December 2007 the Venezuelan voters defeated a change in the constitution that would have converted the armed forces in a “socialist, bolivarian, anti-imperialistic group” from the professional, non-political institution that it should be. Chavez imposed a salute to the forces: “Fatherland, socialism or death”, which contiutes a clear violation of the constitution. Large scale bribing by Chavez has maintained the top military brass under his political control. Today the middle and lower ranks of the Venezuelan armed forces are highly unmotivated and some components (National Guard) are collaborting with the Colombian FARC in drug trafficking. The amount of drugs moving through Venezuela has grown by a factor of ten (25 to about 3000 tons per year) in the last few years.

The collapse of Petroleos de Venezuela.
For almost 25 years after its creation the state-owned oil company, Petroleos de Venezuela enjoyed excellent international reputation. Today it has become a third rate organization, deeply politicized and involved in activities that have little or nothing to do with its core business. It is not surprising, therefore, that its production capacity has declined in about 800,000 barrels per day and is facing an acute financial crisis, unheard of in the petroleum sector, which is probably the best business in the world. The company is failing to pay its suppliers and, even, its employees, because Chavez is deviating the money required to keep the company operating efficiently to finance political activities. Of the 2.4 million barrels of oil per day of the company’s current production, some 800,000 barrels are sold at about $9 per barrel in the domestic market, below production costs and about 500,000 barrels per day are given to countries like Cuba, Nicaragua, Bolivia and Argentina at highly subsidized prices or exchanged for “services” or staples like bananas and black beans. This leaves the country with only 1.2 million barrels of truly commercial exports. Due to the decline in oil prices and to the loss in export volumes the 2009 national budget will face a deficit of about $30 billion. As a result, Chavez will probably be forced to devalue the currency and the nation could be very near to an economic and political crisis.
Chavez’s alignment with international terrorism.
The documents found in the laptops of deceased FARC’s leader Raul Reyes show an intimate connection of Chavez with these Colombian terrorists and drug traffickers. The documents include information about the money contributionsmade to Chavez by the FARC when he was in prison, in the 1990’s and of Chavez promises to the terrorists to provide money. In a separate video Chavez’s Minister of Interior, Ramon Rodriguez Chacin, can be seen transmitting to the terrorists the “greetings and promises of support from Chavez”.
Equally incriminating to the regime has been the increasing alignment of Chavez with Hamas, Hizballah and Iranian extremists. There are daily flights between Teheran and Caracas, often loaded with passengers that the U.S. Congress has considered to be Islamic terrorists trying to reach the United States with false Venezuelan documents.

Chavez’s sowing of class and racial hatred.
Although this cannot be quantified or subject to statistics it is, probably, the worst of Chavez’s crimes. Chavez has been systematically preaching hatred against the rich, the middle class, the white, the Catholics and the Jews. He tells the poor that their misfortunes have been caused by the well to do and the educated. As a result Venezuela is today a deeply divided country. Close to one million Venezuelan have left the country since Chavez took over, driven away by his aggressive rhetoric and his abuses of power. Only in the State of Florid it is estimated that there are about 600,000 Venezuelans, mostly middle-class, in an exodus that resembles the first decade of Fidel Castro’ Cuban dictatorship. If anyone wants to see the future of Venezuela under Chavez all they have to do I to look at today’s Cuba, after 50 years of Castro’s dictatorship. Einstein defined madness as “the repetition of the same process expecting to have a different result”.

Changing names as a replacement for creating new things.
Ten years and $700 billion later Hugo Chavez has created very little infrastructure in the country. No significant new highways, hospitals, schools, buildings have been built, certainly not in proportion to the amount of money received. Instead, he just changes the names of pre-existing infrastructure. Example: what used to be a well maintained, beautiful park in Valencia, named “Fernando Peñalver”, an independence hero, was renamed “Negra Matea” (Bolivar’s black nanny) by the Chavez’s governor and its maintenance neglected. The opposition is back in power in that city, so there is still hope for the park. The country has been renamed Bolivarian Republic. The coat of arms has been changed. The flag has been changed, all (as you can well imagine) at a significant cost to the nation.

Hugo Chavez now pretends to become president for life.
A man who has caused so much grief and generated so many disasters in Venezuela during the last ten years now pretends to become president for life after imposing on Venezuelans an illegal and unconstitutional change that would allow him to be re-elected indefinitely, converting Venezuela into some sort of a grotesque tropical monarchy. How can a democratic leader pretend to become president for life? What makes him indispensable? He has already ruined much of the country. We do not want to become another Cuba. We will fight his undemocratic pretensions each inch of the way.
People like Weisbrot et al, who write “academic” papers designed to enhance the international reputation of this pupil of Fidel Castro and Robert Mugabe, become in my eyes accomplices of the Venezuelan tragedy. I think they should be ashamed of what they are trying to do. It is obvious that they are using Venezuela as a pawn in an ideological game for their own purposes or benefit, basing their posture on the dictum: “The enemy of my enemy must be my friend”.
I also think I have the right to ask them a question: Has any one of you obtained a Venezuelan government contract or have a link of any kind to the Chavez government that would compromise your objectivity?
I know this is not a polite question to ask. But it is very important to know.
I write this as a Venezuelan who loves freedom and democracy and who considers Chavez a great enemy of my country.

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I have given my reasons above. I am prepared to debate with Weisbrot at al about these issues at the place they choose, if and when they want.
My credentials are as good as theirs. And, of course, I am a Venezuelan, I am a stakeholder of Venezuela Inc.






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