Free Markets, Free People

Foreign Affairs

How To Build A Dictatorship

Venezuelan voters approved a referendum to end term limits on Sunday, paving the way for Hugo Chavez to perfect his dictatorship:

President Hugo Chavez says a referendum victory that removed limits on his re-election is a mandate to intensify his socialist agenda for decades to come. Opponents warn of an impending dictatorship.

Victory!  Enslaved at last!

Victory! Enslaved at last!


Both sides had called the outcome of Sunday’s vote key to the future of this South American country, split down the middle between those who worship the president for redistributing Venezuela’s oil riches and those who see him as a power-hungry autocrat.

“Those who voted “yes” today voted for socialism, for revolution,” Chavez thundered to thousands of ecstatic supporters jamming the streets around the presidential palace. Fireworks lit up the Caracas skyline, and one man walked though the crowd carrying a painting of Chavez that read: “Forever.”

[...]

The constitutional overhaul allows all public officials to run for re-election as many times as they want, removing barriers to a Chavez candidacy in the next presidential elections in 2012 and beyond.

“In 2012 there will be presidential elections, and unless God decides otherwise, unless the people decide otherwise, this soldier is already a candidate,” Chavez said to applause. First elected in 1998, he has said he might stay in power until 2049, when he’ll be 95.

Hmmm. Maybe those “critics” are onto something, eh?

At their campaign headquarters, Chavez opponents hugged one another, and some cried. They said the results were skewed by Chavez’s broad use of state resources to get out the vote, through a battery of state-run news media, pressure on 2 million public employees and frequent presidential speeches which all television stations were required to air.

With the courts, the legislature and the election council all under his influence, and now with no limits on his re-election, officials say Chavez is virtually unstoppable.

“Effectively this will become a dictatorship,” opposition leader Omar Barboza told The Associated Press. “It’s control of all the powers, lack of separation of powers, unscrupulous use of state resources, persecution of adversaries.”

As the article notes, however, everything is not peaches and cream for Chavez. Venezuela’s economy, which is so heavily dependent on oil revenues, lies in shambles, beset by low oil prices, rampant inflation, and little prospect for relief. According to Michael Shifter of the Inter-American Dialogue in Washington:

… the global financial crisis and the plunging price of oil, which accounts for 94 percent of Venezuela’s exports and nearly half its federal budget, will limit Chavez’s ability to maintain the level of public spending that has fueled his popularity.

Without oil revenues to prop up the socialist spending regime, Chavez will have to resort to other means of stabilizing the economy. Because producers of wealth are so politically disfavored in Venezuela, and there are myriad obstacles to successfully operating any businesses, Chavez’s options for economic recovery are limited:

Empty shelves in Venezuela.

Empty shelves in Venezuela.

“Venezuela faces serious problems no matter what today’s results were. Later this year, economic problems are going to be felt more acutely.”

Venezuela, the fourth-largest supplier of crude oil to the U.S., depends on oil for 93 percent of export revenue and half the government’s budget. Prices for crude have plunged 74 percent since touching a record in July.

[...]

“Now we’re going to see what’s beyond this campaign and what he does when he takes the economy into account,” [Enrique] Alvarez, [head of Latin America fixed-income research at IDEAglobal in New York] said.

The adjustments to economic policy will probably include raising taxes and devaluing the currency to cover a public deficit now that his marathon political campaign is out of the way, said Alberto Ramos, Latin America economist at Goldman Sachs Group Inc. in New York.

Raising taxes is de rigueur in such circumstances, but not likely to generate much revenue. After all, the government has taken over the most lucrative part of the Venezuelan economy, and people and businesses who don’t earn much don’t have much to pay to the government. Taxes are not going to solve any problems.

Without any real economic engine to fund socialist programs, therefore, Chavez won’t be able to buy votes anymore. Instead he will have to find another way to garner (or manufacture) public support if he wants to remain in power. And there isn’t any doubt that he wants to remain in power.

The most obvious way for Chavez to accomplish this feat to convince the country that his leadership is indispensable to the country’s fortunes. That line of argument is already a staple in his rhetoric — i.e. that success of the Bolivarian Revolution depends on Chavez exercising ever increasing power — so the foundation has been laid. However, it was much easier to sell that idea when the oil revenues were pouring in. With a looming fiscal crisis at hand, and the prospects of economic improvement looking dim, a call for new leadership will likely grow louder.

Ironically, the path to permanent power for Chavez was described by socialist activist Naomi Klein in her book “Shock Doctrine: the Rise of Disaster Capitalism.” In what has become the bible for the anti-capitalist/ant-globalization movement, Klein

… explodes the myth that the global free market triumphed democratically. Exposing the thinking, the money trail and the puppet strings behind the world-changing crises and wars of the last four decades, The Shock Doctrine is the gripping story of how America’s “free market” policies have come to dominate the world– through the exploitation of disaster-shocked people and countries.

Her theory rests on the premise that democratic obstacles to corporate domination are swept aside in times of severe crisis (e.g. Iraq war, Katrina, tsunami in Sri Lanka), allowing global moneyed interests to swoop in and take control of the economy. She often cites Milton Friedman and the “Chicago Boys” dealings with Pinochet as an example of how capitalist forces purposely, and sometimes violently, undermine the will of the people when they are at their weakest in order to introduce reforms that actually serve the interests of the elite rather than the people. In spite of her historically challenged maunderings (Friedman only met Pinochet once for an hour, and wrote him a letter), Klein does hit on an important point: crises are routinely used to further the power of the elites. Klein just identifies the wrong parties. It is typically the government elites who profit from these crises.

Take, for example, how our own government has seized upon the current fiscal crises to shove a giant social spending bill down our throats, plunging future generations into massive debt, and centralizing control over the lives of individual Americans:

Last year the US economy was hit with one shock after another: the Bear Stearns bail-out, the Indymac collapse, the implosion of Fannie Mae and Freddie Mac, the AIG nationalisation, the biggest stock market drop ever, the $700bn Wall Street bail-out and more – all accompanied by a steady drumbeat of apocalyptic language from political leaders.

And what happened? Did the Republican administration summon up the spirit of Milton Friedman and cut government spending? Did it deregulate and privatise?

No.

It did what governments actually do in a crisis – it seized new powers over the economy. It dramatically expanded the regulatory powers of the Federal Reserve and injected a trillion dollars of inflationary credit into the banking system. It partially nationalised the biggest banks. It appropriated $700bn with which to intervene in the economy. It made General Motors and Chrysler wards of the federal government. It wrote a bail-out bill giving the secretary of the treasury extraordinary powers that could not be reviewed by courts or other government agencies.

Now the Obama administration is continuing this drive toward centralisation and government domination of the economy. And its key players are explicitly referring to heir own version of the shock doctrine. Rahm Emanuel, the White House chief of staff, said the economic crisis facing the country is “an opportunity for us”. After all, he said: “You never want a serious crisis to go to waste. And this crisis provides the opportunity for us to do things that you could not do before” such as taking control of the financial, energy, information and healthcare industries.

That’s just the sort of thing Naomi Klein would have us believe that free-marketers like Milton Friedman think.

Of course, that isn’t how supporters of free markets behave at all. It is, however, exactly how someone like Hugo Chavez operates.

With the Venezuelan economy shrinking, and real suffering occurring on a growing scale, the opportunity is ripe for Chavez to further “reform” the country, and complete the Bolivarian Revolution as he has promised. That won’t save the nation from economic ruin, and indeed will probably hasten such an outcome, but it will provide the impetus for perpetual Chavista rule.

The economy is doing poorly? That’s because the revolution has not advanced far enough. Economy doing well? The revolution is working its wonders! Rinse and repeat.

Thus the keys to Chavez’s Bolivarian kingdom lie in the propagandistic message that only centralized and powerful leadership can provide adequately for all. Principles such as “fairness” and “equality” are used as bludgeons against any who dare step out of line. Individual achievement is sneered at as “selfish” and “against the common good.” The redistribution of any wealth created outside the government system (as all wealth created inside is confined to the governmental leaders) is touted as the only means of ensuring a safe and productive future for all. Capitalism is deemed the language of the oppressor, and blamed for any and all ills that befall the nation. Yet, despite all this rhetoric, things will never seem to get any better.

Poor, poor Venezuela. Thank goodness we won’t such stifling of economic welfare and individual freedom here.

Parsing Iran’s “Dialog With Respect” Demand

The new line out of Tehran is that Iran is ready for talks with the US if those talks are a “dialog with respect”. So let’s check out President Ahmadinejad’s words, shall we?

“The new U.S. administration has said that it wants change and it wants to hold talks with Iran,” President Ahmadinejad said.

“It is clear that change should be fundamental, not tactical, and our people welcome real changes,” he said. “Our nation is ready to hold talks based on mutual respect and in a fair atmosphere.”

Mr. Ahmadinejad went on to say that Iran could cooperate with the United States to uproot terrorism in the region. “The Iranian nation is the biggest victim of terrorism,” he said.

But he referred to former President Bush as one of reasons for insecurity in the region and said, “Bush and his allies should be tried and punished.”

“If you really want to uproot terrorism, let’s cooperate to find the initiators of the recent wars in the Middle East and the Persian Gulf region, try them and punish them,” he said.

Is Iran really willing to talk?

Is Iran really willing to talk?

“Fundamental, not tactical”. Remember, Ahamdinejad accused the Obama administration of only favoring a tactical change. His claim was the Obama administration would not be fundamentally different in its approach to relations with Iran than was the Bush administration. While in Munich, VP Joe Biden made it clear that the US wouldn’t tolerate Iranian nuclear weapons and reserved the right to pre-emptively attack Iran in case it refused to stand down its nuclear weapons program and produced a nuclear bomb. That is the very same policy the Bush administration advanced. How that can be spun as a “fundamental change” vs. a “tactical change” will be interesting to watch. But one is certainly hard put to describe such a policy as one which would place the talks on a plane of “mutual respect”.

An interesting line, of course, is Ahmadinejad’s declaration that the “Iranian nation is the biggest victim of terrorism”. The obvious reason for that declaration is found in the next line, i.e. the policies of the Bush administration are interpreted by Ahmadenijad as being terroristic in nature as they pertain to Iran. But, other than the “let’s talk” invitation, the policy of pre-emptive action remains the announced policy of the Obama administration as well.

Last, but certainly not least, Ahmadinejad clearly puts the Israel question on the table and lays out his solution for stopping terrorism. While Iran demands a “fundamental” change in the US approach to relations with that nation, there’s certainly nothing to suggest that Iran is willing to make fundamental changes in return. And its proxy war with Israel, through Hamas and Hezbollah is certainly an indicator of its continuing attempt to take the “Zionist entity” on.

Or is that simply a delaying tactic until they achieve their aims?

Or is that simply a delaying tactic until they achieve their aims?

So while some may be encouraged by the fact that Ahmadinejad is at least talking about better relations with the US, I say take it all with a large grain of salt. Iran has aspirations toward being the regional power in the Middle East. That is what brought it in direct conflict with Iraq and precipitated their 8 year war. Iraq also had such aspirations. Iraq is no longer a threat in that regard, and the only entity that really stands in its way is the US. Obviously Iran would like to neutralize the US and its influence in the region. One way to do that is to pretend to give the new administration what is so desperately wants – a foreign policy success. Entering into direct talks with the US would do that while really costing Iran nothing. In return for those direct talks, Iran would demand that the US tone down its rhetoric and lift sanctions thereby accomplishing it’s neutralization goal. It can extend the talks as long as it wishes while it proceeds on its merry way to creating a nuclear weapon and marrying it to a long-range missile. At that point, the US is no longer necessary as Iran, by fiat, will be if not the dominant regional power in the Middle East, a close second (assuming as everyone does, that Israel has nukes).

At that point, an Obama administration would be left to either live up to Biden’s words or back off and hope Iran doesn’t finally deal with the “Zionist entity” before Israel deals with it.

Food for thought.

~McQ

Obama’s Foreign Policy Dilemma

Despite all the happy talk about hope and change concerning America’s foreign policy the reality is every nation out there has its own agenda and America still stands in the way of many of them.  In the case of our allies, their agenda usually entails seeing how much of the load they can get America carry.  And, while the hope, hype and spin claim that this is the dawn of a new era, in reality the clock is ticking:

Vladimir Putin of Russia

Vladimir Putin of Russia

The danger is that, as the novelty of the Obama administration begins to wear off the U.S. will be left with little more to show for its renewed focus on diplomacy than the Bush administration achieved.

Before that occurs, U.S. officials are hoping a willingness to engage in a way that the Bush administration never was will produce progress. Major reviews of U.S. policy toward Afghanistan and Iran are currently under way and are expected to produce new options for Obama within several weeks.

The options produced may be new for Obama, but will they be new for those nations at which they’re aimed? And will they address the fundamental problems in the areas they are intended or will they simply be the same policies with shiny new names? While Obama may come up with what he considers many new options, in reality the options are quite limited when it comes to some of the nations who are going to challenge him (and that will be dictated by the attitude those nations take to any new Obama initiatives).

As the Washington Times notes, his foreign affairs problems are beginning to cascade:

On Friday, Pakistan – the recipient of billions of dollars in U.S. aid – released from house arrest Abdul Qadeer Khan, the nuclear scientist who for two decades ran a black market that sold nuclear-weapons technology to U.S. adversaries including Iran and Libya.

Two days earlier, Kyrgyzstan announced that it would not renew a U.S. lease at

Mahmoud Ahmadinejad of Iran

Mahmoud Ahmadinejad of Iran

the Manas air base, a critical transshipment point in the Afghanistan war. Meanwhile, the Russians – who offered Kyrgyzstan $2 billion in cash and loans to oust the Americans – said that they intend to establish a new base in a breakaway enclave of Georgia, the country Moscow invaded over the summer in response to a Georgian assault on another enclave.

If this were not enough, Iran last week launched a crude satellite into space, suggesting that the Islamic regime has mastered at least some of the technology for multistage, long-range missiles.

Finally, Yemen on Sunday announced that it had released 170 men arrested on suspicion of having ties to al Qaeda. Just two weeks earlier, the terrorist group called Yemen its base for the entire Arabian Peninsula.

And let’s not forget that the Obama administration has already upset India with its claim that it would involve itself in the India/Pakistani dispute over Kashmir.

A president’s primary job involves foreign policy. He is the sole architect and executor of it. But thus far, it seems more of a distraction than a focus for Obama. He has primarily concerned himself with his domestic agenda and delegated his foreign policy role to Biden – at least for the time being. But Biden isn’t the decision maker and lack of focus on foreign affairs could see the US end up, diplomatically, behind the power curve if enemies perceive him as not being fully engaged and his diplomatic effort lacking leadership.  That is a weakness they would try to exploit.

If that ends up happening, all of this happy talk will quickly go out of the window and the Obama administration could be facing the same stark choices, and options, that his predecessor faced – if he’s lucky.

~McQ

America’s “New” Foreign Policy

Joltin’ Joe Biden previewed it in Germany yesterday:

As promised, Vice President Joe Biden reached out to the international community Saturday, saying the U.S. is open for talks with Iran and Russia to repair relations, and willing to work with allies to solve world problems.

But in his first major foreign policy speech for the new administration, the Democrat also warned that the U.S. stands ready to take pre-emptive action against Tehran if it does not abandon its nuclear ambitions and support for terrorism.

Repair relations?  Just words at the moment.

Pre-emptive action? I thought we quit doing that stuff. OK, pre-emptive action. Also known as maintenance of the status quo policy. “We want to repair relations but reserve the right to pre-emptively attack Iran”.

Good luck with that.

And while he said it is time to mend fences with Moscow, he said the U.S. continues “to develop missile defenses to counter a growing Iranian capability, provided the technology is proven and it is cost-effective.”

Continue to develop missile defenses? Status quo – but again, with the caveat “we want to mend fences”.

Good luck with that.

The article notes that Biden was “short on details”. No particular surprise there. But apparently the “tone” was just music to the diplomats ears.

For instance:

“I think Vice President Biden came to Munich today in a spirit of partnership,” British Foreign Secretary David Miliband told AP Television News. “I think he set an ambitious agenda with big goals and high objectives, and he called and challenged us to work with him. I think that’s the right spirit.”

That hits me as diplo-speak for “he’s going to do things the way we want them done”. And, of course, that’s not leadership.

Understand too that diplomats are also going to give this a positive spin because they stand to gain from it. That’s why Russia said:

“The tonality was rather encouraging. It was really a serious call to restart U.S. foreign policy — including, clearly, Russian-American relations,” said Konstantin Kosachev, head of the international relations committee in Russia’s lower parliament house.

That’s diplo-speak for “we think we can roll these guys”.

What details Biden did give included the aforementioned continuation of the missile defense and this:

“It’s time to press the reset button and to revisit the many areas where we can and should be working together with Russia,” said Biden. Yet, he added that the U.S. will continue to have differences with Moscow, including opposition to its efforts to carve out independent states in Georgia.

Again, “just words” and status quo.

And to Europe, Biden said:

Biden, who also met privately with a number of world leaders, including top officials from Russia, France, and Germany, told allies that they will be expected to share the burdens of fighting extremists and bolstering weaker governments and poor nations.

“America will do more, that’s the good news,” said Biden. “But the bad news is America will ask for more from our partners.”

I’m not sure why asking more from our “partners” is “bad news” but it certainly reflects a continuation of the status quo.

Lastly, this:

On another topic, Biden told the leaders that the U.S. needs their help in taking the detainees now held at Guantanamo Bay, Cuba.

He repeated Obama’s vow that the U.S. will adhere to its values, not torture, and will close the detention center at Guantanamo that has spurred such criticism from European allies.

Of course we’ve since learned that the Obama administration has reserved the right to approve more intensive interrogation techniques and, of course, you don’t need Guantanamo if you continue give the CIA permission to use rendition as a tool to deal with terrorists.

But apparently, to this point, that hasn’t really penetrated the good will that Obama still enjoys among the Euro types. Once the new wears off and they’re actually pushed to contribute “more” they’ll probably “discover” the duplicity of Biden’s words.

Hope and change.

~McQ

Smoot-Hawley Fiasco Averted.

Bruce wrote earlier that the stimulus bill, in it’s current form, invites a Trade War with the rest of the world.  Naturally, the protectionist elements of the bill had many of our trading partners both worried and miffed.

The EU, for example, has been struggling with the issue over there, and began tossing off warnings of a trade war. The EU Ambassador to the united States, John Bruton, expressed those warnings frankly.

The EU warnings came in letters to US political leaders in Congress, Timothy Geithner, the Treasury Secretary, and Hillary Clinton, the Secretary of State. Mr Bruton urged them to respect the decision taken by the G20, the world’s leading economic nations, in Washington last November to resist protectionism as a defence against the crisis. They are expected to meet again in London in April.

“Failing this risks entering into a spiral of protectionist measures around the globe that can only hurt our economies further,” he wrote.

“Open markets remain the essential precondition for a rapid recovery from the crisis, and history has shown us where measures taken contrary to this principle can lead us.”

Maybe someone in the White House has been reading up on this.

Maybe someone in the White House has been reading up on this.

Back in Europe proper, the language was bit less guarded and diplomatic.

The European Commission’s powerful trade department, a bastion of open markets formerly headed by Lord Mandelson, said yesterday that the “Buy American” clause was “the worst possible signal” that could be sent to world trade.

A spokesman said: “We are particularly concerned about the signal that these measures could send to the world at a time when all countries are facing difficulties. Where America leads, many others tend to follow.”

In responding to those concerns, Pres. obama seems to have backed down a bit.

Last night Mr Obama gave a strong signal that he would remove the most provocative passages from the Bill.

“I agree that we can’t send a protectionist message,” he said in an interview with Fox TV. “I want to see what kind of language we can work on this issue. I think it would be a mistake, though, at a time when worldwide trade is declining, for us to start sending a message that somehow we’re just looking after ourselves and not concerned with world trade.”

Congratulations to Pres. Obama for realizing the toxic effect that outright protectionism would have on world trade, and economic recovery.

NoKo Prepares To Launch The “Let’s Test The New Guy” Missile

Cult of Personality?

Cult of Personality?

Of course “Dear Leader” and the boys also call the missile the Taepodong-2 and it is supposedly capable of reaching the US (Alaska or Hawaii – and no Sarah Palin can’t see NoKo from Alaska). But as the title indicates, there’s little doubt about why it is to be launched:

The apparent preparations for a launch, which are easily discernible by spy satellites, may be intended by the government as a way of asserting itself as it prepares to resume nuclear disarmament negotiations with the new US government of Barack Obama.

Dear Leader knows all about political brinksmanship and he wants to see how the Obama administration reacts to him and his machinations. This is all a pretty normal course of events in international relations. If there’s a new guy, the usual suspects try to test him to see what they can get away with. And, if he blinks, well, the full court press will be on.

One of the strengths of our American democracy, of course, is we don’t have a “Dear Leader” problem here. Nope, sure don’t. Nothing to see here. Move along.

Hope and change.

~McQ

Venezuela: Headed For A Hugoless Future?

I think my guy Hugo is beginning to see the handwriting on the wall and realizes that if he doesn’t manage to fool the population into making him president for life now, he’ll have to seek other means.

You see, the situation in Venezuela is not getting better nor the future brighter for our favorite socialist:

Treasury reserves are dwindling, electricity blackouts are becoming commonplace, public security is deteriorating, and the finances of the state-owned oil monopoly, PdVSA, are in apparent disarray. There is little reason to think that the decline will be reversed any time soon.

If Mr. Chávez hopes to continue governing under the guise of democracy after 2013, when his term expires, he must get the constitution changed now.

The last time he tried this, even with almost total control of the voting apparatus, he was unable to concoct a win. He apparently tried for days, but apparently the loss was such that even he couldn’t fudge it.

So now the newest attempt. Interestingly, the latest attempt includes open-ended terms for nearly every elected official in Venezuela, not just the presidency. I’d suggest that actually works against Chavez and not for him. Those that marginally favor Chavez may not want the local mayor, legislator or governor in office indefinitely. It is an even bet then that they will not be inclined to vote for such a constitutional amendment. They, as well as anyone, know the hazards of entrenched power.

You have to wonder then, given the great possibility that the amendment will go down in flames on Feb. 15th what Hugo’s next move will be. My guess is it will have nothing to do with supporting and defending the constitution of Venezuela.

~McQ