Hugo Chávez is in the news again, appropriating and nationalizing more of the oil industry in his country.
That sort of move by him has become so routine that it almost isn’t news anymore. But this particular sentence caught my eye and reminded me of what we’ve seen here as well:
This move forms part of a broader assault against the private sector, which Mr Chávez has increasingly blamed as Venezuela slides into recession.
Vilification is a political tactic in use by a certain type of politician, and anyone paying attention to what has been going on in this country has seen it deployed in earnest against the wealthy and certain industry sectors in the US in the last few months. The health care industry is next. And, as in Venezuela, the government is being offered as the best alternative. Yet watching Venezuela, most understand the ramifications of moves such as Chavez is making on the long-term viability of Venezuela’s economy:
But analysts say that by shifting its problems onto its suppliers, PDVSA is storing up even bigger problems for the future. Not only does it lack the ability to operate as efficiently as the service providers, but it sends a grim signal to companies considering investing in Venezuela. Consequently, future oil production is under threat.
While the moves taking place here aren’t as drastic as those in Venezuela, they’re just as problematic. Government appointed board members on auto company boards and government calling the shots in the financial sector aren’t direct takeovers, but they portend a level of government meddling unseen here before. And health care and energy are next.
The key word in the quoted paragraph above is “investing”. Investors are very wary about both the auto and financial industries at this point. They’re wary of the auto industry because government is essentially throwing the bankruptcy procedures out of the window and those investors which should be guaranteed the first seat at the table for the recovery of their investment are now being vilified as “greedy” and pushed to the side. Any reason they or any other investor should take a monetary stake in either of the government controlled auto companies again? And given the experience with autos, don’t you suppose investors in the financial sector are having second thoughts?
Investment is the road to recovery in recessionary times. The moves Hugo Chávez is making in Venezuela are exactly the wrong moves in terms of economic recovery (not to mention being a complete violation of property rights). While not as drastic as Chávez, the moves the Obama administration have made are sending a similar signal to investors. And that doesn’t bode well for a swift economic recovery.
Health care and energy are next.
Not that I’m particularly upset that he’s managed to re-sour (is that even a word?) relations with Venezuela before he even got to meet with Hugo. But you do remember the promise:
Venezuela’s President Hugo Chavez said on Sunday his U.S. counterpart Barack Obama was at best an “ignoramus” for saying the socialist leader exported terrorism and obstructed progress in Latin America.
“He goes and accuses me of exporting terrorism: the least I can say is that he’s a poor ignoramus; he should read and study a little to understand reality,” said Chavez, who heads a group of left-wing Latin American leaders opposed to the U.S. influence in the region.
Chavez said Obama’s comments had made him change his mind about sending a new ambassador to Washington, after he withdrew the previous envoy in a dispute last year with the Bush administration in which he also expelled the U.S. ambassador to Venezuela.
“When I saw Obama saying what he said, I put the decision back in the drawer; let’s wait and see,” Chavez said on his weekly television show, adding he had wanted to send a new ambassador to improve relations with the United States after the departure of George W. Bush as president.
Apparently during the January interview with Spanish language Univision, Obama said Chavez hindered progress in Latin America and accused him of exporting terrorist activities and supporting Colombian guerrillas. As you might imagine this was not something El Supremo found to be helpful:
“My, what ignorance; the real obstacle to development in Latin America has been the empire that you today preside over,” said Chavez, who is a fierce critic of U.S. foreign policy.
Mark up another victory in that promised attempt to have the world “like us better”. The upcoming Summit of the Americas scheduled for next month ought to be a real circus – both Chavez and Obama will be attending.
Man, am I glad that doofus Bush is out of office.
Hope and change.
Iran isn’t just fomenting unrest in its home region, it has found a new area to spread the revolution and fund it:
Iran is increasing its activity in Latin America and the Caribbean, including actions aimed at supporting the Lebanese militant group Hezbollah, a top U.S. military commander said on Tuesday.
Navy Admiral James Stavridis, who oversees U.S. military interests in the region as head of U.S. Southern Command, also said Hezbollah was linked to drug-trafficking in Colombia.
“We have seen… an increase in a wide level of activity by the Iranian government in this region,” Stavridis told the Senate Armed Services Committee.
“That is a concern principally because of the connections between the government of Iran, which is a state sponsor of terrorism, and Hezbollah,” he said.
The U.S. State Department lists the Lebanese-based political and military movement as a terrorist organization.
Stavridis said Hezbollah activities in South America have been concentrated particularly in the border region between Brazil, Paraguay and Argentina, but also in Colombia.
“We have been seeing in Colombia a direct connection between Hezbollah activity and narco-trafficking activity,” the commander added, without providing specifics.
Of course, one of Iran’s NBFs in the area is Venezuelan strongman Hugo Chavez. And he’s not the only one as reported by Todd Bensman:
But with the exception of my own coverage, there’s been hardly a peep about the fact that Iranian President Mahmoud Ahmadinejad planted the Iranian flag so far north in Nicaragua as soon as the time-tested American nemesis Daniel Ortega took office in January 2007. In fact, Ahmadinejad considered Ortega’s ascension so important that he was in Nicaragua to attend the inauguration. Within months, Iran was promising hundreds of millions in economic projects — and quickly set up a diplomatic mission in a tony Managua neighborhood where it could all supposedly be coordinated. Now Iran is extending its reach even further north, right into Mexico City with equally under-covered proposals to vastly expand tenuous ties to America’s immediate southern neighbor.
Hey, we mess around in Iraq and Afghanistan, they mess around in Mexico. Of course all we have to do talk to them and we can straighten this all out, right?
Heh … I love it when this sort of thing happens. Unfortunately it doesn’t happen often enough.
The saccharine conventions of showbusiness were thrown out of the window last week, when the Hollywood actress Maria Conchita Alonso was collared by paparazzi and asked if she was pleased about her former co-star Sean Penn’s recent Oscar victory.
“He’s an amazing actor. I can’t take that away from him,” she said of Penn, who worked with her on the 1988 cop film Colors. “It’s just that he has no clue at all what’s going on in Venezuela. He’s been praising Hugo Chavez, who is a dictator and a killer. He should shut up about what he doesn’t know.” Alonso, who was raised in Venezuela, was apparently upset by a glowing article that Penn had written for The Nation magazine about her homeland’s charismatic but increasingly dictatorial left-wing President.
Of course Penn’s not the only one from Hollywood in the thrall of Chavez:
Other Hollywood liberals face public criticism, most notably Oliver Stone, currently filming an adulatory authorised biopic of Mr Chavez. Stone could be joined in the pillory by Danny Glover, who was given $18m by Mr Chavez in 2006 to make a left-leaning film about Haiti’s 19th-century leader, Toussaint Louverture. Harry Belafonte sparked outrage two years ago when he appeared on a platform with Mr Chavez to call George Bush “the greatest terrorist in the world”.
The term “useful idiots” describes them well.
Apparently Timothy Geithner isn’t the financial “rock star” he was touted to be if his handling of the Asian crisis 10 years ago is any indication.
While Obama may have “inherited” the financial problems, the bear market is all his.
Speaking of lay-offs, this isn’t going to make our jet jocks feel very secure.
The new slogan of the Democrats – never let a good crisis go to waste. So this is a “good” crisis?
Take a look at this page and tell me where are the promised tax money from rich folks is going to come from.
If you don’t believe government is contemplating some pretty heavy care rationing when and if they get control, read this little beauty carefully.
Even George McGovern finds the pending card check legislation desired by unions to be “fundamentally wrong” and undemocratic.
Grey wolves “delisted” from endangered species list.
No time for Gordon Brown, but plenty of time for Brad Pitt. Wonder if Pitt got a 25 volume DVD set too?
Is Obama preparing the way for a massive defense spending cut?
Even Paul Krugman is getting a little antsy about the apparent lack of focus of the Obama administration on the financial crisis.
It appears Hugo Chavez recognizes a kindred spirit when he sees one.
The Senate is one vote short of passing the omnibus spending bill with 9,000 earmarks. All I wonder is which Republican will cave first?
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.
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:
“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?
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.