In the latest in power outage to hit Venezuela this year, a blackout on Monday night left a large portion of Caracas in the dark, with other parts of the country affected as well. Outages were also reported in the states of Vargas, Aragua, Miranda, Lara, Zulia, Carabobo, and Falcón.
For many in Caracas, the power outage lasted only 10 minutes, while other parts of the country endured the blackout for over an hour and a half, according to Energy Minister Jesse Chacón. The outage occurred just after 8 p.m. local time, as Venezuelan President Nicolás Maduro was speaking on television.
In September, a power failure caused 70 percent of the country to lose power. That incident, as well as the one last night, originated from the same power substation west of Caracas. In both incidents, President Maduro suggested that sabotage was involved, but was unable to provide evidence.
Corpoelec, Venezuela’s state-run power company, was working late into Monday night to restore power across the country, and by 9:30 p.m. had successfully gotten about 85 percent of the greater Caracas area back on the grid. Venezuelan authorities said they would begin an investigation to determine the cause of the blackout.
Likely top stories this week: Chilean voters go to the polls; El Salvador and Honduras face off over Isla Conejo; the Venezuelan government seizes the electronic chain Daka; Chilean forensic experts conclude that Pablo Neruda was not poisoned; the Argentine president is cleared to start working.
Chilean Presidential Elections: Chilean voters will go to the polls on Sunday to elect their next president, with former President Michelle Bachelet heavily favored to win. Bachelet may forgo a presidential runoff with the second-place candidate if she is able to win more than 50 percent of the vote; polls thus far predict she will do so by winning a first-round majority. However, this is the first presidential election in Chile in which voting is no longer compulsory but in which all eligible voters are automatically registered; the new system may have some impact on the vote.
El Salvador Appeals to UN Over Isla Conejo: Salvadoran President Mauricio Funes announced on Sunday that his government would send a letter to the UN and OAS regarding its diplomatic dispute with Honduras over Isla Conejo, which is claimed by both countries. The Honduran military has occupied Isla Conejo since the 1980s, but El Salvador's recent purchase of ten A-37 fighter planes from Chile has made the Honduran government uneasy, with the Honduran government calling the purchase "an open threat." Funes denied the claims on Sunday and said that El Salvador was a peaceful nation and was not planning to go to war.
Government Seizes Venezuelan Electronics Chain: As the Christmas season and Venezuela's December 8 municipal elections approach, the Venezuelan government on Friday ordered the seizure of the electronics chain Daka, saying that prices of goods like plasma TVs were overpriced by as much as 1000 percent. After the government instituted a rapid price reduction of Daka's goods, Venezuelan customers lined up for hours to take advantage of the new prices. Shortages of basic goods have plagued the Venezuelan economy and inflation is estimated at 54 percent. Maduro says he is cracking down on unscrupulous businesspeople and has instituted a number of strategies—including kicking off Christmas celebrations in the first week of November—to shore up support ahead of the elections.
Neruda Not Poisoned, Experts Say: Experts from the Chilean Forensic Service said on Friday that no evidence of poison was found in the remains of Nobel Prize-winning poet Pablo Neruda, who was exhumed earlier this year and whose body underwent six months of test by a team comprised of 15 Chilean and foreign forensic scientists. Neruda apparently died of prostate cancer just days before the coup of General Augusto Pinochet in September 1973. Neruda's driver, Manuel Araya, maintained for decades that the poet was poisoned after entering the hospital. Chile's Communist Party, of which Neruda was a member, has called for further studies.
Fernández de Kirchner to Resume Duties: A month after undergoing emergency surgery due to a blood clot in her brain, Argentine President Cristina Fernández de Kirchner has been given medical clearance to resume presidential duties starting on Monday. She will undergo more tests next month and is not allowed to fly for another 30 days. Argentine Vice President Amado Boudou was formally in charge of the government during Fernández de Kirchner’s recovery.
On October 21, Indian oil and gas firm ONGC Videsh Ltd (OVL) was among 11 foreign companies in Rio de Janiero to bid for Brazil’s latest oil find, the Libra oil field.
The winning consortium was made up of a Sino-European mix of four companies, with Brazil’s Petrobras holding the majority stake. Although OVL didn’t make the final cut, its presence in the bidding process points to India’s growing energy equation with Latin America, as does the recent success of Indian oil majors in acquiring large contracts in Latin America.
Eight Indian companies—OVL, Reliance Industries, Essar Oil, BPCL, Oil India, Videocon Industries, Assam Company, and Indian Oil Corporation—are part of 12 joint ventures in Venezuela, Brazil, Colombia, Ecuador, Cuba, and Peru. Their approach is pragmatic: invest substantial capital with state-run oil companies and use local expertise.
In Venezuela and Brazil, the national oil companies—PDVSA and Petrobras, respectively—get their governments’ support in procuring funding and project clearances, which further facilitates the joint ventures. As a result of the enhanced trade in oil from these countries to refineries at home, India’s total oil imports from Latin America increased from 4.5 percent in 2003 to 11 percent in 2012-13.
La vida en Venezuela es imprevisible. No se sabe cuándo los bienes básicos llegarán a los anaqueles, ni cuánto tiempo un corte eléctrico puede dejar el país a oscuras. Desplazarse de una ciudad a otra—en un país de 916 mil kilómetros cuadrados—puede llevar una hora como cinco. Ni siquiera el crimen es organizado. En términos prácticos, es como si cada día fuese una sorpresa, pero a la vez como si se tratase de un guión que se repite de manera incesante.
Dos semanas atrás, una protesta por mejoras salariales paralizó por completo las instalaciones de la Siderúrgica del Orinoco (Sidor), la mayor productora de acero del país que forma parte de la Corporación Venezolana de Guayana (CVG), un complejo de industrias básicas ubicado al sureste del país que en nació en los años 60 con la promesa de potenciar el crecimiento económico de la nación petrolera.
Si bien la sorpresa cayó de imprevisto en la golpeada gestión presidencial de Nicolás Maduro—el heredero político del fallecido Hugo Chávez—las luchas sindicales en Sidor y sus industrias hermanas no son novedad. Durante años, los trabajadores de Sidor han reclamado que las arduas condiciones de trabajo y la ausencia de un plan de jubilación deben ser recompensados con onerosos contratos colectivos. Chávez nacionalizó la empresa en 2008, bajo la premisa que acompañó los otros muchos procesos de estatización durante su gobierno: Venezuela es soberana. Revertir la privatización—firmada en 1997—le garantizó el apoyo de la masa obrera, a un costo muy alto para el país. Bajo el control del Estado, la empresa disminuyó sus niveles de producción en 60 por ciento; producto de la crisis eléctrica, la falta de insumos y corrupción administrativa.
Durante la última huelga, que se extendió por tres semanas y terminó con nuevas promesas, algunos trabajadores insistieron que la siderúrgica podría ser una empresa autosustentable, pero por decisión del Gobierno continúa produciendo a pérdida y subsistiendo gracias al desembolso directo del presupuesto nacional. Esta es la realidad nacional: los problemas administrativos y pésimas decisiones en materia económica obligan al Estado—antes suplantado personalísticamente por Chávez—a intervenir en cada fase del proceso venezolano. Así, el Estado oye a los trabajadores, el Estado garantiza hospitales, el Estado escoge los libros de texto para las escuelas, el Estado garantiza que haya leche y pollo en casa.
Venezuelan President Nicolás Maduro requested on Tuesday that the National Assembly implement the Ley Habilitante (Enabling Law), granting him special powers in order to fight corruption, economic issues and “capitalist logic” for one year. Maduro will need at least one opposition vote next week to receive the legislative powers. Because his party already has a two-thirds majority in the legislature, it is expected that the Enabling Law—which former President Hugo Chávez was granted four times—will be implemented for the executive.
Maduro insists the legislative powers are necessary to fight graft, given that Venezuela was ranked as the third most corrupt country in the world behind Liberia and Mongolia. But the news sparked speculation that Maduro is seeking to use his powers to undermine opposition candidates and distract Venezuelans from the economic crisis in their country. Opposition leader Henrique Capriles stated that he believed Maduro’s government would “ use the law to persecute and distract the people from their real problems."
Maduro’s request comes at a time when Venezuela claims highest inflation rate in the region, a sluggish economy and a power outage that left more than 65 percent of Venezuelans without electricity last month. Many analysts believe that 14 years of the Cadivi system—currency and price controls that are a holdover from the Chávez era—are seen as the main culprit behind Venezuela’s high inflation and shaky economy. The system, which provides dollars to importers and Venezuelans who travel abroad, has long been exploited and helped drive the black market price of the dollar to seven times the official exchange rate.
World leaders and migration experts met in New York this week to participate in the UN General Assembly High-Level Dialogue on International Migration and Development. Participants discussed the growing impact of migrants’ contributions to the economic and social realities of member countries and the need to include migration as a key topic in the development agenda.
The recent world economic crisis led to a new socio-economic landscape—particularly in Latin America, where intra-regional migration flows increased significantly as a result of fewer employment opportunities and tighter immigration policies in Europe and the United States. Countries like Argentina, Brazil, Chile, and Uruguay became popular destinations for international migrants.
All countries in the region are greatly benefiting from an increased commercial and demographic interconnectedness, except for one: Venezuela.
For many years, Venezuela was a very popular migrant destination. Particularly between 1940 and 1970, thousands of immigrants from Europe and other countries in Latin America—particularly Colombia—saw Venezuela as an ideal place to escape from civil wars, dictatorships and economic crises. Back then, the South American country had a vibrant economy and was one of the most politically stable nations in the Western Hemisphere.
The economic boom lasted until the 1980s, when the collapse of oil prices crippled the Venezuelan economy. Venezuelans’ living standards fell dramatically as a result of failed economic policies, increasing corruption in government and a rise in poverty and crime. It was in this period that, for the first time, a significant number of Venezuelans decided to look for better opportunities abroad.
But the Venezuelan exodus did not attain its current dramatic proportions until the Hugo Chávez era. Between 1999 and 2013—the fourteen years of Chávez’ presidency—Venezuela witnessed unprecedented human capital flight. Though there are no official records of the exact number of Venezuelans living abroad, some experts estimate that about 1 million Venezuelans have fled their home country, 3.5 percent of the country’s population. This includes the emigration of half of Venezuela’s Jewish community—a constant target of the regime—by the time Hugo Chávez died in March 2013.
Due to geographic and cultural proximity, Colombia is the quintessential destination for Venezuelan migrants in Latin America. Some believe that Colombia’s current oil boom can be directly attributed to a rare breed of experts: the thousands of high-skilled Venezuelan oil professionals that were barred from working in the industry following the 2002-2003 Paro Nacional, or national strike. Besides Colombia, Venezuelans have congregated in Miami, Panama City and Madrid, and are increasingly sighted in less conventional places, such as Sydney, Calgary and Santo Domingo.
One of the characteristics of this exodus is that Venezuela is now exporting much more than gray-haired oil professionals. For some time, students have been the country’s main exports, as they have greatly benefitted from Venezuela’s twisted currency control regime known as the Comisión de Administración de Divisas (CADIVI). Thousands of Venezuelan students have decided to enroll in universities abroad as a means to escape the Bolivarian drama. With CADIVI dollars at a preferential rate—currently 6 times lower that the parallel black market rate—many students pursue not one, but two and sometimes three academic degrees, an expensive crusade to postpone the hardest decision of all: going back home.
But there is a bright side to the drama and the brain drain. According to Michael Clemens, a Senior Fellow at the Center for Global Development in Washington DC, emigration has many overlooked benefits for countries of origin. In a recent report about skilled migration and development, Clemens says that “even if migrants do not return to their countries of origin, they transfer money, skills, technology, and even democratic ideas; their stories can inspire investments in education in sending countries; and they expand their own life opportunities in ways not possible without moving.”
This and other studies reveal that, besides being a fundamental source of remittances, migrants can also promote entrepreneurship and transfer knowledge and skills that are crucial for the growth and well-being of their countries of origin. Venezuela’s diaspora has traditionally been comprised of high-skilled professionals. And if we add the thousands of younger Venezuelans—who, in the past 14 years, have attained a high-level education overseas—we end up with a solid professional base with unbelievable potential. So how can we capitalize on this human capital in ways that benefit Venezuela?
An engaged diaspora is the sine qua non to development in countries where the number of emigrants is very high. We don’t have to go too far to find examples. Mexico—a country that, unlike Venezuela, has a long history of migration—has discovered the secret ingredient: connecting migration to development. Mexico’s Institute for Migrants Abroad (Instituto de los Mexicanos en el Exterior—IME) coordinates a long list of initiatives through its broad consular network aimed at strengthening the ties between Mexican citizens: those living in Mexico and abroad. Through the “3x1 program”, for instance, Mexicans living in the U.S. can directly invest in their communities of origin. For every Mexican peso provided by migrants, the federal, state and municipal governments contribute an additional peso.
Venezuelans abroad are already moving in this direction. VenMundo, a non-partisan network of Venezuelans in Canada, Chile, the U.S., and Spain, has drafted a set of proposals that include a comprehensive census of the Venezuelan migrant population and an incentive program for returning migrants. However, greater resources and political will are still missing to get these ideas off the ground.
In a recent speech in Doral County, Miami—the largest Venezuelan immigrant community in the United States—opposition leader and Governor of Miranda State Henrique Capriles Radonski asked the Venezuelan community to continue pushing for change in the country they left behind. “I’ve come to take you home,” he said. “The best country in the world is called Venezuela.”
The United States Department of State announced today that it is expelling the three top Venezuelan diplomats in Washington after Caracas ousted three of their American counterparts on Sunday. The Venezuelan officials, including charge d’affaires Calixto Ortega Rios, were given 48 hours to leave the country.
The State Department decision comes in direct response to the expulsion of U.S. charge d'affaires Kelly Keiderling, David Moo and Elizabeth Hoffman, who Venezuelan President Nicolas Maduro accused of conspiring to sabotage the economy, alleging that the diplomats had bribed Venezuelan companies to cut down power production. The U.S. embassy immediately denied the allegations.
Maduro gave the U.S. diplomats a 48 hour timeframe to leave Venezuela, saying in a speech in Santa Ana, “Out of Venezuela! Yankees, go home!” A State Department official called the decision out of Caracas “counterproductive to the interests of both our countries and not a serious way for a country to conduct its foreign policy.”
The U.S. and Venezuela have gone without ambassadors in each other’s capitals since 2010, when former President Hugo Chávez denied a visa to would-be American Ambassador Larry Palmer—and the U.S. retaliated by expelling the Venezuelan ambassador to Washington. Borrowing a strategy from his predecessor, Maduro’s decision on Sunday may be an effort to turn Venezuelan’s attention away from the ailing economy, where inflation reached 45 percent, and the availability of basic goods is at a five-year low.
No son tiempos fáciles para Venezuela. En el tercer trimestre del año, la escasez de productos básicos continúa siendo una piedra en el zapato del Gobierno, el dólar paralelo—que inició 2012 cotizando en 17BsF—pasó la línea de 40BsF, la inflación se ubicó en 42,5 por ciento para agosto pasado, y la inversión extranjera fue de -15 por ciento, uno de los índices más bajos de la región. Con la debacle económica marcando la opinión pública y, peor aún, la calidad de vida de los ciudadanos, el presidente Nicolás Maduro tomó un avión para China la semana pasada.
La primera visita oficial del heredero político de Hugo Chávez se produce antes de completar un semestre en el Palacio de Gobierno. Fue un viaje expreso, pero con los resultados esperados: en tres días, el mandatario cerró un nuevo préstamo de 5 mil millones de dólares, y la promesa de inversiones por 14 mil millones de dólares en el área petrolera.
Con esta inyección de dinero, Venezuela suma 43 mil millons de dólares en préstamos de China en apenas seis años. El esquema, establecido en 2007 a través de la creación del Fondo Mixto Chino Venezolano, se centra en blindar créditos con la entrega de petróleo a precio fijo por un plazo determinado de años. Fue la fórmula que el entonces presidente Hugo Chávez encontró para materializar su interés por China. Desde el comienzo de su gestión el mandatario buscó caminos para sustentar su retórica anti americana, y una China en plena ebullición parecía, sin duda, la más atractiva de las alternativas.
Asia era un destino tan poco considerado por Venezuela, que cuando Chávez fue electo en 1999 la balanza comercial entre ambos países sumaba 1,9 mil millones de dólares. En la primera década de la revolución bolivariana, el intercambio creció 10 veces, alcanzando los 10,3 mil millones de dólares en 2010. Ese año fue significativo para la relación binacional: China autorizó un préstamo de 20,8 mil millones de dólares, el mayor concedido por autoridades bancarias chinas a un único deudor.
El dinero chino motorizó la economía venezolana. En teoría, debía ser destinado a proyectos de infraestructura nacional, agricultura y a la construcción de dos satélites, sin embargo, la ausencia de una contraloría real en el país dificulta discriminar cuánto se invirtió en proyectos a largo plazo, y cuánto sirvió para sostener el sistema populista y paternalista de Chávez, ratificado en trece elecciones consecutivas. La negociación no sólo ofrecía un atractivo en materia de política externa para alguien necesitado de antagonizar con Washington, sino que también representaba ventajas a lo interno. El dinero entraba rápidamente, sin condiciones que exigieran ajustes económicos inmediatos, y si los venezolanos durante años han dilapidado parte de su presupuesto subvencionando gasolina para consumo interno, ¿por qué iban a cuestionar al Gobierno por comprometer, por lo menos, 11 por ciento de la producción petrolera a varios años?
Next up on the world’s stage of Theater of the Absurd: Venezuela’s President Nicolás Maduro. Like his predecessor, the late Hugo Chávez, Maduro has as his mentors—in things big and small—Fidel and Raul Castro of Cuba. Always the masters of deception, the Castro brothers were caught red-handed this summer trying to ship weapons to North Korea. Now it is Maduro whom might have been caught red-handed, or should we say “red-faced,” trying to sneak Cuban intelligence agents into the United States.
Maduro had planned a speech to the United Nations General Assembly in New York. He never made it. Traveling on Cubana Airlines with a Venezuelan delegation that included his wife, son and daughter-in-law, a hair dresser and a bevy of Cuban security experts carrying Venezuelan passports, his plane landed in Canada for refueling, on a return flight from China. ABC, Madrid’s daily broke the story reporting that the United States denied visas to the Cubans, part of Maduro’s entourage. But according to U.S. government sources, what happened was that Maduro ordered his aircraft “to turn away when the US wouldn’t give them assurances that they would not be denied entry.” The State Department spokesman said that “No visas have been denied for the Venezuelan delegation to this year’s UN General Assembly.”
Maduro left in a fury vowing retaliation and “drastic actions.” Caracas’ El Universal quoted Maduro saying that “he dropped his trip to New York in order to safeguard his physical integrity.” El Universal also reported that the Venezuelan president “fingered former US officials Roger Noriega and Otto Reich for allegedly planning ‘a provocation’”. The possibility of Noriega and Reich, two Republican political appointees, directing any initiative of any kind by the Obama administration is zilch.
There was also some speculation that the Venezuelans feared the Cuban 767 would be seized, as Cuban vessels have been detained in various foreign countries in the past due to Havana’s failures to fulfill financial obligations.
Recent discussions when in Caracas and Maracaibo have made clear that as soon as the late Venezuelan President Hugo Chávez died, the strategy of Petróleos de Venezuela S.A. (PDVSA) became “pragmatism” in the face of “necessity.”
My August 29 AQ Web Exclusive described PDVSA’s scramble for production by enlisting the private sector and by meeting the tough new constraints on loans imposed by Beijing and major foreign oil companies.
Several Venezuelans, on condition of not being quoted as they do business with PDVSA, related a consistent picture differing only in amount of detail: PDVSA has had to allow delivery of loans directly to large joint ventures (JVs) with major foreign oil companies, surrendering much operational management. To guarantee timely payment and repatriation of profits, PDVSA delivers oil produced to a third party for marketing abroad, with proceeds put in offshore accounts with JV partners. 
But for a near-term production boost, “re-invigorating” tens-of-thousands of mature fields is crucial. Venezuelan oil executives and analysts generally say investments must begin in a few months, yielding new production six to 12 months thereafter. And, most feel the state has dollar wiggle room to muddle on for another one to two years.
For example, the Central Bank was given the right to inspect the books of PDVSA, its subsidiariesand social funds—finding perhaps $24 billion in off-budget funds, while controlled prices and/or taxes could also be raised. But this assumes no big shocks such as natural disasters, mass demonstrations against food and medicine shortages, inflation, insecurity, or prolonged blackouts.
The devastated private sector is clearly anxious to provide goods and services as PDVSA proposes (to cut its dollars spent for imports) and to invest in the mature fields PDVSA is offering (which means finding foreign investors when PDVSA cannot).