Political Risk Latin America Blog @PolRiskLatam

Hugo Chávez no longer lying low

Posted in News and Articles, Political Risk by politicalrisklatam on July 26, 2011

by Girish Gupta for The Christian Science Monitor, July 25h, 2011.

Venezuelan president Hugo Chávez’s silence during his initial trip to Cuba for cancer treatment raised speculation about his future. Now he is trying to remain in the public eye.

“THEY ROBBED US OF THE VICTORY GOAL!” screamed Venezuelan President Hugo Chávez’s Twitter account on Thursday morning, as Venezuela were knocked out of the Copa America after unexpectedly making the semi-finals.

As Mr. Chávez underwent his first phase of chemotherapy last week, he appeared to be keen to ensure that Venezuelans knew he was in charge – and eccentric statements like that are his modus operandi.

The firebrand socialist seems to have learned from the mistakes of last month, as an uncharacteristic three-week silence sparked speculation, compounded by his own ministers whose statements were confused and contradictory.

Their ubiquitous leader was missed and, thankfully for him, no one was able to fill the vacuum. This time around, there would be no vacuum to fill. “During the course of this week I have not lost focus on Venezuela for an instant,” Chávez said as he arrived back in Caracas on Saturday night.

His primary method of keeping up that appearance is Twitter. The maverick leader posted more than 50 times during his week away as he underwent medical treatment, spurring on the country’s soccer team, making budget statements, and alluding to his “great battle,” but without being specific as to why he was getting treatment.

Chávez is the face of government, and his public relations skills are second to none. Supporters hardly talk of their love for the party but, rather, their unflinching love for Chávez, the man. That fire has been kept burning for more than a decade by Chávez’s ubiquity on television, radio, and the streets of Caracas. (continue reading… )


Venezuela: Chávez van Gogh

Posted in News and Articles, Political Risk by politicalrisklatam on July 15, 2011

by Stefan Wagstyl for Financial Times – Beyond Brics, July 15th, 2011.

It is well known that Hugo Chávez is a former military man. Many are also aware of his passion for baseball, a career the left-handed pitcher abandoned in order to join the army. But it often goes unmentioned that he is also an enthusiastic painter.

Venezuela’s multi-talented leader clearly wanted to remind the nation of this, as he greeted ministers to a televised cabinet meeting at the presidential palace this morning, while putting the finishing touches to his latest masterpiece.

At a time when the notoriously active leader is having to moderate his normally energetic schedule, as he faces the prospect of undergoing chemotherapy – media reports sugges the may go to the same hospital in Brazil where Paraguayan president Fernando Lugo was successfully treated for his cancer – he seems to continue to want to give the impression that he is in control, and can do anything and everything.

That is in spite of his own admission this week that he “needs to learn to delegate”, and that he must temper his micromanaging style. “I was killing myself…. It was permanent anxiety, sometimes I couldn’t breathe,” he confessed, approvingly quoting advice from his
mentor Fidel Castro: “Chávez cannot be the mayor of all Venezuela.” (continue reading… )

Prison riots in Venezuela speaks volumes about corruption and mismanagement under Hugo Chávez

Posted in News and Articles, Political Risk by politicalrisklatam on June 21, 2011

by Joel Hirst for InterAmerican Security Watch, June 20th, 2011.

Fyodor Dostoevsky is said to have observed, “The degree of civilization in a society can be judged by entering its prisons.”  If this is true, the Venezuela of Hugo Chavez’s “Pretty Revolution” is truly in a sorry state.  A series of prison riots in recent days – which incompetent cronies have struggled to contain by indiscriminate violence – speaks volumes about the brutish state of Venezuela under Hugo Chávez.

These ferocious riots should come as no surprise.  Last year, 467 people were killed and 967 injured in Venezuela’s prison system.  Its 30 tattered jails, crumbling and pockmarked with bullet holes, were designed to hold 12,500 people: yet are currently home to roughly 49,000.

Not only is overcrowding an issue, but prisoners live at the mercy of their corrupt jailers.  Family members are forced to pay bribes to the guards for food and medical care, and better treatment and facilities are available to the highest bidder.  The gangs that control the Venezuelan jails frequently face off against each other, and the carnage that ensues is too much to even show on TV or newspapers.

Chavez’s revolutionary government has decried this fecklessly, blaming the problem on previous governments and committing to a process of “humanizing” the prisons.  After 12 years and thousands of dead, the government is guilty of hypocrisy, incompetence, or a little of both.  The prisoners and their families have no confidence in the regime, resorting to weekly hunger strikes each Sunday – visiting day for family members – and occasionally taking their own family members hostage and threatening them in a desperate attempt to get improved conditions. (continue reading… )

Chávez, Correa Increase Bilateral Cooperation

Posted in News and Articles, Political Risk by politicalrisklatam on June 8, 2011

by Americas Quarterly Online, June 8th, 2011.

In a sign of tightening economic cooperation, Venezuelan President Hugo Chávez and his Ecuadorian counterpart Rafael Correa signed 12 bilateral agreements yesterday in the Ecuadorian resort town of Salinas. Some of the agreements focused on creating joint ventures for housing and the production and sale of cocoa. Others covered the sectors of tourism, health, social security, and technology.

Furthermore, despite calls among Gulf Arab states of the Organization of the Petroleum Exporting Countries (OPEC) to escalate daily outputs by its members, both presidents rejected such demands while in Salinas. Correa claimed that OPEC quotas should not increase given current global demand levels, noting that “production will have to increase when demand grows.” Ecuador and Venezuela are OPEC member nations.

The two leaders also celebrated the victory earlier this week of Peruvian President-elect Ollanta Humala. They noted that Humala’s victory and yesterday’s bilateral agreements are further signs of regional integration. Chávez added that this integration is intended to turn Latin America into “a zone of peace and democracy.”

A Setback in Colombia’s Rapprochement with Venezuela

Posted in News and Articles, Political Risk by politicalrisklatam on May 23, 2011

by Andres Mejia Vergnaud for Americas Quarterly, May 19th, 2011.

President Santos’ policy of rapprochement with Venezuela has suffered a significant and unexpected setback: the resignation of José Fernando Bautista, Colombia’s ambassador to the Bolivarian Republic.

Bautista submitted his farewell letter anticipating revelations of deals with the infamous Nule Group, whose owners, two brothers and their cousin, remain in prison while they face trial for what will perhaps be the greatest corruption scandal in Colombia’s history.  The case involves multi-million bribes and illegal commissions in public contracting.  The Nule scandal has also resulted in the suspension of Bogotá Mayor Samuel Moreno, the arrest of his brother Iván —a senator— and the imprisonment of a number of second-rank officials.

At this point, it’s still not clear what kind of job Mr. Bautista did for the Nules. A long-time successful lobbyist, he might have sold his ability to be influential in the highest circles of fovernment. But concerns have arisen that he might have gone beyond this, and that he could have been involved in an alleged plot to discredit Sandra Morelli, the Colombia’s comptroller general. Mr. Bautista claims in his letter that he did nothing but advising what at the time was a successful and respected corporate group. This defense leaves a question open: if this was the case, why did he feel compelled to resign? It’s hard not to suspect there’s something more. (continue reading… )

Colombia and Venezuela: friends again

Posted in News and Articles, Political Risk by politicalrisklatam on April 13, 2011

by Bendict Mander for Financial Times – Beyond Brics, April 13th, 2011.

Who’d have thought it? Less than a year ago the presidents of Venezuela and Colombia were practically at each other’s throats. With the inauguration of Juan Manuel Santos as Colombia’s new leader last August, many assumed things would get worse.

How wrong they were. The burgeoning “friendship” between him and Hugo Chávez, practically ideological opposites, just keeps on delivering surprises. Now, Santos is telling the world that the camps of the leftwing Colombian rebels, FARC, that they knew of in Venezuela are no longer there.

This marks a huge rhetorical reversal from his predecessor, Alvaro Uribe (with Santos as his defence minister), who just before leaving the presidency launched a full frontal assault on Chávez, accusing him of providing safe haven to the guerrillas.

Why the sudden change? Under Uribe, Colombia looked increasingly isolated from its neighbours (not just Venezuela), while moving ever closer to the US, a key ally both militarily and in terms of trade. But it is finally beginning to look like Colombia may get the free trade deal with the US that it has been angling for so long. (continue reading… )


Venezuela: a good deal from China?

Posted in News and Articles, Political Risk by politicalrisklatam on March 17, 2011

by Benedict Mander for Financial Times – Beyond Brics, March 16th, 2011.

What would Hugo Chávez do without China? From cheap fridges for the poor to life-saving state-to-state loans, help with building essential housing to massive investments in major oil projects, there’s scarcely an area of Venezuela’s economy where China doesn’t play a key role.

However, while there’s no question that China’s help is of great importance for Chávez – not least given a deterioration in relations with the private sector and countries that have more traditionally been keen to invest in Venezuela, like the US – some doubt whether he is always cutting the best deal.

On Tuesday, Venezuela’s leader signed a deal with the Industrial & Commercial Bank of China, which promised to evaluate making a $4bn loan to finance much-needed infrastructure projects, including construction, which another Chinese state company, Citic Group, will help with. Just the day before, an agreement was signed with China’s XCMG Construction Machinery Co to import hydraulic trucks to help build homes too; while the day before that, on Sunday, it emerged China would export agricultural machinery to Venezuela. (continue reading… )


Oil leak

Posted in News and Articles, Political Risk by politicalrisklatam on February 25, 2011

by The Economist, February 24th, 2011.

Could one of the world’s top petroleum producers really go bankrupt?

Ever since Greece plunged into a sovereign-debt crisis in 2009, investors have focused on which European country might be next. According to Capital Economics, a research firm in London, however, the next trouble spot could be Venezuela. “There is a growing risk that the government will default on its obligations in 2012,” its analysts wrote on February 17th. Some in the markets have taken fright, too: the country’s credit-default swaps imply a 50% chance of default by 2015. That may be overblown. Even so, Hugo Chávez, Venezuela’s leftist president, seems to be pulling off a dubious achievement by causing the bond markets to fear for the solvency of the world’s eighth-largest oil producer.

The chief cause of Venezuela’s travails has been Mr Chávez’s pillaging of PDVSA, the state oil firm. He has packed it with loyalists, starved it of investment and used it for social spending, cutting its output from 3.3m barrels per day (b/d) in 1998 to around 2.25m b/d, according to industry estimates. Of that, some 1m b/d is sold at subsidised prices at home or to regional allies, leaving just 1.25m b/d for full-price exports.

Meanwhile, the president’s hostility to business has devastated the rest of the economy. He has nationalised hundreds of companies and trumped up charges against their owners, causing much of Venezuela’s private sector to shut up shop and flee. As a result, the country has seen vast capital flight, and must import many goods that it used to produce. Non-oil exports have ground to a halt: petroleum now accounts for 92% of its dollar intake. (continue reading… )

Venezuela: stuttering back to growth

Posted in News and Articles, Political Risk by politicalrisklatam on February 23, 2011

by Adam Thomson  for Financial Times – Beyond Brics, February 23rd, 2011.

It is hard not to shed a tear for Venezuela. Latin America’s largest oil producer on Tuesday confirmed that it had pulled off the remarkable feat of contracting 1.4 per cent during a year in which oil prices rallied.

That was the second consecutive year of negative growth for Venezuela – in 2009, the country led by socialist President Hugo Chávez shrank 3.3 per cent – and it comes as the rest of Latin America is rebounding strongly from the global recession of two years ago.

Indeed, as Venezuela has continued to suffer, it has looked more and more like an outlier in a region that, for the most part, finally seems to have freed itself from the cycles of boom and bust that previously characterised economic development. In 2010, the only countries in the region likely to post negative growth are Venezuela and Haiti. (continue reading… )


The Revolution Will Not Be Marginalized

Posted in News and Articles, Political Risk by politicalrisklatam on January 7, 2011

by Christopher Sabatini for Foreign AffairsAmericas Society/Council of the Americas, January 7th, 2010.

Hugo Chávez Tightens His Grip on Venezuela.

Those who believed that the Venezuelan opposition’s gains in the September 2010 midterm elections would chasten President Hugo Chávez have seen their hopes dashed in the past six weeks. Since the end of November, Chávez and his allies — Chavistas — rammed through a series of laws that consolidate his control over everything from banks and local governments to the Internet and the National Assembly.

In the waning days of the Chavista-controlled National Assembly, the legislation came fast and furious, including a long-threatened law that forbids organizations and individuals receiving international financial support from defending Venezuelans’ political rights and prohibits local organizations from hosting foreigners who express opinions perceived offensive to the government. Other bills effectively established a parallel state on a local scale by creating community-level structures that report directly to the president, and granted the state unlimited discretion over economic policy.

Chávez’s new laws decimated the authority and fiscal capacity of local governments by creating a vertical, separate structure for overseeing and managing social programs. The laws bypass municipal governments’ fiscal and political authority (established under Chávez’s own 1999 constitution) by establishing a new “commune”-level government and setting up a “popular power” chain of command that answers only to the “revolutionary leadership” in Caracas. Recent banking laws have put banks under the government’s thumb by officially declaring them public utilities and requiring them to either donate five percent of their profits to a social fund or risk seizure by the state. To add an exclamation mark to the end of the Chavista-dominated legislature, on December 17, 2010, Chávez had the outgoing National Assembly grant him the authority to rule by decree for 18 months. This “enabling law” will allow him to pass laws of his choice on social and economic policy and matters of national security. (continue reading… )