n 30/05 - The Chavez "discount", commentary on two FT Articles: "Beyond Borders: The Chávez premium" & "Iran to help Venezuela sell more oil to Asia"

PMBComments: these days it is increasingly tricky to write about Venezuela. If one is not bewildered by Chávez’s male chauvinist vulgarity (our heartfelt apologies to Condi Rice), one is aghast at the depth of the national security challenge posed by Colombian guerillas freely roaming our streets and voting in our cartersanctioned referendum. What words should I use to describe the plan to arm and re-train our military (and militias) to go into an asymmetric war with the “empire”? If packing the Supreme Court, gagging the press and shackling the Central Bank aren’t sufficient proof for some; what do we do about growing evidence of chavista foul play behind the deaths of a “martyred” prosecutor (Danilo Anderson, a highly publicized affair) and of a “doctrinaire” army general (Brigadier General Moncanaut, a hushed up imbroglio)? And how do we adequately report on the unprincipled spectacle of a visiting US Senator suggesting we all “turn the page on the recent past” while Hugo Chávez rips out every remaining one from the democratic rule book? And with regards to the death of the OAS, should it continue unnoticed? Or, should we notify the next of kin? Amazement my reader friends is not an exceptional word but the norm when relating the state of our oil-propelled calamity.

Since it is oil – and oil alone - that keeps this deadly-serious farce on track, it is important to focus on articles such as these two appearing on the European and US editions of the FT. Webb Vidal, always vigilant and in the forefront of developments in Venezuela, highlights what the oil markets now label the “Chávez premium”. This oil price surcharge, attributable to the volatility brought about by Chávez antics, has a corollary in Venezuela which we should start calling “the Chávez discount”. This would account for the loss in domestic values (moral and financial) and the deterioration of every measurable indicator used to objectively, or subjectively, measure progress. It is a scandalous travesty that this “discount” concurs with a “premium” that regales Venezuela with immense oil wealth. Chavez’s apologists (should we start labeling them “the page turners”) should focus a little bit more on this shameful dichotomy. The evolution of a democratic society can never be measured by a government’s ability to plunk cash to cover-up problems, but by its ability to empower its citizens to become sustainable net contributors to society. Hugo Chavez has made poverty a wicked political asset, and as such is perversely content to be cheered on by those whose future he is decimating and by those who live too far to really give a damn. PMB

Note on oil: given the rapid shift in Venezuelan oil strategy: i.e. threat to reduce or cut oil supply to the US, increased sales to China, help from Iran, sudden and unilateral changes in contractual terms, never ending PDVSA management musical chairs, “Citgo is robbing us” accusations and other such jewels, I will soon write a stand alone commentary on the demise of PDVSA and the upcoming demise of Venezuela as a serious or significant player in the oil market. Until then keep an eye on one Bernard Mommer, Eminence gris of the destruction of PDVSA, who was recently promoted to the Board of PDVSA but whose “real and current” master is still a mystery to most of us who strive to understand the reason behind such consistent and shortsighted stupidity.

Financial Times

Beyond Borders: The Chávez premium
By Andy Webb-Vidal in Caracas
Published: January 30 2005 20:19 | Last updated: January 30 2005 20:19

Oil futures traders in London and New York have come up with a catchy term to describe an additional source of uncertainty when it comes to judging potential volatility in supplies: the Chávez premium.

There is as yet no established formula that serves to precisely calculate how many dollars should be added to the price of a barrel of oil because of Venezuela's President Hugo Chavez, from whom the term derives.

However, one thing is clear: political uncertainty stemming from Mr Chávez and his policies is becoming not only a factor in the oil markets, but it also has implications for Venezuela's sovereign bond holders and for oil multinationals.

As the world's fifth largest oil exporter, for decades Venezuela had been seen as a secure source of oil, particularly to the US. Tens of billions of dollars have been invested to extract oil from the South American country.

However, Mr Chávez is uncomfortable with Washington, which he sees as the centre of an imperialist "empire" bent on dominating the rest of the world, and intent on overthrowing him and his self-styled "revolution" for the poor.

Mr Chávez's repeated threats to "cut off" oil supplies to the US used to be dismissed by analysts as mere rhetoric.

It is becoming clear that Mr Chávez means business, inasmuch as he is planning to ship the oil he controls to anywhere but the US.

"He's trying to align his business movements with his political aspirations to have closer relations with non-US countries," says Rob Cordray, analyst at PFC Energy, a consultancy based in Washington. During a visit to Beijing in December, Mr Chávez offered to send oil to China.

Mr Chávez has wasted no time in fulfilling his pledge. Since the start of this year, Venezuela has sold two 3m-barrel cargoes of crude oil to China.

Some observers point out that because Venezuelan crude is heavy, it will be unusable in Chinese refineries. Also, because China is far more distant than the US, a strategy of diverting oil to China is an exercise that has to be paid for by one of the parties, and is economically unsustainable.

"Venezuela's dependence on US refining capabilities and the lack of access to the Pacific will limit Chávez's ability to diversify Venezuela's export market in the near future," says Patrick Esteruelas, a Latin America analyst at Eurasia Group, a consultancy based in New York.

While that may be true, people familiar with the recent shipments say the oil is being sold at a heavy discount, in theory allowing China to be able to resell the oil at a small profit. The re-sale of Venezuela crude oil to third parties was previously forbidden by Petroleos de Venezuela (PDVSA), the state-owned oil company.

"The reason for the dispatch of these cargos is 100 per cent political," said a trader familiar with the deals.

Venezuela is also planning to ship oil to Asia via a pipeline across Panama.

While the diversion of oil exports to China for political reasons is at an early stage, analysts say that its expansion will damage Venezuela's credit rating because it will receive less income, especially if oil prices decline. The issue of Venezuela's creditworthiness was called in to question two weeks ago when Standard & Poor's, the ratings agency, dropped the country's debt rating to "selective default" after the country missed a $35m payment due in October.

Richard Francis, analyst at Standard & Poor's, said: "It was more for technical issues, we don't believe that the ability or willingness of the government is really in question, at least at this point."

Venezuelan officials said the payment was missed because of an "error", but other observers are concerned.

"The selective default reflects the state of disarray the public administration is in," said an investment banker dealing in Latin American debt.

PDVSA has become far more poorly managed since a strike two years ago that led to the summary dismissal of 18,000 experienced employees.

Today, rather than the seat of a $100bn oil company, PDVSA's headquarters is the hub of a chaotic social welfare agency, with distressed mothers breast-feeding babies in a foyer scattered with "revolutionary" pamphlets.

Indeed, such is the lack of control at PDVSA, which has to maintain a $2bn-plus revolving "social fund" under orders from Mr Chávez, that no one knows the state of its financial health.

"How can anyone assess a company that has not presented its financial statements since 2002?" asks Pedro Burelli, a former director of PDVSA.

Foreign executives who deal with PDVSA also allege irregularities such as the issue of parallel contracts that allow for personal fortunes to be made by "mafia-like" factions inside the company.

Today, PDVSA sells most of its oil-derived products on a spot basis or via contracts of no more than 12 months' duration. Some crude is also sold "spot" for immediate delivery.

However, there is another related issue that is complicating Venezuela's capacity to continue pumping oil.

Because of declining output at PDVSA, due to the diversion of money away from essential investment, poor management and alleged corruption, a greater share of Venezuela's oil supply is coming from private companies.

Yet the investment conditions for foreign oil companies is deteriorating fast rather than becoming easier.

In recent weeks Mr Chávez has ordered a unilateral overhaul of dozens of oil contracts in an effort to raise tax revenue.

Alarm bells are ringing in Houston. Harvest Natural Resources, a US company, has seen its shares collapse in the past two weeks after it was told by Venezuela to suspend exploration in its main project.

At least one investment bank downgraded its outlook for ConocoPhillips after its plan to develop its promising Corocoro oil field was stopped by the government.

Venezuela, which currently produces about 2.6m barrels per day, predicts it will increase daily oil output to 5m barrels by 2009.

In practice, say experts, Venezuela is every day shipping less oil to world markets, in effect bolstering the "Chávez premium".

Iran to help Venezuela to sell more oil to Asia
By Andy Webb-Vidal in Caracas
Published: January 30 2005 22:04 | Last updated: January 30 2005 22:04

Venezuela has enlisted Iran's help to steer its oil exports to China and away from its traditional US market. A team of traders from Petroleos de Venezuela, the state-owned oil company, is to be trained in London by Iranian advisers in how to best place oil in Asian markets, people close to the industry say.

The move is part of an effort by Venezuela, the world's fifth-largest oil exporter, to strengthen ties with China at the expense of the US, with whom relations are again becoming strained after a two-year period of calm.

Iran is Venezuela's closest ally in the Organisation of the Petroleum Exporting Countries, which has agreed to keep output quotas unchanged in the short term to support oil prices.

At the weekend, Hugo Chávez, Venezuelan president, signed accords with Zeng Qinghong, China's vice-president, to allow the China National Petroleum Corporation to develop oil and gas reserves in Venezuela.

“China has come here as a sister nation to extend a friendly hand to the neediest in Latin America,” Mr Chávez said.

Venezuela is in talks with Panama to find ways of transporting oil across the Pacific Ocean, which would allow it to send oil to Asia more cheaply.

Mr Chávez, who has been in power for six years, has threatened to cut off oil supplies to the US on several occasions in response to what he asserts are persistent attempts by Washington to meddle in domestic affairs.

Venezuela settled an intense, two-week diplomatic dispute with the US-backed government of Colombia at the weekend after claims of a US-assisted “kidnapping” in Caracas of a Colombian rebel wanted by Bogotá.

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Jan 30/05 - On Jimmy Carter's plan to do somemthing about democracy in Latin America...thanks to Andres Oppenheimer

PMBComment: Jimmy Carter’s proposals to the OAS (yes, the building still stands even if the institution is AWOL) are not bad. What is appalling is his utter inability to put a name on the problem. Having observed how Hugo Chavez run circles around him and the hapless Cesar Gaviria, I can only imagine that he is scared stiff of publicly confronting someone who pulled his string at will. PMB

THE OPPENHEIMER REPORT | Carter plan could retire Chávez

ANDRES OPPENHEIMER

Former President Jimmy Carter, who gave his blessing to Venezuelan leftist
leader Hugo Chávez's controversial victory in a recall referendum last year,
has now come up with a proposal that -- if accepted -- could send Chávez
into instant retirement at a Cuban beach resort.

In an address Tuesday to the 34-member Organization of American States
(OAS), Carter called for injecting new life into an inter-American treaty
aimed at preventing democratically elected presidents from seizing all
powers, and becoming de facto dictators. Which is exactly what Chávez seems
to be doing.

''Let us strengthen the charter and not be afraid to use it,'' Carter said,
bolstering the idea we suggested in this column a few weeks ago.
The OAS Democratic Charter was signed in 2001 in the aftermath of former
Peruvian President Alberto Fujimori's takeover of Peru's Congress, but it
has rarely been used.

The problem is that it calls for collective diplomatic sanctions against
Fujimori-styled one-shot attacks on the rule of law, but it does little to
address Chávez-styled cases of piecemeal destruction of the democratic
system.

Carter said the current weakness of the treaty stems from its vagueness: It
calls for collective actions against ''unconstitutional interruptions of
democracy,'' without defining what these may be. Breaking new ground, Carter
proposed eight criteria for defining such interruptions. Among them:

• When a government breaks the constitutional system of separation of
powers.
• When it systematically violates basic freedoms, including freedom of
expression.
• When it arbitrarily fires or replaces members of the judiciary or
electoral bodies.

Under most of these conditions, the United States or any other OAS member
could invoke the Democratic Charter against Chávez at any time.

CHAVEZ'S EXCESSES

Chávez recently took over Venezuela's Supreme Court, expanding it from 20 to
32 members, and packed it with loyalists. Before last year's referendum, he
had done the same with Venezuela's top electoral bodies, tilting the
referendum rules in his favor.

And a few weeks ago, Chávez passed a press law that gives the government
wide discretion to clamp down on independent media. He now runs all three
branches of government and can shut down the media at his will.
Will Carter's proposal fly? Unfortunately, the political climate in Latin
America could hardly be less conducive to U.S.-led democracy-building
initiatives. Polls show that, in the aftermath of the go-it-alone decision
to start the war with Iraq, an overwhelming number of Latin Americans
believe the Bush administration has lost moral authority to preach respect
for the rule of law.

Meantime, Chávez is gaining influence by selling oil at preferential prices
in the region. And Brazil, Argentina and others seem more interested in
restraining U.S. supremacy than keeping their neighbors from tampering with
democracy.

Even Mexico, which under President Vicente Fox had made great improvements
in the defense of democracy and human rights, last week convened a
''consultation'' meeting of more than 30 Latin American and Caribbean
countries that is causing alarm in human rights circles.

At the meeting, Mexico proposed creation of a new regional group to
self-police compliance of its members with human rights conventions. The
conference, which was attended and applauded by Cuban officials, was seen by

critics as an attempt to overshadow the OAS Human Rights Commission, an
independent body that has done an excellent job in denouncing abuses by both
rightist and leftist regimes.

Critics say Mexico is trying to court Cuba-friendly Caribbean nations whose
votes it needs to get Mexican Foreign Minister Luis Ernesto Derbez elected
as head of the OAS.

A JOKE

The Mexico-proposed human rights group would be a joke because it would rely
on government officials -- rather than independent human rights monitors --
to judge their own countries' human rights abuses. It would be like allowing
a suspect to judge his own behavior, critics say.

Patricia Olamendi, Mexico's under-secretary for human rights, denies any
intention to eclipse the OAS Human Rights Commission. She told me that the
new group ''will not be a human rights evaluation group,'' but rather would
be aimed at exchanging experiences, doing workshops to help countries better
comply with international treaties.

My conclusion: Carter's proposal is excellent, and the Bush
administration -- although no fan of Carter's -- should embrace it. But I'm
afraid that, barring a much-needed U.S. fence-mending effort in the region,
the current mood in Latin America will not help push any Washington-backed
pro-democracy initiative

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Jan 26/05 - Sobre Comunicado de protesta a los EEUU de la Cancilleria Venezolana

PMBComentario: la Cancilleria Venezolana responde “formalmente” a las crecientes manifestaciones de preocupación emitidas por funcionarios del gobierno norteamericano. El estilo deja mucho que desear, aun cuando es una mejora importante con respecto al toque tan “personal” que le dio el Presidente Chávez el pasado fin de semana. Las relaciones entre EEUU y Venezuela están condenadas a ser malas – muy malas - pues Chávez requiere que así lo sean. Ojala que la Dra. Rice haga muy pronto los cambios requeridos en el Departamento de Estado para evitar que este problema se convierta en un ping-pong inútil entre Washington y Caracas. Si de veras llego la hora de ponerle un parado a Chávez, también será la hora de tener una relación mas seria, inteligente y productiva con el resto de los países y mandatarios de la región. PMB

Republica Bolivariana de Venezuela

Ministerio de Relaciones Exteriores

Comunicado

Durante los últimos días han venido menudeando distintas expresiones hostiles por parte de voceros del gobierno norteamericano. Como ya hemos señalado, para cada expresión agresiva habrá una respuesta.

En América Latina es bien conocida la historia de agresiones armadas por parte de distintos gobiernos de los Estados Unidos de Norteamérica. México, Guatemala, Grenada, República Dominicana, Nicaragua, Panamá, son dolorosos testimonios de esta incuestionable verdad histórica.

Generalmente la agresión armada, directa o indirecta, ha estado precedida de campañas políticas tendentes a crear las condiciones para el ataque. Antes del golpe de Estado de abril del 2002, y durante el curso del mismo golpe, los voceros del gobierno del presidente Bush abundaron en pronunciamientos como los que repite la señora Rice, el señor Ereli y el señor Boucher, y a los cuales intenta hacerle coro, tristemente, el presidente de El Salvador Antonio Saca.

Las autoridades norteamericanas llaman a ejercer presión sobre Venezuela para que rompa sus presuntos nexos con las FARC. Saca, por su lado, retoma declaraciones atribuidas al ex jefe del Comando Sur. No se requiere la más mínima malicia política para entender dos cosas: primero, que el gobierno del presidente Bush, lejos de asimilar las impresionantes lecciones de democracia que le ha dado el pueblo venezolano durante nueve eventos electorales, y la derrota del golpe militar y del golpe petrolero, se empecina en sus graves errores, en su grosera intervención en asuntos internos de Venezuela. Segundo, no satisfecho con sus fallidos intentos dentro de Venezuela, pretende inmiscuirse en problemas que sólo atañen, en el presente caso, a los gobiernos de Colombia y Venezuela, con el fraternal concurso de los gobiernos de la Comunidad latinoamericana, con una sola vergonzosa excepción ya mencionada.

Venezuela y Colombia son países hermanos. Tienen suficiente madurez y criterio para resolver entre ellos sus diferencias, como ya lo hicieron en el pasado con el grave y famoso incidente de la corbeta Caldas. Contrasta de manera impresionante la actitud de todos los países de Sudamérica con la permanente actitud provocadora, intervensionista, violatoria de los principios más elementales de las relaciones internacionales, mediante al presión explícita, ya no solamente sobre Venezuela, sino sobre los países de la Comunidad latinoamericana.

Como muy bien expreso Allan Wagner, secretario general de la CAN, "es importante que Estados Unidos observe una no interferencia en el proceso que estamos viviendo, de tal manera que, libremente, los gobiernos de Colombia y de Venezuela encuentren fraternamente los caminos de solución, y con la colaboración que podamos brindar los países andinos y latinoamericanos.

Finalmente el Gobierno de Venezuela reitera ante el gobierno norteamericano su voluntad de mantener las mejores relaciones sobre la base del respeto mutuo, de la no injerencia en sus asuntos internos, del cese al permanente hostigamiento, del financiamiento a grupos muchas veces vinculando a movimientos violentos en Venezuela y al intento de provocar y agravar diferencias entre nuestros países, porque para Venezuela ¡La patria es América!

26 de Enero de 2005

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Jan 26/05 - On Chavez's crude attack on Dr. Rice

PMB Comment: Below select excerpts from the transcript of President Chavez's speech on Sunday in which he nonchalantly and crudely offends U.S. Secretary of State Condoleezza Rice. Hugo Chavez once again demonstrated to the world the need for an International Mental Board on constant notice to deal with leaders that were elected sane and became cuckoo while in power. PMB

PS: the non-sequiturs are vintage Chavez

Transcript:

March in Defense of Sovereignty

Public gathering in front of Miraflores Palace (CARACAS)

Sunday, February 23rd, 2005

President Chávez: We've seen during these last few days, dances and lavish
parties in Washington, celebrating the new mandate of Mister Bush, now
accompanied by a new secretary of State, 'la mister' Condolence (sic) Rice,
Condolence Rice. I'm sorry that I could not have sent her ... Fidel, send me,
please, the (literacy) method ... so that I can send it "in english" to Condolence Rice, I didn't send it to her before, I forgot, for all the work one has to do, because she continues to demonstrate complete ignorance in relation to what is happening in Venezuela and what is happening in the world and what is happening in Latin America.

Public: Applause.

President Chávez: It was recommended to me a while back that in the case of
Condolence Rice, who said a few days ago... First it was said that she was
very troubled.

Public: ¡Uh! ¡Ah! Chávez is not going to go. ¡Uh! ¡Ah! Chávez is not going
to go.

President Chávez: First it was said that she was very troubled...by Chávez, the tyrant Chávez, the leader ("caudillo"), that he is a threat to the people of the world and of America. Afterwards, the following day, they asked her, it seems that she dreams about me, - I'm told that in La Hojilla (note: he refers to a crude political program in VTV the State channel, which takes after an equally crude Alo Ciudadano in Globovision, an opposition tilted all news channel) a poll was taken, - here are the boys from La Hojilla- how are you? In La Hojilla, they took a poll, they asked some questions there and among them they asked: What is with Condolence and Chávez? And I'm not going to give the results here, but in La Hojilla they could repeat it tomorrow.

Public: Screams, uproar.

President Chávez: Look, even though she is Secretary of State of that

imperialistic government and it is up to Doctor Alí Rodríguez (Venezuela's Foreign Minister) to get together with her, I am willing to invite her to a meeting to see. What's up with you and I, then? Let's fix that, let's see.

Public: Applause.

President Chávez: Do you want me to invite her? I'll do what you tell me. A
little while back someone recommended: "Look, why don't you propose
marriage to her to see it that fixes things?" Should I propose marriage to
her?

Public: Noooooo.

President Chávez: What bad luck this lady has! You said No.
Well, truthfully she first said that she was very troubled, the next day,
she changed, it would be good if this were anlyzed by a good psychiatrist,
because the following day they asked her and what she said was that she was
not troubled, no, now she was very sad. Oh daddy! That she was very sad and
depressed by Chávez, that tyrant. Afterwards she came to say that Chávez is
a negative force in the Continent....

President Chávez: ... The future is yours, Ché Guevara would say! The
present is a struggle, the future belongs to us and above all it belongs to
you, you are the vanguard of the new Venezuelan medicine, this upcoming 3rd
of February. That's why I tell you that I cannot marry Condolence, because I
have too much work, she'll have to find other options, she'll have to forget
about me a bit. Alí Rodríguez could do it, Cristóbal Jiménez is there,
available; well, Juan Barreto is single; another could make that sacrifice
for the fatherland, ask me whatever else you want, don't ask me that.
Nicolás Maduro, Pedro Carreño...

Public: Applause.

...

(Translation adapted from one prepared by SH, thanks to RM)

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Jan 25/05 - Jimmy Carter's Address to the OAS "THE PROMISE AND PERIL OF DEMOCRACY"

ADDRESS BY JIMMY CARTER, FORMER US PRESIDENT
AT THE OPENING CONFERENCE OF THE LECTURE SERIES OF THE AMERICAS
Washington, DC
January 25, 2005

(AS PREPARED FOR DELIVERY)

THE PROMISE AND PERIL OF DEMOCRACY

I AM HONORED TO ADDRESS THE PERMANENT COUNCIL OF THE ORGANIZATION OF AMERICAN STATES. THANK YOU, MR. SECRETARY GENERAL, MR. PRESIDENT, AND AMBASSADOR BORREA FOR THE KIND INVITATION TO INAUGURATE THIS LECTURE SERIES OF THE AMERICAS.

I HAVE LONG BEEN INTERESTED IN THIS ORGANIZATION. THIRTY YEARS AGO, AS GOVERNOR OF GEORGIA, I INVITED THE OAS GENERAL ASSEMBLY TO MEET IN ATLANTA—THE FIRST MEETING IN THE U.S. OUTSIDE OF WASHINGTON. LATER, AS PRESIDENT, I ATTENDED AND ADDRESSED EVERY GENERAL ASSEMBLY IN WASHINGTON.

BACK THEN, I REALIZED THAT MOST OF THIS HEMISPHERE WAS RULED BY MILITARY REGIMES OR PERSONAL DICTATORSHIPS. SENATE HEARINGS HAD JUST CONFIRMED U.S. INVOLVEMENT IN DESTABILIZING THE GOVERNMENT OF SALVADOR ALLENDE IN CHILE, AND A DIRTY WAR WAS BEING CONDUCTED IN ARGENTINA. I DECIDED TO STOP EMBRACING DICTATORS AND TO MAKE THE PROTECTION OF HUMAN RIGHTS A CORNERSTONE OF U.S. FOREIGN POLICY, NOT ONLY IN THIS HEMISPHERE, BUT WITH ALL NATIONS.

WHEN WE SIGNED THE PANAMA CANAL TREATIES IN THIS SAME AUGUST HALL IN 1977, MANY NON-ELECTED OR MILITARY LEADERS WERE ON THE DAIS. KEY CARIBBEAN STATES WERE ABSENT, NOT YET PART OF THE INTER-AMERICAN SYSTEM. THEN IN 1979, ECUADOR STARTED A PATTERN OF RETURNING GOVERNMENTS TO CIVILIAN RULE. THE INTER-AMERICAN CONVENTION ON HUMAN RIGHTS SOON CAME INTO FORCE, AND OUR HEMISPHERE DEVELOPED ONE OF THE STRONGEST HUMAN RIGHTS STANDARDS IN THE WORLD.

THESE COMMITMENTS HAVE BROUGHT TREMENDOUS PROGRESS TO LATIN AMERICA AND THE CARIBBEAN. CITIZENS HAVE BECOME INVOLVED IN EVERY ASPECT OF GOVERNANCE: MORE WOMEN ARE RUNNING FOR POLITICAL OFFICE AND BEING APPOINTED TO HIGH POSITIONS; INDIGENOUS GROUPS ARE FORMING SOCIAL MOVEMENTS AND POLITICAL PARTIES; CIVIC ORGANIZATIONS ARE DEMANDING TRANSPARENCY AND ACCOUNTABILITY FROM THEIR GOVERNMENTS; FREEDOM OF EXPRESSION IS FLOURISHING IN AN INDEPENDENT AND VIBRANT PRESS; OMBUDSMEN AND HUMAN RIGHTS DEFENDERS ARE ACTIVE; AND MANY COUNTRIES ARE APPROVING AND IMPLEMENTING LEGISLATION TO GUARANTEE THAT CITIZENS HAVE ACCESS TO INFORMATION.

THE ENGLISH-SPEAKING CARIBBEAN HAS SUSTAINED VIBRANT DEMOCRACIES. A DEMOCRATIC CHILE IS REMOVING MILITARY PREROGATIVES FROM THE PINOCHET-ERA CONSTITUTION AND THE MILITARY HAS ACKNOWLEDGED ITS INSTITUTIONAL RESPONSIBILITY FOR THE TORTURE AND DISAPPEARANCES OF THE 1970S. CENTRAL AMERICA HAS ENDED ITS CIVIL WARS AND DEMOCRACY HAS SURVIVED. THE GUATEMALAN GOVERNMENT OFFERED PUBLIC APOLOGY FOR THE MURDER OF MYRNA MACK, AND A SALVADORAN RESPONSIBLE FOR THE ASSASSINATION OF ARCHBISHOP ROMERO WAS TRIED AND CONVICTED LAST YEAR, ALTHOUGH IN ABSENTIA.

VENEZUELANS HAVE AVOIDED CIVIL VIOLENCE WHILE ENDURING A DEEP POLITICAL RIFT IN THE LAST THREE YEARS. MEXICO DEVELOPED AN ELECTORAL INSTITUTION THAT HAS BECOME THE ENVY OF THE WORLD. ARGENTINE DEMOCRACY WEATHERED THE DEEPEST FINANCIAL CRISIS SINCE THE 1920S DEPRESSION AND ITS ECONOMY IS ON THE REBOUND.

FOUR YEARS AGO, CANADA AND PERU TOOK THE LEAD IN DEVELOPING A NEW, MORE EXPLICIT COMMITMENT TO DEMOCRACY FOR THE HEMISPHERE. ON THE TRAGIC DAY OF SEPTEMBER 11, 2001, THE INTER-AMERICAN DEMOCRATIC CHARTER WAS SIGNED.

I AM PROUD TO HAVE WITNESSED THESE DEMONSTRATIONS OF THE COURAGE, PERSISTENCE AND CREATIVITY OF THE PEOPLE OF THIS HEMISPHERE.
BUT I AM ALSO WORRIED. I AM CONCERNED THAT THE LOFTY IDEAS ESPOUSED IN THE DEMOCRATIC CHARTER ARE NOT ALL BEING HONORED. I AM CONCERNED THAT POVERTY AND INEQUALITY CONTINUE UNABATED. AND I AM CONCERNED THAT WE IN THIS ROOM, REPRESENTING GOVERNMENTS AND, IN SOME CASES, PRIVILEGED SOCIETIES, ARE NOT DEMONSTRATING THE POLITICAL WILL TO SHORE UP OUR FRAGILE DEMOCRACIES, PROTECT AND DEFEND OUR HUMAN RIGHTS SYSTEM, AND TACKLE THE PROBLEMS OF DESPERATION AND DESTITUTION.

SINCE OUR YEARS IN THE WHITE HOUSE, MY WIFE ROSALYNN AND I HAVE STRIVEN TO PROMOTE PEACE, FREEDOM, HEALTH, AND HUMAN RIGHTS, ESPECIALLY IN THIS HEMISPHERE AND IN AFRICA. OUR DEDICATED STAFF AT THE CARTER CENTER HAVE WORKED IN 54 ELECTIONS TO ENSURE THEY ARE HONEST AND COMPETITIVE. CIVIL STRIFE HAS BECOME RARE, AND EVERY COUNTRY BUT CUBA HAS HAD AT LEAST ONE TRULY COMPETITIVE NATIONAL ELECTION.

YET, TINY GUYANA, WHERE WE HAVE BEEN INVOLVED FOR MORE THAN A DECADE, REMAINS WRACKED WITH RACIAL TENSION AND POLITICAL STALEMATE. HAITI, WHERE WE MONITORED THE FIRST FREE ELECTION IN ITS HISTORY AND WHERE THE WORLD CONTRIBUTED MANY TENS OF MILLIONS OF DOLLARS IN AID, HAS BEEN UNABLE TO ESCAPE THE TRAGEDY OF VIOLENCE AND EXTREME POVERTY. IN NICARAGUA, I WAS PRIVILEGED TO WITNESS THE STATESMANSHIP OF DANIEL ORTEGA TRANSFERRING POWER TO VIOLETA CHAMORRO; YET TODAY THAT COUNTRY CONTINUES ENMESHED IN POLITICAL DEADLOCK AND POVERTY THAT IS SECOND ONLY TO HAITI.

ACROSS THE HEMISPHERE, UNDP AND LATIN BAROMETER POLLS REVEAL THAT MANY CITIZENS ARE DISSATISFIED WITH THE PERFORMANCE OF THEIR ELECTED GOVERNMENTS. THEY STILL BELIEVE IN THE PROMISE AND THE PRINCIPLES OF DEMOCRACY, BUT THEY DO NOT BELIEVE THEIR GOVERNMENTS HAVE DELIVERED THE PROMISED IMPROVEMENTS IN LIVING STANDARDS, FREEDOM FROM CORRUPTION, AND EQUAL ACCESS TO JUSTICE. WE RUN THE VERY REAL RISK THAT DISSATISFACTION WITH THE PERFORMANCE OF ELECTED GOVERNMENTS WILL TRANSFORM INTO DISILLUSIONMENT WITH DEMOCRACY ITSELF.

HOW CAN WE PROTECT THE ADVANCES MADE AND AVOID THE DANGEROUS CONCLUSION THAT DEMOCRACY MAY NOT BE WORTHWHILE AFTER ALL?

THE GREATEST CHALLENGE OF OUR TIME IS THE GROWING GAP BETWEEN THE RICH AND POOR, BOTH WITHIN COUNTRIES AND BETWEEN THE RICH NORTH AND THE POOR SOUTH. ABOUT 45 PERCENT (225 MILLION) PEOPLE OF LATIN AMERICA AND THE CARIBBEAN LIVE UNDER THE POVERTY LINE. THE MATHEMATICAL COEFFICIENT THAT MEASURES INCOME INEQUALITY REVEALS THAT LATIN AMERICA HAS THE MOST UNEQUAL INCOME DISTRIBUTION IN THE WORLD, AND THE INCOME GAP HAS CONTINUED TO INCREASE IN THE PAST FIFTEEN YEARS.

WHEN PEOPLE LIVE IN GRINDING POVERTY, SEE NO HOPE FOR IMPROVEMENT FOR THEIR CHILDREN, AND ARE NOT RECEIVING THE RIGHTS AND BENEFITS OF CITIZENSHIP, THEY WILL EVENTUALLY MAKE THEIR GRIEVANCES KNOWN, AND IT MAY BE IN RADICAL AND DESTRUCTIVE WAYS. GOVERNMENTS AND THE PRIVILEGED IN EACH COUNTRY MUST MAKE THE DECISION AND DEMONSTRATE THE WILL TO INCLUDE ALL CITIZENS IN THE BENEFITS OF SOCIETY.

DEMOCRATIC ELECTIONS HAVE IMPROVED, BUT WE HAVE ALSO WITNESSED A DANGEROUS PATTERN OF RULING PARTIES NAMING ELECTION AUTHORITIES THAT ARE PARTISAN AND BIASED, GOVERNMENTS MISUSING STATE RESOURCES FOR CAMPAIGNS, AND ELECTION RESULTS THAT ARE NOT TRUSTED BY THE POPULACE. I INCLUDE MY OWN COUNTRY IN SAYING THAT WE ALL NEED TO CREATE FAIR ELECTION PROCEDURES, TO REGULATE CAMPAIGN FINANCE, AND TO ENSURE THAT EVERY ELIGIBLE CITIZEN IS PROPERLY REGISTERED AND HAS THE OPPORTUNITY TO CAST VOTES THAT WILL BE COUNTED HONESTLY.

BUT DEMOCRACY IS MUCH MORE THAN ELECTIONS. IT IS ACCOUNTABLE GOVERNMENTS; IT IS THE END OF IMPUNITY FOR THE POWERFUL. IT IS GIVING JUDICIARIES INDEPENDENCE FROM POLITICAL PRESSURES SO THEY CAN DISPENSE JUSTICE WITH IMPARTIALITY. IT IS PROTECTING THE RIGHTS OF MINORITIES, INCLUDING THOSE WHO DO NOT VOTE FOR THE MAJORITY PARTY. IT IS PROTECTING THE VULNERABLE – SUCH AS THOSE AFFLICTED WITH HIV/AIDS, STREET CHILDREN, THOSE WITH MENTAL ILLNESSES, WOMEN ABUSED WITH DOMESTIC VIOLENCE, MIGRANTS, AND INDIGENOUS PEOPLES.

GOVERNMENTS OF THIS HEMISPHERE HAVE CARRIED OUT ENORMOUS ECONOMIC REFORM EFFORTS IN THE LAST TWO DECADES, BUT THESE EFFORTS HAVE NOT YET BROUGHT THE NEEDED REDUCTION IN POVERTY AND INEQUALITY. TOO MANY GOVERNMENTS STILL RELY ON REGRESSIVE SALES TAXES BECAUSE THE PRIVILEGED CLASSES CAN MANIPULATE GOVERNMENTS AND AVOID PAYING TAXES ON THEIR INCOMES OR WEALTH.

MILITARY SPENDING HAS BEEN SIGNIFICANTLY REDUCED, BUT ADDITIONAL REDUCTIONS ARE ADVISABLE NOW THAT THE REGION IS DEMOCRATIC AND MOST BORDER ISSUES HAVE BEEN RESOLVED. HEALTH AND EDUCATION ARE MORE IMPORTANT THAN EXPENSIVE WEAPONS SYSTEMS.

ACCESS TO LAND, SMALL LOANS, AND EASIER PERMITS FOR SMALL BUSINESSES CAN HARNESS THE POTENTIAL DYNAMISM OF EACH NATION’S ECONOMY. BRAZIL HAS INITIATED A ZERO HUNGER PROGRAM TO ADDRESS POVERTY, AND VENEZUELA IS USING OIL WEALTH TO BRING ADULT EDUCATION, LITERACY, HEALTH AND DENTAL SERVICES DIRECTLY TO THE POOR. THESE AND OTHER CREATIVE SOCIAL PROGRAMS SHOULD BE STUDIED TO SEE WHICH MIGHT BE APPROPRIATE IN OTHER AREAS.

WHEN POLITICAL LEADERS DO MAKE THE RIGHT CHOICES TO ADDRESS THE NEEDS OF ALL CITIZENS, THOSE CITIZENS HAVE A RESPONSIBILITY AS WELL—TO COMPLY WITH THE ESTABLISHED RULES OF THE POLITICAL PROCESS. POLITICAL HONEYMOONS ARE SHORT, AND SOMETIMES A FRUSTRATED PEOPLE ARE TEMPTED TO UNSEAT AN UNSATISFACTORY GOVERNMENT, BY VIOLENCE OR UNCONSTITUTIONAL MEANS. ELECTED LEADERS DESERVE A CHANCE TO MAKE THE TOUGH DECISIONS, OR TO BE REMOVED AT BALLOT BOXES.

NEWS MEDIA PLAY AN ESPECIALLY IMPORTANT ROLE IN A FREE SOCIETY. PRESS FREEDOM IS VIBRANT IN THE HEMISPHERE, AND MUST BE KEPT THAT WAY. “INSULT” (DESACATO) LAWS AND HARASSMENT OF JOURNALISTS SHOULD BE ELIMINATED. THE MEDIA ALSO HAVE A RESPONSIBILITY TO INVESTIGATE CAREFULLY AND TO CORROBORATE THEIR STORIES BEFORE PUBLICATION.

THOSE OF US IN THE RICHER NATIONS HAVE ADDITIONAL OBLIGATIONS. WE MUST RECOGNIZE THAT WE LIVE IN AN EVER-CLOSER HEMISPHERE, WITH MUTUAL RESPONSIBILITIES. TRADE AND TOURISM OF THE U.S. AND CANADA ARE INCREASINGLY CONNECTED WITH ALL OF LATIN AMERICA AND THE CARIBBEAN, AS THE SUB-REGIONS OF THE HEMISPHERE ARE FORGING CLOSER ECONOMIC TIES.

WE ARE ALSO CONNECTED BY THE SCOURGE OF CRIME, WHICH IS A TWO-WAY STREET. DRUG DEMAND IN THE U.S. FUELS DRUG PRODUCTION AMONG OUR NEIGHBORS, UNDERMINING THE ABILITY OF DEMOCRATIC INSTITUTIONS TO ENFORCE THE RULE OF LAW, AND THE EASY AVAILABILITY OF SMALL ARMS FROM THE U.S. HAS MADE CRIME A SERIOUS PROBLEM FOR GOVERNMENTS IN THE CARIBBEAN AND CENTRAL AMERICA.

GLOBALLY, AMERICANS GIVE JUST 15 CENTS PER $100 OF NATIONAL INCOME IN OFFICIAL DEVELOPMENT ASSISTANCE. AS A SHARE OF OUR ECONOMY, WE RANK DEAD LAST AMONG INDUSTRIALIZED COUNTRIES. THE RECENTLY ANNOUNCED MILLENNIUM CHALLENGE ACCOUNT IS DESIGNED TO PROVIDE ADDITIONAL HELP FOR GOVERNMENTS PURSUING TRANSPARENCY AND ACCOUNTABILITY, BUT IN THIS HEMISPHERE ONLY BOLIVIA, HONDURAS AND NICARAGUA ARE BEING CONSIDERED FOR THIS AID.

THE UNITED STATES HAS ANOTHER ROLE TO PLAY AS WELL: OF SETTING AN EXAMPLE OF PROTECTING CIVIL LIBERTIES AND IMPROVING DEMOCRATIC PRACTICES AT HOME, AND BY ITS UNWAVERING SUPPORT OF DEMOCRACY AND HUMAN RIGHTS ABROAD.

THE INTERNATIONAL LENDING AGENCIES ALSO HAVE IMPORTANT ROLES TO PLAY: BY BEING MORE FLEXIBLE AND RESPONSIVE TO POLITICAL PRESSURES AND SOCIAL CONSTRAINTS WHEN DECIDING CONDITIONALITY; BY INVOLVING LOCAL CITIZENS AND GOVERNMENTS IN DEVELOPING CONSENSUS FOR POVERTY-REDUCTION STRATEGIES; AND BY HELPING THE HEMISPHERE CARRY OUT THE MANDATES ADOPTED BY PRESIDENTS AT THE PERIODIC SUMMITS OF THE AMERICAS.

FINALLY, I CALL ON ALL GOVERNMENTS OF THE HEMISPHERE TO MAKE THE DEMOCRATIC CHARTER MORE THAN EMPTY PIECES OF PAPER, TO MAKE IT A LIVING DOCUMENT. THE CHARTER COMMITS US TO HELP ONE ANOTHER WHEN OUR DEMOCRATIC INSTITUTIONS ARE THREATENED. THE CHARTER CAN BE A PUNITIVE INSTRUMENT, PROVIDING FOR SANCTIONS WHEN A SERIOUS CHALLENGE TO THE DEMOCRATIC ORDER OCCURS, BUT IT IS ALSO AN INSTRUMENT FOR PROVIDING TECHNICAL ASSISTANCE AND MORAL ENCOURAGEMENT TO PREVENT DEMOCRATIC EROSION EARLY IN THE GAME.

LET US STRENGTHEN THE CHARTER AND NOT BE AFRAID TO USE IT. RIGHT NOW THE CHARTER IS WEAK BECAUSE IT IS VAGUE IN DEFINING CONDITIONS THAT WOULD CONSTITUTE A VIOLATION OF THE CHARTER—THE “UNCONSTITUTIONAL ALTERATION OR INTERRUPTION” OF THE DEMOCRATIC ORDER NOTED IN ARTICLE 19. THE CHARTER ALSO REQUIRES THE CONSENT OF THE AFFECTED GOVERNMENT EVEN TO EVALUATE A THREAT TO DEMOCRACY. IF THE GOVERNMENT ITSELF IS THREATENING THE MINIMUM CONDITIONS OF DEMOCRACY, THE HEMISPHERE IS NOT PREPARED TO ACT, SINCE THERE WOULD CERTAINLY NOT BE AN INVITATION.

TWO SIMPLE ACTIONS WOULD HELP TO REMEDY THIS PROBLEM AND ALLOW THE GOVERNMENTS OF THIS HEMISPHERE TO ACT WHEN NEEDED. FIRST, A CLEAR DEFINITION OF “UNCONSTITUTIONAL ALTERATION OR INTERRUPTION” WOULD HELP GUIDE US. THESE CONDITIONS SHOULD INCLUDE:

1. VIOLATION OF THE INTEGRITY OF CENTRAL INSTITUTIONS, INCLUDING CONSTITUTIONAL CHECKS AND BALANCES PROVIDING FOR THE SEPARATION OF POWERS.

2. HOLDING OF ELECTIONS THAT DO NOT MEET MINIMAL INTERNATIONAL STANDARDS.

3. FAILURE TO HOLD PERIODIC ELECTIONS OR TO RESPECT ELECTORAL OUTCOMES.

4. SYSTEMATIC VIOLATION OF BASIC FREEDOMS, INCLUDING FREEDOM OF EXPRESSION, FREEDOM OF ASSOCIATION, OR RESPECT FOR MINORITY RIGHTS.

5. UNCONSTITUTIONAL TERMINATION OF THE TENURE IN OFFICE OF ANY LEGALLY ELECTED OFFICIAL.

6. ARBITRARY OR ILLEGAL, REMOVAL OR INTERFERENCE IN THE APPOINTMENT OR DELIBERATIONS OF MEMBERS OF THE JUDICIARY OR ELECTORAL BODIES.

7. INTERFERENCE BY NON-ELECTED OFFICIALS, SUCH AS MILITARY OFFICERS, IN THE JURISDICTION OF ELECTED OFFICIALS.

8. SYSTEMATIC USE OF PUBLIC OFFICE TO SILENCE, HARASS, OR DISRUPT THE NORMAL AND LEGAL ACTIVITIES OF MEMBERS OF THE POLITICAL OPPOSITION, THE PRESS, OR CIVIL SOCIETY.

WE ALSO NEED A SET OF GRADUATED, AUTOMATIC RESPONSES TO HELP US OVERCOME THE INERTIA AND PARALYSIS OF POLITICAL WILL THAT RESULT FROM UNCERTAIN STANDARDS AND THE NEED TO REACH A CONSENSUS DE NOVO ON EACH ALLEGED VIOLATION. WHEN A DEMOCRATIC THREAT IS IDENTIFIED, THE ALLEGED OFFENDERS WOULD BE REQUESTED TO EXPLAIN THEIR ACTIONS BEFORE THE PERMANENT COUNCIL. A FULL EVALUATION WOULD FOLLOW, AND POSSIBLE RESPONSES COULD BE CHOSEN FROM A PRESCRIBED MENU OF APPROPRIATE OPTIONS, INVOLVING NOT ONLY THE OAS, BUT INCENTIVES AND DISINCENTIVES FROM MULTILATERAL INSTITUTIONS AND THE PRIVATE SECTOR.

THERE IS ALSO A ROLE FOR NONGOVERNMENTAL LEADERS. WE AT THE CARTER CENTER HAVE CONVENED A GROUP OF FORMER HEMISPHERIC LEADERS TO AID IN RAISING THE VISIBILITY OF THE CHARTER, TO ENGAGE THE OAS, AND TO HELP IT PROVIDE APPROPRIATE RESPONSES WHEN DEMOCRACY IS CHALLENGED.

LET ME CLOSE BY CONGRATULATING THE OAS, WHICH HAS COME A LONG WAY FROM MY FIRST ASSOCIATION WITH 30 YEARS AGO. AS A PROMOTER OF FREEDOM, DEMOCRACY, AND HUMAN RIGHTS, THE OAS IS ONE OF THE FOREMOST REGIONAL ORGANIZATIONS IN THE WORLD. THIS HEMISPHERE ADOPTED THE WORLD’S FIRST ANTI-CORRUPTION CONVENTION AND HAS DEVELOPED A MULTILATERAL EVALUATION MECHANISM ON DRUGS. THE OAS HAS WORKED ON DE-MINING, PEACEMAKING, AND PROVIDING SCHOLARSHIPS TO STUDENTS. IT EXEMPLIFIES THE NOTION THAT OUR BEST HOPE FOR THE WORLD IS FOR SOVEREIGN STATES TO WORK TOGETHER.

THE OAS IS GOING THROUGH A DIFFICULT TRANSITION AT THE MOMENT, BUT IT WILL EMERGE EVEN STRONGER. A NEW SECRETARY-GENERAL WILL BE CHOSEN THIS YEAR, AND IMPORTANT DISCUSSIONS WILL BE FORTHCOMING AT THE GENERAL ASSEMBLY IN FLORIDA AND THE FOURTH SUMMIT OF THE AMERICAS IN ARGENTINA.

WE NEED EACH OTHER. LET US WORK TOGETHER TO MAKE OUR HEMISPHERE THE BEACON OF HOPE, HUMAN DIGNITY, AND COOPERATION FOR THE 21ST CENTURY.

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Jan 24/05 - Sobre los "diZParates" del Gobierno de Zapatero

PMBComentario: Un buen amigo de España me escribe diciendo -

Pedro, los errores de Zapatero y su equipo son tan notorios que ha sido aprobada por la Real Academia de la Lengua la siguiente palabra:

diZParate.
	(De la conjunción constante de disparatar y ZP – diminutivo de un político avergonzado de llevar un apellido muy común como pudiese ser Rodríguez).
	1. m. Hecho o dicho disparatado atribuible a un alto cargo del PSOE
	2. m. coloq. Atrocidad política o adefesio (que causa vergüenza en el país y en exterior)

Real Academia Española © Todos los derechos reservados

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Jan20/05 - On Venezuela - Colombia political crisis

PMB Comment: as Colombia prepares to deliver - once again - evidence of FARC/ELN presence in Bolivarian Venezuela, the world will have to hold its collective breath and wait for the fallout. Under normal circumstances the OAS would say something, but given that it has become nothing more than a fancy party venue, nada can be expected (plus its magnificent Constitution Avenue headquarters must be a mess in the aftermath of the one of many Presidential Inauguration Balls to be held there today).

Once upon a time, the UN (that's the one with the nice building by the river in NY) would have seen the blatant harboring of terrorists in a highly volatile region as a matter of concern, but then today they are more interested in shielding Kofi Annan from the blow of the upcoming report on rampant corruption in the food-for-oil program that ended up benefiting Saddam more than others - at least till the US put an end to the scheme the hard way.

What about the neighbors? They might be concerned...but they will only act if it is to provide Chavez a final and definitive blow. If there is any chance the guy can survive and seek revenge by creating or funding more havoc in their domestic politics, they will play deaf, dumb or both.

And what about the US? It became clear - once again - that Dr. Rice understands the problem (which means the President does to), but can she afford to please Chavez by making this seem like a Chavez vs. Bush bout? I doubt it, but on the other hand the US cannot afford to have Plan Colombia/Patriot blunted by the reckless behavior of this counterfeit revolutionary. So we will have to wait and see what they do in DC.

That leaves us with President Uribe and more importantly the people of Venezuela. Will they alone be able to corner a regime that has opted to side with criminals under the cover of a fraudulent oil fueled mandate? In my opinion, it might be possible. Uribe is as obstinate as Chavez, and as a survivor he can probably access the risk of doing nothing once he has let the cat out of the bag. And while Venezuelans might have split their vote when the option was Chavez or the putrid past, when it comes to harboring guerillas and letting them vote in our elections there might be a different reaction. Let the truth flow, assume a principled outrage from the international community and I am certain you could once again see tumultuous marches in the streets of Venezuela.

Finally, a word of caution: Fidel Castro will not allow his life support to be cornered and disconnected that easily. Expect that the fan will be promptly turned on to high and ALL sorts of counter allegations procured by the highly efficient G2 will further complicate the matter. PMB

PD: below you can read two very good articles from The Economist and the FT on the matter at hand. Great reporting..

The Economist

Colombia and Venezuela

Neighbour dispute

Jan 20th 2005 | BOGOTÁ AND CARACAS
From The Economist print edition

A Colombian bounty hunt puts Hugo Chávez on the spot

RODRIGO GRANDA was scarcely a household name when in mid-December the Colombian police said they had arrested him in the city of Cúcuta, close to the border with Venezuela. With his cardigan and the air of a carefully groomed, middle-aged bank manager, he looked anything but a leader of the FARC, Colombia's main left-wing guerrilla group. But the FARC has acknowledged that Mr Granda was indeed a roving envoy for their movement, which figures on the United States' list of terrorist organisations.

The story might have ended there, as another success in the “war on terror”, were it not for the details of how Mr Granda ended up in Cúcuta. These have emerged in fits and starts. He was snatched from a café in the centre of Caracas and smuggled over the border by, it is alleged, the anti-kidnap squad of Venezuela's National Guard. It was a freelance operation, carrying a hefty reward—and perhaps with Colombian agents present.

These revelations have brought relations between the two countries to their lowest point since 1987 (when a Colombian warship entered disputed waters, almost sparking a war). Hugo Chávez, Venezuela's left-wing president, accused Colombia of violating his country's sovereignty. On January 14th, he suspended trade agreements with Colombia and withdrew his ambassador from Bogotá pending an apology. Álvaro Uribe, his right-wing counterpart in Colombia, denies that any violation took place. He has repeated claims that Mr Chávez harbours terrorists and turns a blind eye to guerrilla camps on Venezuelan soil.

This issue has long caused tensions. Mr Chávez claims to be “neutral” in the conflict between Colombia's democratic state and the rebels, who rely on kidnapping and drugs. Venezuela's ruling coalition includes some close friends of the FARC. Although both the FARC and right-wing paramilitaries have spilled across the 2,200km (1,370-mile) border between the two countries, Mr Chávez refused to co-ordinate army operations with Colombia. Venezuela is suspicious of American aid to its neighbour, which includes helicopters and military advisers.

Recently, however, relations had become warmer. Mr Chávez's victory in a recall referendum in August, and Mr Uribe's success in obtaining a constitutional change to allow his re-election, mean that both men expect to have to do business with each other for a while. In November, they met and talked of exchanging intelligence on the border region.

The Granda incident has put paid to this thaw. It appears that Mr Granda and his family had been living openly in Venezuela. He had been given nationality and even voted in the referendum. Awkwardly for Mr Chávez, the FARC put him on the spot by stating that Venezuela's government had invited Mr Granda to two conferences, something officials had previously denied. The president must now choose either to quarrel with Colombia, or to repudiate the FARC and dent his “revolutionary” credentials.

Even though Colombia's exports to Venezuela are substantial and growing, officials in Bogotá were slow to mend relations. Francisco Santos, the vice-president, called on “bounty-hunters of the world” to help capture terrorists. Colombia says at least seven more guerrilla leaders are in Venezuela, and it wants them extradited.

The United States, which has criticised Mr Chávez's recent curbs on the media and opponents, has given firm backing to Colombia in the argument—and may have helped find Mr Granda. A group of American senators recently called for better relations with Venezuela, which is an important oil supplier. But at her confirmation hearing this week, Condoleezza Rice, the new secretary of state, said that Venezuela's government was “a negative force in the region”. She promised to “work with others to expose that and to say to President Chávez this kind of behaviour is really not acceptable in the hemisphere.”

What now? Mr Uribe has not accepted Mr Chávez's invitation to a bilateral meeting, saying the two should meet in the presence of other Latin American leaders. Brazil's president, Lula da Silva, has offered to mediate. Colombia has promised hard evidence that Venezuela is protecting the guerrillas—something which has been elusive. If there is substance to the claim, even Mr Chávez's friends in the region will press him to crack down. A Latin America composed of democracies no longer thinks it acceptable for one country to harbour another's “terrorists”.

Financial Times Lula acts to broker end to stand-off over Farc 'arrest' By Andy Webb-Vidal in Bogotá Published: January 20 2005 00:50 | Last updated: January 20 2005 00:50 Luiz Inácio Lula da Silva, the Brazilian president, travelled to the Colombian border on Wednesday to meet the leader of Brazil's neighbour in an effort to broker a resolution to a tense diplomatic stand-off between Colombia and Venezuela. Since last week the two Andean neighbours have been locked in a bitter dispute triggered by the covert capture in December of a top Colombian insurgent in the Venezuelan capital Caracas. Colombia insists that Venezuela is harbouring “terrorists” wanted by the Colombian authorities, while Venezuela has withdrawn its ambassador to Bogotá in protest and unilaterally suspended trade links. The impasse was expected to dominate the previously scheduled bilateral meeting between the Brazilian leader and President Alvaro Uribe in Leticia, a Colombian jungle town bordering Brazil. Brazil maintains relatively cordial relations with both Bogotá and Caracas, and a peace initiative from there is likely to be considered by Hugo Chávez, Venezuela's president. Caracas has already signalled that it is willing to extend an olive branch. “We want to overcome this situation, so it ends up as an incident in the past,” Ali Rodriguez, Venezuela's foreign minister, said on Tuesday. Colombia's government says that Rodrigo Granda, the guerrilla representative, was captured by Venezuelan soldiers and handed over to Colombia after the offer of a reward. Venezuela claims that Colombia, assisted by the US Central Intelligence Agency, bribed Venezuelan national guards into undertaking an “illegal” kidnapping that violated its sovereignty. Colombia is accumulating information supporting its claim that the Chávez government is supporting the Revolutionary Armed Forces of Colombia (Farc), a group classified as “terrorist” by the US and Europe. Interpol circulated documentation last September including to Venezuela's Interpol representative that detailed Mr Granda's Farc history. Venezuela, Bogotá adds, ignored the Interpol request for Mr Granda's arrest, despite his attendance at a government-organised seminar. According to Mr Granda's diary, excerpts of which were seen by the FT, the top Farc representative kept the telephone numbers of several people in the Chávez government and other Farc members in Venezuela. It also has the numbers of Evo Morales, the Bolivian coca farmers leader and an international ally of Mr Chávez. Even if a settlement to the diplomatic dispute is brokered by the Brazilian president, the thorny issue of Venezuela's alleged support for the Farc will remain. Colombia, Washington's staunchest regional ally in the war on terrorism, said it would present Caracas with details of the location of seven top Farc commanders and several guerrilla camps in Venezuela. Colombia possesses photographs of Farc settlements in Venezuela taken by US satellites. To be classed by Colombia, and by extension the US, as a supporter of terrorists could give Venezuela, the world's fifth-largest oil exporter, “rogue-state” status. Condoleeza Rice, the incoming US secretary of state, described Mr Chávez as a “negative force” in the region. A US consultant in Bogotá said: “I hope someone in Caracas is thinking this through. I don't think Chávez wants his country declared a terrorist haven.” The Granda incident has caused ructions within the government of Mr Chávez, self-styled champion of the region's wave of radical populism. His position in recent days has been influenced by the competing pull of a range of disparate leftwing and military factions. While all the factions are loyal to the president, the radicals favour a faster pace of social reform and a more confrontational stance with the US. After the capture of Mr Granda a radical group of Marxist intellectuals who have sought international solidarity for Mr Chávez, as well as for the Farc, pressured Mr Chávez to take an aggressive stance with Mr Uribe. “This internal struggle is having a big impact on the [structure of] power,” says Alfredo Keller, a Caracas-based political analyst. “Chávez acted to suit the requirement of the left.” Differences between them and more conservative, mainly military, factions,analysts say, help explain why Mr Chávez took so long to respond to Mr Granda's capture.

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Jan 17/05 - On the deterioration of the Venezuela-US oil relationship

PMB Comments: when reading articles like the one below from Stratfor it seems like an unraveling in the oil supply chain that has been the mainstay of Venezuela is in the works. Whatever the merits of focusing on developing other markets – and there are certainly many - a precipitous and emotional move vis-à-vis supplying oil to the US will certainly produce uncharitable havoc. But, since it seems like Chavez wants to elevate himself to global “enfant terrible” status via direct and personal confrontation with George W. Bush (and/or vicariously with President Uribe whom he refers to as “Bush’s lap dog” in private) we cannot rule out that he will follow through on his numerous threats to cut oil supply to the US. When he fired the 18,000 most qualified employees of PDVSA he showed complete disregard for the welfare of Petróleos de Venezuela (a.k.a. “the goose that lays the golden eggs” or more aptly “the revolution’s ATM”) not to mention the future of Venezuela. His venomous anti-US rhetoric shows no sign of abatement as he seems to relish every opportunity to needle the US or its interests.

Chavez has boasted – in public - that he deliberately incited the oil commotion that lead to his brief ouster in April 2002, and was also instrumental in provoking the two-month oil strike which began later that year and which left the US (and many smaller countries in the region that have now become submissive to his will in exchange for cheap barrels) without a drop of Venezuelan oil for almost two months. His unilateral and capricious management of oil matters has translated into one undeniable fact: while many foreign oil companies in Venezuela continue to hold on to their “options”, very few projects are truly underway and the prospects for many signed agreements are iffy at best (remember Lukoil and the French in Saddam’s Iraq?). Why should we find comfort in the idea that Chavez will “always keep the oil flowing”? Why is it that we have failed to understand that his aims are radically different than ours and as a result his means are bound to continue surprising those that underestimate or appease him?

I once spent six hours discussing oil with Hugo Chavez. That was back in early 1998 when he had 3% in the polls. My conclusion then: charming, nimble, ignorant and irresponsible. My conclusion today: not as charming! PMB

Note: last week Platt’s informed the world that at least someone in the US was taking Hugo Chavez’s repeated threats seriously. Attached you will find the letter that Senator Richard Lugar, Chairman of the powerful Foreign Affairs Committee in the US Senate sent to the General Accountability Office on the matter of Venezuelan Oil. The letter speaks for itself and it would seem certain that the GAO will deliver a report that will help defuse Chavez’s oil bargaining/blackmailing card while mapping the demise of almost 80 years of stable and mature oil relationship between our countries.

STRATFOR
Venezuelan President Hugo…

January 17, 2005

Venezuelan President Hugo Chavez has been ratcheting up the rhetoric over cutting off U.S. markets from Venezuelan oil supplies during the past several weeks.

On the surface the idea seems preposterous. Along with Mexico, Canada and Saudi Arabia, Venezuela has ranked among the top four U.S. oil suppliers for decades and currently supplies approximately 11 percent of U.S. oil needs.

Located just across the Caribbean from the U.S. Gulf Coast, it is ideally situated to supply the U.S. market. Denying that in order to supply customers in Asia or Europe would cut deeply into Venezuela's profit margins.

However, Chavez's primary rationale is not economic, it is political. Opposition to the United States is an ideological fact for him, and he wants to reduce Venezuela's economic links to the superpower to his north -- even if it means a little less cash for his coffers.

Now, we do not take Chavez exactly at his word. We never expect him to stop all shipments to the United States, not out of love or kindness, but because the primary customer for Venezuelan crude in the United States is CITGO, a subsidiary of PDVSA, the state-owned Venezuelan oil company. Chavez might be many, many things, but he is not about to cut off supplies to one of his own companies -- or at least not before he sells it (although that is another issue we will get to in good time).

CITGO uses about 860,000 barrels per day to supply its refineries and approximately 700,000 bpd of that total comes from PDVSA. To fill domestic refinery needs, Venezuela keeps about another 1.3 million bpd at home, of which some 900,000 bpd of product is shipped abroad with the remaining 400,000 bpd being used at home. That leaves Venezuela with only about 600,000 bpd of additional crude exports to play with. In a global system where demand is at about 80 million bpd, 600,000 bpd can be mopped up pretty quickly.

But Chavez has even selected where he wants his country's crude to go: China. Chinese representatives have been hop scotching all over Latin America during the past few months attempting to pen trade and investment deals. For China, energy security is an acute issue. The Persian Gulf states enjoy a near monopoly on exports to Asia, resulting in a stiff premium on supplies. Venezuela's heavy crude might be of inferior quality to the lighter, sweeter streams that come from the Middle East, but it does not have to steam past regional rivals Australia, India, Singapore or Vietnam to reach Shanghai.

The lower cost of Venezuelan crude -- not to mention the lack of a premium -- should also offset the higher transport cost of getting it across the Pacific.

Venezuela is already in advanced negotiations with Panama to trim some of that transport cost. Panama possesses a pipeline -- the Petroterminales de Panama -- that transports crude from its Pacific to its Atlantic coast.

Chavez wants to reverse the flow so Venezuelan crude can reach the Pacific basin. The process is rather simple and cheap -- and with oil prices where they are Venezuela can afford it. Should an agreement be struck, Venezuelan cargos could be steaming to Asia by August. At maximum capacity the Petroterminales de Panama can handle 800,000 bpd.

The one hitch in the plan is that Venezuelan crude is so thick that very few Chinese refineries can run it at all. Refitting sufficient capacity to use the stuff could take up to two years. Currently, China could handle no more than 100,000 bpd according to sources in the U.S. Department of Energy.

But even here Venezuela has a bridge to make things work out. Singapore currently has spare capacity of about 300,000 bpd which is capable of handling the Venezuelan crude, and the U.S. West Coast has plenty of refineries that would be willing to take a few cargos to supplant or supplement -- Middle Eastern deliveries even if only on a temporary basis.

When Venezuelan crude oil hits the Pacific, Chavez will have his pick of potential customers -- even if the Chinese are not among them at first.

That leaves only the pesky issue of CITGO , a front on which no moss is gathering. On Jan. 13, Chavez restructured the PDVSA board of directors and installed Bernard Mommer, until now PDVSA's U.K. director, in the new lineup. Mommer favors PDVSA selling all of its international holdings. Add that PDVSA President Rafael Ramirez's first assignment for the new board was to completely review all of PDVSA's contracts and agreements with foreign firms, and it appears ground is being laid for a rolling Venezuelan disengagement from the United States.

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