Tuesday, September 27, 2005

Sep 27/05 - On the shedding of a democratic disguise: the revolution is now exposed.

PMBComment: on September 2, I wrote that the Bolivarian “revolution” had to accelerate its pace or else risk being crushed by its own lawlessness and incompetence (“drugs, guns and graft”). Over the last two weeks, developments have confirmed that Chávez and cohorts seem to be trapped, like Dr. Frankenstein, in a grand mess of their own creation.

To cover up crimes - and treason – and to deflect growing criticism at home and abroad, they have opted to use a sledgehammer to break off the shackles of a Bolivarian Constitution that no longer seems to please its capricious creators. Doing away with the rule of law, i.e. grabbing by force what is not theirs, is a coherent next move for an unhinged President who has excelled at demonizing the past, done a fabulous job of bulldozing the fundamental institutions of the State, perfected the art of intimidating all who dare question his whim, enriched his kin and military buddies, but failed wretchedly at improving the prospects for 24 millions Venezuelans.

So where do we go from here? It would seem that Venezuelans of all walks of life have been forced by recent events to recognize – maybe a tad too late - that democracy, freedom and private property are precepts that can no longer be taken for granted in the land of Simon Bolivar. Now that the “revolution” has opted to shed its democratic garb, my guess is that it will not take too long for repression to replace cash as the preferred method to buy the acquiescence of the hungry and disenchanted masses. But sooner rather than later, the streets of every city and every town will be filled with democrats doing what they do best when they are left with no other option. Hugo Chávez would do well to watch a few reruns from Warsaw, Prague, Manila, Bucharest or Belgrade…or better still an 8mm reel of Caracas on January 24th, 1958. PMB

Note: if you have been out of touch with recent events Andy Webb’s piece from the FT will surely bring you up to date….

Financial Times

Venezuela speeds up state takeover of industries
By Andy Webb-Vidal in Caracas
Published: September 27 2005 17:59 | Last updated: September 27 2005 23:38

Venezuela's government is accelerating plans to expropriate local agribusinesses and extend state control over foreign oil and mining industries, fulfilling President Hugo Chávez's “revolutionary” economic agenda.

Hugo de los Reyes Chávez, the governor of the province of Barinas and the president's father, issued a decree on Monday expropriating a flour milling plant belonging to Polar, Venezuela's largest food company and the country's biggest private-sector employer.

The announced expropriation of some of Polar's assets, apparently without the prospect of financial compensation, heralds a new, more integrated phase in the government's land redistribution programme.

In recent weeks dozens of rural estates have been “intervened” in by officials from the national land institute, often accompanied by the military.

It is not clear whether the Polar plant, if confiscated, will be handed over to a workers' co-operative, as has been the case with other land expropriations, or whether the assets will be transferred to new business groups.

Lorenzo Mendoza, president of Polar, said last night: “We consider this decision to be unjust, disconcerting and unconstitutional.”

President Chávez says he will eliminate large landholdings as part of a drive to introduce what he terms “socialism of the 21st century”. But the move against agribusiness parallels a policy of extending government control over heavy industry. Rafael Ramirez, the energy minister, said this week that the government might take over oil fields operated by multinationals if the companies failed to comply with a new legal operating framework by the end of the year.

Oil companies are required to sign transitory operating contracts ahead of converting them into joint ventures with Petroleos de Venezuela, the state-owned oil company, in which the state will hold a majority stake.

Patrick Esteruelas, a Latin America analyst at Eurasia Group, said that while local agribusinesses such as Polar were likely to see expropriation, foreign oil and mining companies faced a different challenge.

“More strategic companies are likely to face tighter terms but are not likely to see their assets expropriated,” said Mr Esteruelas.

The likelihood of greater state control is also surfacing in the mining sector. Mr Chávez said last week that a gold mining region known as Las Cristinas “belonged to the state”. His comments prompted a sharp decline in the share price of Crystallex, a Canadian mining company planning to build what would be Venezuela's largest gold mining venture