Wednesday, May 26, 2010

May 26/10 | On Jackson Diehl's "Hugo Chavez's implosion continues in Venezuela"

Back to square one ...but now really really broke

PMBComment | If someone has understood the convoluted DNA and macabre tempo of the Bolivarian "revolution" it has been Jackson Diehl from the Washington Post. There is no one in mainstream media that has been so prescient, trenchant and consistent in his assessment of this destructive bacchanal. The piece below, which was posted today in the paper's blog section, is one of a long list of articles and editorials that have been proven right despite the protestations of Chávez's withering legion of sycophants.

The long anticipated final implosion of a country blessed with all sorts of natural resources and unique geographical location, is now upon us. The crude and rude Lt. Colonel who has ranted more than ruled, who has destroyed more than built and who is now being chased by ghosts and non-ghost of his own making, has only dark places and treacherous ploys in which to hide. His democratic facade has melted, his skills as a communicator have worn thin and if he is in power it is because there is no obvious alternative - but, as is always the case, a replacement will emerge just when finally needed.

Hugo Chávez's remaining relationship with a minority of Venezuelans is mostly mercantile which is no surprise in a country in which the State is omnipresent despite its incompetence. But, every day someone from the innards of the beast jumps ship in a one directional exodus with no feasible return. Soon more and more of the ugly truths of a very crooked administration will surface and the "magic" of the Bolivarian fraud will be bared. The world will be exposed to lurid details of massive secret foreign bank accounts, untold wealth in the hands of a few - many with Chávez as their last name, and a myriad of dangerous liaisons that will compromise Venezuela's future for years to come. The oil bonanza that hid so much from 2002 till 2008 is long gone, the internal battles are ragging, the foreign friends - with the exception of the most desperate and dangerous - are mostly gone, the apologists are few and unconvincing.

As we enter the epilogue of this wasteful saga, we must open our collective eyes to the challenges of rebuilding a country dismantled by hatred, incompetence and greed. When first sworn in, Mr. Chávez stated - correctly - that he was "consequence and not cause", but he has morphed into the root cause of untold misery and intractable problems we never dreamed of having. For the future of Venezuela, and the region, and the world, it would be ideal that this putrid time bomb explodes in the face of its artificiers. Mr. Chávez is not destined - nor has he earned the right - to exit democratically and that is not a threat or even a wish, but a crude reality of his own making. Those who naively spouse a "democratic, electoral and peaceful" do not fully understand the nature of the brew, or the corrosive power and natural consequence of this brand of misrule. PMB

The Washington Post | Post Partisan |

By Jackson Diehl | May 26, 2010; 2:26 PM ET

Hugo Chavez has been keeping a relatively low profile of late -- there have been no grand world tours, no fiery speeches at the United Nations. The Obama administration, which once promised to “engage” the Venezuelan caudillo, is instead quietly shunning him.

There’s a simple reason for this: the implosion of Chavez’s self-styled “Bolivarian socialism” is accelerating.Figures reported Tuesday by the Chavez-controlled central bankportrayed an economy that is completely out of sync with the rest of the region -- and perhaps unique in the world in the degree of its current distress. Gross national product fell by 5.8 percent in the first quarter, while inflation remained at 30 percent. Private investment plummeted by 27.9 percent as capital continued to flee the country.

Private economists suspect the economic contraction is even worse than what the official figures concede. But let’s assume they are correct. Venezuela’s crash compares with quarterly growth rates of 8 percent in Brazil, Argentina and Mexico. It comfortably exceeds the collapse of Greece, which contracted by 3 percent in the first quarter.

Inflation in Caracas is triple the next highest rate in Latin America (Argentina) and is more than double that of the next worst economy (Pakistan) among the 56 tracked by the Economist’s website. Even Zimbabwe, which used to be considered the world’s economic basket case, looks good compared to Venezuela: it is expecting 6 percent growth this year, while inflation is under 5 percent.

In short, economic recovery is taking hold across the world -- except in Chavez’s Venezuela. When I pointed out back in January that Chavez’s revolution was collapsing, a chorus of left-wing bloggers rose up in protest. The extremists among them claim that Venezuela is actually doing better than the rest of the world, because (loony version) Chavez is destroying evil capitalism or because (slightly less loony version) Venezuela’s implosion is irrelevant to the rest of the region.

But, of course, Venezuela really is cratering -- and Chavez’s desperate measures to stop the freefall are only making it worse. A couple of weeks ago, for example, he abruptly moved to abolish the private currency market, which supplies the dollars for 30 to 40 percent of Venezuela’s imports. The dollar exchange rate was soaring, so the government arrested a bunch of currency traders and announced that sales of dollars henceforth would be controlled exclusively by the central bank. The result will almost certainly be another drastic decrease in imports, the worsening of already widespread shortages in food and basic consumer goods, and the creation of a new black market in dollars.

And, of course, the implosion of Chavez’s potted socialism does matter to the rest of Latin America. It’s not just that the Obama administration no longer needs to bother with the strongman, since he is doing an excellent job of self-destruction. It’s that Venezuela’s clients and imitators -- especially in Bolivia and Nicaragua -- stand to lose both subsidies and ideological sustainment from Caracas. Chavez’s decade-long attempt to create a bloc of like-minded countries around the region is in tatters.

The caudillo’s popularity rating around Latin American is now below 40 percent, and his backing in Venezuela has dropped below 50 percent. With an election for the National Assembly coming up this fall, he has resorted to the Iranian tactic of disqualifying prominent opponents from the ballot. He will try to steal the election; if that doesn’t work he will try to strip the legislature of power.

No matter: Chavez appears powerless to stop the unraveling of Venezuela’s economy -- and with it, his “revolution.” He will be left with a choice: surrender to his country’s mounting discontent, or rule entirely by force.

By Jackson Diehl | May 26, 2010; 2:26 PM ET

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