My Plan Colombia

My Plan Colombia

In times of disagreement, it is important to draw the conveniences, which is why I firmly believe that with the people and land of Venezuela and Colombia we could build a Nation capable of competing, face to face, with the other superpowers of the world. However, given the many mental and real barriers that exist, you will probably ask me: what lumpia [eggroll) did I smoke?

Paraphrasing Carlos Zubillaga, I consider that one of the obstacles to the integration of interests of the two countries is due to the fact that Colombia seems to have developed under the influence of a ruling class, which only sought to dominate, while in Venezuela, our course was marked by a ruling class that refused to dominate.

Another impediment is the loss of self-confidence, caused first and foremost by the gospel of globalization. Normally, our geographical conditions, between north and south, east and west, would represent for a glass-half-full philosopher a cluster of fortresses, but unfortunately, for our glass-half-empty philosophers, they only constitute weak flanks to protect.

To make matters worse, even Bolívar's life cycle, his birth and death, which could unite us so much, instead of constituting a platform to launch us into a greater future, only seems to anchor us in the past.

Given these difficulties, it is understandable that prudence suggests deferring an integration effort until when more favorable conditions exist. However, the reality is that our Colombia, said with the same right and respect with which I hope they can refer to their Venezuela, faces something very close to a civil war, which we simply cannot ignore.

Of course, if we want to preserve the ambitions of achieving a future and twinned greatness, we cannot participate directly in this conflict, but I believe that this should not mean that our only alternative for action is to equip our border and avoid the splash of a Colombia Plan.

On the contrary, the moment is historically opportune to relaunch an aggressive economic integration plan that helps us, both them and us, to understand that the true obstacles to a better future are very, very far from the causes of a fratricidal conflict.

In this sense, I propose that we immediately seek to reaffirm the Andean Pact, at least as it relates to Colombia and Venezuela. To begin, we must seek to align our currencies in order to maximize Colombian-Venezuelan commercial exchange and impose significant external and common trade barriers, which will allow us to create an important internal market.

The above, like a successful angioplasty, could unblock the commercial arteries and oxygenate the economies to such an extent that both Colombia and Venezuela can observe new and better horizons and perhaps even a bonanza that allows generating new and peaceful solutions.

In so many places in the world we observe the presence of wars caused by passions that are absolutely inexplicable to a normal being. For God's sake, whatever happens, I beg you not to leave as an inheritance to our children that absolute, eternal and corrosive hatred between brother peoples, which eats away at a newborn life.

(Translated by Google from an Op-Ed published in El Universal January 4, 2001)

 

Of bolivars and time-sharing

The oft-mentioned Law for the Safeguarding of Public Patrimony (Ley de Salvaguarda del Patrimonio Público) imposes controls over the sale or liquidation of public assets. 

It is interesting to note that this law is completely and utterly ignored when it comes to the sale, day after day, hour after hour, of what should be classified as the country’s main public assets, i.e. its reserve of dollars.

At this point in time, I doubt there is one economist that, upon having analyzed the evolution of relative prices and the forecasts for the country’s income levels (basically oil), doesn’t consider that the Bolívar is overvalued to the tune of at least 20%. That means the Dollar should be worth at least Bs. 670.

Why, then, don’t we devalue? I don’t know the proper answer for this question, but if you asked me to speculate, I would probably infer that it was due to factors such as ignorance or stubbornness. 

I still remember back in 1982, when I called for a modest devaluation of the Bolivar so as to correctly reflect circumstances that resemble the ones we have present today. The absurd argument against this devaluation I received from professionals of fame and reputation was that this was impossible since we were due to celebrate the bicentennial of our Liberator Simon Bolivar in 1983, and that a devaluation was tantamount to denigrating the latter.

These references to the dishonor of Bolivar’s memory, were totally confusing for someone like myself. I was educated under the influence of a system of competitive economies for whom the real heroes were those authorities that managed to devalue the currencies of their countries just a tad more that their neighbors, furthering economic development even if this came at the expense of others. I consider it is patriotic to generate opportunities of internal employment by way of increasing exports and minimizing imports. 

It is possible that we still have public servants that equate a downwards readjustment of the exchange rate with national weakness and an upwards readjustment with strength. If these people have invested a high amount of ego in this argument, God save us if they find that they could theoretically return to the days of Bs. 4.30/US$ by increasing bank reserve requirements and increasing interest rates.

One of the more ridiculous arguments arising from this debate is that the government is not promoting a fiscally motivated devaluation thereby showing that there is great seriousness in the managing of the country’s finances. Devaluations are the consequence of irresponsible fiscal management, not the cause of it.

The only truly fiscally motivated devaluation that occurs is when, due to a lack of confidence in the future of the country, the market decides to pay an exaggerated premium for foreign currency. We could call this a tax on nervousness. 

When we analyze recent Venezuelan history, there is no doubt that our governments have been very efficient in their collection of this tax. “The budget doesn’t balance. Let’s spook the markets and get more Bolivars for every Dollar”.

The least we should expect out of a government in its dying days is that they don’t leave a wide gap in the valuation of our currency based exclusively on artifices such as disproportionately high interest rates or the simple burning of international reserves.

The next government’s job, whoever it is, will be sufficiently complicated without having to tackle this type of problem.

The use of mini-devaluations fixed within a band is a reasonable policy when one is trying to manage market expectations on inflation and devaluation into the future. The use of the band system and mini-devaluations to hide facts that already exist (inflation and falling oil prices) is an insult to our country and our intelligence.

If, in the face of all of its mistakes, the Government really wishes to make an act of penitence, I suggest they go about seriously and effectively reducing the unproductive public payroll. I say seriously and effectively since our governors have in the past demonstrated their dexterity in applying the techniques used by the sales persons hawking time-sharing units.

These sales persons normally increase the sales price by US$ 15,000 in order to then generously award potential purchasers a discount of US$ 12,000. The same goes for our politicians, who first increase the public payroll in order to then propose a reduction.

By the way, it is being said that, although the government has not been able to reduce the payroll, it has at least designed the restructuring plans that will allow the next government to achieve this goal “with ease”. 

I believe that, as far as shamelessness is concerned, our politicians are head and shoulders above sellers of time-sharing units.