I privatize you, I privatize you not

The sad truth is that for a very long time now - decades really - the country simply has not had anything even remotely close to a coherent economic policy. Without one, it will be very difficult to drag the country out of its current emergency, the bottom line of which is serious unemployment and poverty. I still have fresh in my mind that infamous cocktail of eighty “urgent” measures presented to the previous administration by Fedecámaras.

It is even more difficult to find a good direction due to the fact that our dilemma as a country is situated within the context of globalization process that seems to threaten national identities even further.

In these circumstances, it is no wonder that magic, instant solutions, and quick fixes seem to be coming from everywhere. Among these, none is more beautiful and tempting than the privatization of PDVSA. It seems to be to the economy what the Constituent Assembly is to politics.

Before I continue on this track, I wish to make the point that by referring to a state- run oil industry I refer only to activities in exploration, extraction, refining and distribution to basic markets. All other downstream business such as the petrochemical field, among others, is subject to such intense competition that the cruel efficiencies of the private sector are required for it to be successful. Any intervention by the State in this secondary business, can only result in the loss of part of the riches initially created by the basic activities mentioned above. There is not doubt that downstream business must be privatized.

We return, then, to the beautiful siren song (the sirens themselves are not so beautiful): The sale of PDVSA and oil reserves, Nirvana, Shangri-La and immediate gratification.

Evidently, it is not logical for a country as potentially rich as Venezuela to be in the state it is in. The sale of PDVSA could mean, among other things, that we could cancel all of our public debt. If we were able to resist taking on new debt, there is no doubt that the country would have a rather promising future, at least in the short and medium term.

Evidently, any industry that is not subjected to the critical and continuous surveillance by a greedy owner, can easily be led astray and would produce unsatisfactory results.

Evidently, it would not seem to make any difference who really owns PDVSA’s assets. The source of business would remain in Venezuela and the country would continue to benefit from royalties and income tax.

Why is it then, that like Ulysses, I would want to be strapped to the main mast in order to resist the siren song? My reasons are partly intellectual and partly from the heart.

On the intellectual side, the most important reason is that I am not convinced that the country can maximize the value of its oil without OPEC. The privatization of PDVSA would in essence mean our disincorporation from OPEC. This does not mean I am expressing satisfaction with the management of OPEC, which leaves much room for criticism.

The interests of the current players, management and the government, may be in conflict with those of the Nation. Additionally, there is no effective way to evaluate management of the industry. The sirens affirm that the privatization of PDVSA would solve this problem since its valuation in the open market would be a measure of management’s success, and would indicate the way forward. Personally, I believe one way to solve the problem is to require the transparency of information and to create the Office of the Oil Ombudsman. This would allow for the introduction of some national and long-term variables, which are frequently ignored in an increasingly globalized, and short term oriented marketplace.

Notwithstanding, I do admit that in these times, irrational reasons driven by the heart may be weightier by far. To begin with, I am not among those that disqualify the government as a manager.

Defense of oil requires decisive protest against those that prohibit the use of Orimulsion without reason, and against those that impose confiscatory taxes on oil derivatives, meaning that we receive only a fraction of its value. I still have not lost hope that this need for defensive action could rally us to unite as a nation and not simply as greedy individual shareholders.

I do not believe that as a generation that has failed in its management of oil resources we have the moral right to continue to anticipate even more cash flow. 

Should PDVSA actually be privatized and should there be a surplus that can be distributed, I hope it will be distributed among Venezuelans under 21. This opinion will most likely be contrary to that of those people that preach privatization of PDVSA in the same way children try to get to the end-of-party gifts in order to get away early from a boring piñata.

On the other hand, I recognize the value of all the arguments against centralization of fiscal income. Quickly, please... tie me to the mast!

What is it we really need in Venezuela?

We are being confronted on a daily basis with an endless litany of proposals, some fanatical and others just irrelevant and misguided compliance with a perceived social obligation. Both types are bad and make it harder for us to focus on how to really solve our problems.

The fanatics, who all share the wish of looking good on CNN's "Crossfire", cover the extreme sides of the advisory rainbow. 

On one side we find those who want us to foster nationalism and patriotism through isolation in true Robinson Crusoe style while casting old Fidel as young Friday. 

On the other are those who hype the benefits of economic opening and globalization to such a degree that we begin to feel that the only ones with the real right to be called Venezuelans are our compatriots in Miami.

Some twenty years ago, I used to vehemently oppose excessive use of protectionism, considering then that this was causing us to slowly degenerate into an inefficient and lazy nation. Additionally, having studied in Sweden and therefore carrying the social democratic values of that society on my back, I found the pockets of political patronage and power this protectionism created very disagreeable.

Today, however, I consider that in many ways Venezuela has opened itself up to the world excessively. In our effort to be part of every economic fad the world developed, we have actually become poorer and run the risk of slowly being wiped out as a nation. 

In spite of this switch, I am convinced that I have not changed my way of analyzing economic problems one bit since at all times my only goal has been to search for what is best for the nation, at a given moment and under a specific set of circumstances. 

I honestly think that a majority of my colleagues, all advisors and consultants, some formally assigned to this role, and others, volunteers, self-empowered and nosey, have been, albeit not on purpose, basing their recommendations more on how they fit a specific model of thought than on what the country really needs to get ahead. This is tragic.

The second category of proposals are those generated by all the individuals and organizations who seem to live by the motto “if we don’t have a Web Page on the Internet we don’t exist” or in this case, "if we are not able to develop a ‘do-it-in-20-easy-steps’ proposal on how to save Venezuela we have not fulfilled our social duty".

Most of the proposals that fall under this category, some more relevant than others, are basically harmless. 

Even I recently published a humble proposal about what I would do if I were to become President (obviously in an allegorical sense) which had to be published in two articles in order to satisfy its boundless degree of ambition.

Other organizations, given their importance in the development of public opinion due to their ample presence in the national scene and in the media, simply do not have the right to treat the process of the generation of proposals lightly. Among these entities we can mention Fedecámaras.

I know there is a wealth of material on the politics of oil and it could very well be that the last Fedecámaras General Assembly generated some others I do not know of. 

However, what you can find in the document known as the Assembly’s Central Document, all 36 pages of which can be downloaded off the Internet, and that is certified as Copyright© Fedecámaras, seems to me to be a relatively poor proposal. The document includes a list or mix of 63 vital proposals. Obviously, he who has 63 vital issues on his mind, really has none.

In addition the Fedecamaras document does not grasp the realities. It barely touches the issue of how to reactivate the internal economy and it ignores the need to improve the distribution of wealth while urging increased use of the General Sales Tax rather than the Income Tax. 

The issue of reducing government spending is treated with kid’s gloves; trivial matters such as privatization of jails and the approval of the Code of Ethics of Public Servants are addressed; the creation of the Macroeconomic Stabilization Fund is belatedly discussed; and even further confusion is created when the reform of the Judicial Sector is mentioned by saying that “Maybe it would be convenient to hand over all responsibility to the Supreme Court of Justice”.

In a moment such as this, when there is hunger and unemployment in Venezuela, when the economic crisis becomes worse every day and when the world is full of uncertainties, an organization such as Fedecámaras must either present a well developed and thought out proposal or simply keep quiet. The duty of those members of the private sector that feel they are or should be represented by Fedecámaras is to express their opinions.

Mickey Mouse, please help us!

If we look at it objectively, there seem to be few things that are as important for the future of the oil industry of Venezuela as is the development of Orimulsion. Likewise, there are few places in the world with which Venezuela has closer ties than to Florida. On the 24th of June 1998, the State of Florida, without valid fundamental reasons, ratified its prohibition on the use of Orimulsion for its power generation.

We have thereby received an insolent and costly slap in the face. Venezuelans, however, continue to pack their bags to go spend their money on vacations in Florida as if nothing had happened. In my opinion, this simply proves that there is a total absence of the only ingredient necessary to confront and solve the difficult situation our country is in, that is, a sense of patriotism.

As a youngster, I participated in parades in honor of national holidays which promoted the concept of a nation by singing hymns and waving flags. I don’t complain about this, on the contrary, I’m proud and grateful for it. Times change, however, and I’m not sure we want to exaggerate with the parade issue if we wish to give our children the best of all gifts, the pride of belonging to a country, of being a Venezuelan.

Orimulsion is a product invented and produced in Venezuela, and it can be attributed both mythical as well as real elements and characteristics. I therefore believe it is possible to develop a campaign of national identity around it. In this sense (although technically incorrect) it should be enough to visualize images of energy and power bubbling up from the turbulent waters of the Orinoco to the sound of Enya's "Orinoco Flow".

I realize that I am running the risk of being accused of patriotic mumbling and many would ask me what we would do with national pride anyhow. The answer is obvious. We would be able to show the world that Venezuela, more than a simple geographical presence, represents a community of wills and desires that should be respected as such.

I am absolutely sure that Venezuela would be a country with a bright future should all of our youngsters react against Florida’s decision by threatening to cancel trips to Disney World and asking their parents to take their “cheap, give me two” shopping sprees elsewhere.

What worries me even more is the fact that this national apathy towards Florida’s prohibition on Orimulsion comes in the face of a widespread cry for declaring a national emergency due to the drastic fall in world oil prices. As an example of this silence, it is enough to note that the discreet protests emanating from the Venezuelan American Chamber of Commerce (VenAmCham), the only entity that would conceivably have the right to a pained silence, surpass those of the Congress, Fedecamaras, the CTV, universities and presidential candidates.

In today’s world, it has become evident that public opinion is a strong weapon that can be effectively used to obtain favorable results from international commercial negotiations. For good or bad, we are generally not amazed, for example, by the exaggerated advantages awarded agriculture in Europe because we recognize the power of public opinion wielded by this sector.

We have given Bitor and its management (a black box to most) the responsibility of negotiating an issue of utmost importance to the country without giving them either the support of powerful groups that could conceivably promote a strong lobby nor the support of solid public opinion to which they could make reference. This is infantile, and what happened was simply bound to happen.

When I broached the subject to my young daughters, specially the part of not going to Disney World, there seemed to be an immediate backlash since they thought I was insinuating that Mickey was responsible for our troubles. Harmony returned when I explained, however, that what we should really be doing is writing to Mickey to ask him to help us, since without Orimulsion there is no money and without money we cannot continue to visit him.

Harmony could also return to Venezuela if we manage to unite everyone around sacrifices that make real sense such as: defending Orimulsion at all costs; imposing emergency duties to avoid total atrophy of our possibilities of creating internal jobs markets and; prioritizing investments within the country.

If on the contrary we: a) ignore Florida’s slap in the face; b) continue to permit the contraband in our ports, thereby guaranteeing job places in other countries; c) keep building (mostly with public funds) gasoline stations in the face of a lack of schools; d) continue to base emergency plans on the collection of additional taxes in order to finance the indolence of others; and e) take on additional debt which will have to be repaid by our grandchildren, there will be no country left to harmonize.

Unfortunately, should this occur, I will have no other choice but to suggest to my children that they should quit seeing Mickey as a source of recreation and look at him as a future boss, as many compatriots who have had to leave the country actually consider him already. Let’s take advantage of Orimulsion and consolidate ourselves as a nation.

http://petropolitan.blogspot.com/1998/07/mickey-mouse-please-help-us.html