The Hugo Chavez Revolution cheated the poor

And before “Chavistas” stop reading this let me point out that the title does not imply that Hugo Chavez, as a person, deceived the poor, all the time, since for sure he himself was also much deceived by some of his most dedicated followers.

So let me explain the Great Deception.

If there is one thing that the Chavez Revolution holds, is that it foremost works for the poor of Venezuela... and it congratulates itself with reports where the Gini coefficient evidences that inequality has declined in Venezuela. Well ... that is completely false unless you want to argue that this was achieved by impoverishing many of those who had something more.

(PS. In fact some Bolivarian Revolution revolutionaries have confessed their need of keeping the poor poor)

But the Gini coefficient in itself contains falsehoods. As an example, its calculations, for “methodological" reasons, does not include the income of those who became rich via corruption and deviation of funds, like the “boli-bourgeois” (the new rich) and the “briefcase companies” (a name for those who have abused the foreign exchange controls)

And I can argue the Great Deception even stronger.

Imagine that the government had not directly given dollars to other countries or purchased services at inflated prices (Cuban doctors and nurses)

Imagine that the government had not given away the gasoline in Venezuela ($ 6 cents per gallon, € 1.5 cents per liter) and had sold it at its international price.

Imagine that it has not sold cheapo-dollars to those traveling abroad

Imagine that it has not sold cheapo-dollars for imports, those who benefit criminal importers, for instanbce those who over-invoice, or good faith importers, by providing very generous distribution margins ... and which all ultimately delivers only a tiny portion of benefits to the population which, precisely because it is poor, consumes less imports.

And imagine instead that all these resources just HAD BEEN distributed equally in cash among all Venezuelans.

In such a case, I assure you that the Gini coefficient would have shown a vastly larger, more real and more sustainable reduction of inequalities in Venezuela.

So you the poor of Venezuela and you the middle class in the process of being part of the poor in Venezuela, demand your share of the net oil revenues, in cash, in dollars.

And please, I beg you, stop being so naïve as to believe the story that some experts, no matter where they come from, no matter how beautiful they speak to you, know better than what you know what to do with an amount that can represent 150-250 dollars monthly for each one of you 

PS . Reading about some new government efforts to further indebt our country, I beg our students: “You, who would be the surest payers of this debt, declare that debts, incurred only to postpone much needed corrections are "odious", and that therefore you have not the slightest intention of sacrificing yourself by paying these.

PS . Some thoughts during Christiane Amanpour’s interview of Nicolas Maduro:

How can one ask other countries for respect when one disrespects one’s own countrymen?

How can one ask for a multi-polar world while requiring a single-polar country?

How can a government which manages 98% of all the exports of the country, declare itself so innocent of its problems?

How can you say to sleep like a baby and wake up with such large bags under the eyes?

Do you think that Hugo Chavez would sleep happy as Maduro says he does, when so much unhappiness abounds?

Some countries have governments that washes brains, Venezuela has one which is brainwashed

Translated from El Universal

Hugo Chavez and the poor of Venezuela

Now upon his death, we often hear news-media reporting in reference to Hugo Chavez, that he helped to pull a lot of Venezuelans out of poverty. That is simply not true. 

Hugo Chavez did indeed help many poor to live better in poverty, good for him, but that is far different than pulling poor out of poverty. To do so exceeded by far Hugo Chavez’s capabilities, and that of his collaborators. 

Those Venezuelans who did manage to pull themselves out of poverty, did that entirely on their own, or with the help of oil revenues and corruption and very little else.

Please...while you are busy leaving Iraq

What an opportunity we seem to have missed!

Daniel Smith in “Politicians cannot control Nigeria’s corruption crusade”, FT April 12, writes about Nigeria saying “its politics remains a stark scramble for power in which elites compete for domination of the state apparatus to reap the benefits of control over enormous oil revenues”, and so in fact little does the crusade againts corruption matter anyhow, especially while oil prices remain high. As is, the Nigerians now elect a government to whom hand over the oil revenues that in reality belongs to themselves, only to have to spend the next couple of years licking boots in order to get some of that same oil money back, while the elected government officials, arrogantly, not in need of other tax income, couldn’t care less about them.

It is only when you get to understand this that you really get a feeling for what a wonderful opportunity the world seems to have lost in Iraq. Can you imagine what having helped to channel the oil revenues directly to the Iraqi citizens in a transparent way could have done? That could really have been called democracy building, and the setting of a great example for the citizens of Nigeria, Venezuela and all the other oil cursed nations to follow.

The Iraq Study Group Report’s as close at it gets silver bullet

The Iraq Study Group Report’s perhaps most important yet least discussed recommendation is “redistributing a portion of oil revenues directly to the population on a per capita basis” as it has “the potential to give all Iraqi citizens a stake in the nation’s chief natural resource” which could only foster a national identity and help stimulate the search for normality. Besides, given that the price of gas in Iraq is so low that you can fill your tank with less than two dollars, which of course is the source of much corruption, the sharing in the additional revenues that a price increase of gas would generate provides the political support for such difficult but necessary action.

We were told not to expect any silver bullet from the Report but in my opinion this revenue sharing program is a close to one as it gets. Implementing such a program in a transparent way, with the help of the World Bank, could also have far-reaching consequences for fighting all the other oil curses around the world.

What does recommendation number 28 really mean?

The Iraq Study Group Report suggests in recommendation number 2 to “Support the unity and territorial integrity of Iraq” which makes it somewhat difficult to understand the real meaning of number 28 when it says “Oil revenues should accrue to the central government and be shared on the basis of population”, since how do you share if there is only one central government? Now, if what they actually propose is that the oil income should be shared by the population directly on a per capita basis, this would indeed be a much welcomed proposition, given that we all know how impossible it is to construe a real democracy when oil revenues go directly to central government coffers and with it makes a mockery of any balance of power in the society. In the chaotic Iraq trusting the Iraqi people with their oil revenues is wiser than trusting any central government with it.

The only thing left to do in Iraq

The recently published Iraq Study Group Report says “There are proposals to redistribute a portion of oil revenues directly to the population on a per capita basis. These proposals have the potential to give all Iraqi citizens a stake in the nation’s chief natural resource”.

Since we all know that when oil revenues go directly to government coffers this makes it more difficult for society to reach a fair balance of powers among all its participants, these proposals also carried within them the best chances for construing an effective and lasting democracy.

Unfortunately some will seems to be lacking since the report also includes some really poor objections as “Oil revenues have been incorporated into state budget projections for the next several years. There is no institution in Iraq at present that could properly implement such a distribution system. It would take substantial time to establish, and would have to be based on a well-developed state census and income tax system, which Iraq currently lacks.”

In fact, compared with most of all the other challenges that faces Iraq today, to develop a fair and transparent per capita oil revenue sharing system, should be relatively easy and I believe that the World Bank has the required capabilities to successfully complete such mission.

And besides, after helping to free the Iraqi people from those who oppressed it, is not helping them to gain access to their own resources the only thing left to do?

Here is the energy family

Here is [my] the energy family

Dad Oil, a tough and hard-working guy, who brings the bread to the house. He is quite lonely since the family, even though they like him to earn well, ignores him, considering that marketing the devil's excrement does not have enough social status. In his work, when facing difficulties such as consumption taxes, he seeks the company of the OPEC guys, even when they also seem somewhat lacking in desire.

The Hydro breast, always present with its clean and pure energy. As long as there is good communication, he does not need praise and fulfills his duties by sowing renewable warmth in the family.

The eldest son, Carbon, [coal] a solid and conservative boy, even if somewhat boring. He doesn't complain much but, by searching for his language, we can hear him commenting on how unfair it is that he is ignored at home, while in countries like Germany and Spain, his peers enjoy such extraordinary subsidies that they even go by the same name as his father Petroleum.

The second, Heavy Oil, a man who, although he looks like his father, does not even remotely have his father's personality. He is a slow and heavy guy, but if someone only gave him some technical clinics, who knows if in the future he couldn't become a real cleanup hitter. Recently he tried to do something, putting on the Orimulsion flannel but, even in Florida, supposedly a friendly state, they wouldn't let him play.

The little boy Gas – who everyone knows as the genius of the family – but nothing he can start. Although he is a good associate of Dad Oil, helping him fill the empty spaces he leaves, he fails to assert himself when he is alone and free. However, one day he will be a star

The Aeolian female and her alternative cousins ​​are still too young to know how they will behave, but they look good.

Finally, there is a nuclear guy who, because he lives outside the country, almost no one knows him.

What's the point? It occurred to me that describing our energy family in this way could help me explain what a few of us consider to be possible errors in our energy policy as a country. Let's see.

The little Gas boy, instead of preparing him to exploit all his talents in the future and assist him in forming his own OPEG, we want to launch him onto the streets alone, because we have read that he is fashionable in other countries. We don't even realize that one of the reasons for its popularity is that since it is not organized, it is a perfect strikebreaker to be used against its father Oil. Furthermore, and even if it is not bad to generate electricity, when considering its true potential, burning it in this task is like being satisfied with it washing dishes, as long as it is in New York.

Regarding Heavy Oil, if in the Orinoco Belt we sold cheaply, for about 30 years, to various national and foreign groups the bitumen they need and in return developed on-site technologies for generating plants, we could make the boy a champion. How much better than to make him pass off today's global punishment as fat, dirty and flabby!

Finally, Carbon [coal] is not without reason. If they can use it in other parts of the world and if its value is not really seen to rise explosively in the future, why don't we allow it to be useful, generating electricity?

Obviously, all of these are only matters that a united family understands and considers.

PS. Translated by Google from  an Op-Ed in Venezuela, March 1, 2001

 

 

Oil and the Stockholm Syndrome

 Fact No. 1: In 1980 the nominal price of oil (Arabian Light) was US$ 36 per barrel. In constant dollar prices calculated using the GDP deflator with 1998 as base, this was equivalent to US$ 67. By the end of 1998 the price of oil was US$ 12.20. In real terms it means that if the price index of oil in 1980 was 100% then in 1998 it was only 18%.

Fact No. 2: The index of oil products retail prices in 1980 was equal to 100%, in the United Kingdom, it reached 247% in 1998.

Fact No. 3: The amazing difference in how the two oil-related indexes developed can only be explained by taxes. As an example, in the UK in 1980 the ad-valorem taxes on gasoline were 85%; at the end of 1998 the same taxes were 456%.

Conclusion. Oil demand and oil prices are being held hostage by the taxes levied on various oil products by most oil-consuming countries. Had it not been for these sky-high discriminatory taxes, Venezuela would today be selling more oil at higher prices, easily repaying its foreign borrowings, and not even requiring a credit rating.

Adding insult to injury, the before mentioned taxes were slammed on Venezuela's main export at a time when the country was busy reducing custom duties and opening up its economy to all type of foreign competition.

It is difficult, then, to understand why, thanks to their country’s press, radio and television, Venezuelans can only worry and feel guilty of the fact that perhaps the recent increases in the price of oil will be the detonator for inflation and worldwide recession.

Could it be that the Stockholm syndrome affects Venezuela (as well as all of the OPEC nations)? As all pseudo-psychologists and writers should know, the Stockholm syndrome is what happens when someone that has been kidnapped finally becomes sympathetic with the position of his captors and ultimately even begins to defend them.

If you doubt what I am saying, just think of how our neoliberals, while talking up the maximization of income as one of their credos, blithely forgive their foreign heroes by either ignoring the issue or by creating lame environmental excuses or by simply repeating absurdities as “being rentist is really not very good for the country”. I would specially like to see them sustain this last thesis in other countries, for example in those that do all that is possible to maximize their rent from intellectual property, to the point of turning us into their best collectors.

That’s it then. There is no doubt in my mind that the Stockholm syndrome, or something very similar, is alive and well in Venezuela’s economic policies.

We need a couple of couch sessions, this time with psychologists that are very different from those we have used up to now. Dr. International Monetary Freund turned out to be simply an unethical Dr. Fraud. While the latter was pretending to give us good advice, he would travel behind our backs throughout the world, preaching the marvels of increasing taxes on oil-based products, and when this was not sufficiently convincing, simply forcing the adoption of the policy.

With its inaction, OPEC is also a prime suspect of having come down with the same affliction. I sure hope that during their sessions next week, to be held in Vienna, they will find time to get the advice of a true Dr. Freud.

Only then will they realize that at US$ 30 per barrel, the price of oil is still less than 45% of what it was in 1980.

Only then will they be able to understand the true injustice present when a taxman of a consumer country perceives an income 4.8 times more than the producer of a non renewable asset. During February this year, premium unleaded gasoline was sold at the pump in the UK for US$ 1.18 per liter, distributed as follows: 20 cts for the producer, 5 cts for the distributor and 93 cts for the British taxman.

Only then will they know that the world is not threatened by oil prices. The world and economic growth is above all, threatened by taxes implement for the sake of easy tax collection.

Only then will they remember to ask for a reduction of oil taxes, as a quid-pro-quo for any increase in oil production.

OPEC friends, … please remember Stockholm.

Calculations based on information in World Oil Trends 1999 published by Arthur Andersen and Cambridge Energy Research Associates.

In the Daily Journal, Caracas, March 24, 2000

https://petropolitan.blogspot.com/2000/03/oil-and-stockholm-syndrome.html

The world’s real petro-pirates!

This week's column is dedicated to those meetings up in Seattle this week.

When, as a citizen of an oil producing country, Venezuela, I see oil being valued by the market at US$ 150, and we only receive about US$ 20, I believe that I have the right to feel a bit let down by all those who promised us a rose garden if we duly signed up on all the international commercial agreements peddled by GATT; and lately by the World Trade Organization WTO. What do I mean? 

From one barrel of oil, one can approximately and simultaneously obtain 84 liters of gasoline, 12 of jet fuel, 36 of gas oil, 16 of lubricants and 12 of heavy residues. 

In Britain today, educated consumers are paying (voluntarily and out of their own pockets) US$ 1.38 per liter of gasoline (sorry, petrol) using the traditional way of establishing a product's value. 

Even if we just consider the gasoline, we obtain a value of about US$ 116 per barrel of oil and then by adding the rest of the products, we should be close to US$ 150 since refining and distribution costs are fairly small. 

I am well aware that the value US$ 150 is achieved by the taxman forcing himself in at the point of sale of gasoline, as an extremely expensive middleman, keeping 85% of the gross. But, was this not exactly the things that world governments agreed not to do, in order to foster free trade and growth ... and that which we believed when we signed up on all those reductions of protectionist duties, accepting to lend the developed world a hand, collecting, their pretensions of royalties for intellectual property rights? 

Today's result is therefore that, when an oil producing country is selling it's non-renewable and scarce resource to the world, it's only getting a fraction of the real value. 

The hurt and pain I feel at seeing so much poverty in my country, that could be alleviated by just a little bit more of justice by the developed consumer countries themselves, is made worse by thus adding salt to the wound.

Their bankers sold us on the idea, in the mid-seventies, that oil was going to increase in value, and therefore that we could calmly take on the responsibility for servicing a huge country debt ... they never told us that all the increase in the value of oil, which has actually occurred since then, was going to be confiscated by their taxmen.

We producers were, and still are, the remaining scapegoat for all inflationary pressures derived from any price increase in gasoline and other derivatives ... even when these were just the result of higher taxes.

We oil producers were, and still are, branded as the most wanted criminal in environmental issues when, in fact, we are the ones paying 100% of the cost of all the protection plans that through their taxes reduce world demand for oil.

Today we hear of even higher future oil taxes when Germany (for example) announces a plan of annual increases as a way to reduce their workers' social security payments and discriminate against us by not taxing coal and other energy sources.

For what it's worth, I would like to remind the developed world in good conscience that, when you're giving generous assistance to the under-developed world, much of it is with money properly belonging to the oil producing nations. 

When I see the suffering of my more destitute fellow countrymen, I blame myself, I blame all those lousy governments we have had ... but I also rightly blame the taxmen in the consumer countries, who are the true petro-pirates of the world.

http://petropolitan.blogspot.com/1999/12/worlds-real-petro-pirates.html

How can we all keep quiet?

Last week Venezuela issued 20-year bonds for a total of U.S.$500 million at an interest rate of close to 14 percent per annum. This implies service outlays of U.S.$70 million. The United States would pay only 6 percent for a similar issue. This means Venezuela must annually pay U.S.$40 million more than the United States. In spite of this, government officials qualify the issue as successful. Who are we kidding?

Although I am sure these Venezuelan officials were formally authorized to contract this debt, I am certain that they were not authorized morally.

I say this based on the certainty that capable, responsible and patriotic administrators would not have rested in their efforts to develop a healthier alternative for the country. An alternative different than simply paying more, so much more, in fact, that people queued up to purchase these instruments.

I also maintain that there should be limits to the cost at which the country is allowed to subscribe new debt. There should be a limit to the cost at which we, as a failed generation, have the right to saddle future generations with. I consider we have reached that limit. What’s is our government’s limit? Is it 25 percent, 100 percent, or is there no limit at all?

What other alternatives do we have? If there were a real political will to fight for the future of our country, the alternatives are infinite. Cut costs, use reserves, achieve the consensus necessary in order to use the vast real guarantees the country possesses in order to contract debt at lower interest rates, or simply contract debt at shorter maturities. Any which way, anything other than what was actually done.

For example, if the interest rate for Venezuela’s debt drops within one year to the levels Mexico’s debt is currently traded at (9.8 percent), then, considering that there would be 19 years left to maturity and that the paper carries a fixed 14 percent interest rate, the country would have to pay U.S.$675 million to retire this particular debt issue. In other words, in one year the country would have incurred losses of U.S.175 million.

Someone could object and say that the situation could become worse and the 14 percent could actually become a bargain. I don’t believe however, that any government has the right to impose its pessimism for future decades. Should the country now actually implement some of the alternatives being discussed today, such as the partial sale of PDVSA in order to cancel existing debt, the rates the country could command would fall to the same levels as those of the United States.

In this case, the losses incurred with our most recent issue would be stratospheric (hypothetically, if this were to occur within one year from now, the losses would reach U.S.$450 million).

Some may argue that the political conditions that would allow the development of an alternative that was not of least resistance do not exist. I can’t accept this since it is the responsibility of leadership to create these political conditions or, if it fails, to resign. The governability of a country must mean more than simply being able to avoid a coup d’état. The damage caused is not limited to the fact that we must now pay higher interest rates for the U.S.$500 million.

The fact that we forced the issue upon a market with low receptivity by simply raising the interest rate, means that this will be used to measure future opportunities in Venezuela.

It is enough to note that this increase in interest rates will be reflected immediately in an increase in financing costs for the private sector and in a reduction in the income we could receive from future privatizations.

The interest rates fixed for Venezuela are approximately 3 percent higher than those applicable to Mexico and Argentina today. This means a difference of U.S.$15 million per annum.

Our official spokesman explained that the international markets unfortunately perceive a higher credit risk in Venezuela since the latter is an oil producing country. I am truly amazed by the sharpness and realism of this analysis.

As if they were rubbing salt into the wound, the announcement of the bond issue was published simultaneously with an ample, and probably costly, campaign launched by Fogade in which they exhort failed Banco La Guaira’s debtors to “comply with the payment of their obligations.”

This exhortation comes a full four years after the day this institution was intervened by the government. The tranquility with which the government went about the collection of these debts doesn’t seem compatible with the urgency reflected by the high interest rate accepted in the latest bond issue.

I have three beautiful, intelligent and talented daughters. Thank God they have had opportunity to visit various parts of the world and enjoy them immensely. Their good knowledge of languages and computers, as well as their open-minded thinking about the new realities make them ideally suited for a globalized world. 

My eldest daughter recently told me that, in spite of all this experience, the place she likes the most and in which she wants to live is Venezuela. How can I keep quiet?

If I were president (II)

In yesterday’s installment I mentioned the fact that the first thing I must receive in order to responsibly comply with my presidential obligations are certain special powers. Supposing I actually received these powers, I then began to list some of the concrete measures as an example of what I would do during the first 100 days of my term in some specific areas of concern. Here are some more.

Education: A single, all encompassing data base must be put together, identifying each and every active teacher on a school-by-school basis. These teachers will immediately receive an increase in pay and an additional fixed percentage of the payroll amount will be awarded each school to cover administrative expenses. Evidence of false information will result in the immediate suspension (for lying, aiding or abetting) of all the teachers of that particular school. All others that are unduly receiving pay without working from the Ministry of Education will be awarded eternal vacations without pay.

Reduction of public spending: In order to rationalize public spending, as similar strategy as the one above will be implemented. All personnel that are to be dismissed will be paid the equivalent of three month’s salary and all other severance payments will be paid in the form of negotiable Public Sector Restoion Bonds (PSRB). The value of these bonds will increase in the measure that restoration of the public sector is successful.

Infrastructure: All savings from the restructuring process will be invested, after covering fiscal deficits over 3% of GNP, in infrastructure projects, such as energy and water for Margarita and Zulia and a truly nationwide railway system.

Housing: The Central Bank must immediately make available through the private banking system, a credit facility to the tune of US$ 2 billion aimed at issuing long term loans in US$ and fixed rates for acquisition of housing.

Foreign investment: Foreign capital investments will be regulated in order to minimize damage caused by short term capital flight (i.e., the Mexico syndrome). Other countries in Latin America have such regulations in place.

Economic diversification: The oil sector does not create employment. Venezuela’s commercial policies must be renegotiated to achieve the equilibrium of our trade balance in terms of employment generation and not balance in monetary terms as it stands now. An annual budget will be allotted to allow for the protection of certain sectors of the economy, specifically agriculture. Cover under this scheme will be allocated to those sectors within agriculture that we can be competitive in without excessive costs (i.e. rice rather than apples).

Petroleum/Petrochemicals: PDVSA will continue to manage the development of our petroleum industry. However, a special Office of the Petroleum Ombudsman (OPO) will be created. This will allow the common citizen to get closer and to increase his knowledge and control of what is the country’s principal asset. The members of this office will be elected at random from among a list of candidates that have been carefully screened, have complied with some basic requirements and have been presented as such by the Venezuelan people. The Office will be initially asked to analyze why the industry is spending its precious resources in rebuilding a slew of gas stations. In the same sense, I would like to insure that our petrochemical industry is not just reopening Sidor’s covered grave with its new investments.

Taxes/Duties: There will be no more value added tax (VAT) as long as the country continues to perceive significant income from oil. Customs at our ports will be handed over to the private sector management. This will ensure that income that should reach government accounts does not continue to feed unscrupulous individual pockets.

Superfluous functions: Until the State begins to perfectly comply with its responsibilities in fundamental areas such as education, health and security, all other superfluous functions will be suspended. For example: if the local stock market really needs a regulatory entity such as the National Security and Exchange Commission, the market must cover the costs incurred. Today, it is preferable to stamp each issue with the words “Beware – Not Regulated” than to create the false illusion that some control is imposed, and in some instances, actually abet fraud through simple omission.

Day 100 – Evaluation: If my team and I are not able to successfully implement our government’s plans, we must resign and convene new elections. Remember, I have initially made a promise to resign without pension and without a seat as Senator for life in order to avoid a) further degeneration of the stature of the office of the President and b) wasting another four years and nine months of this poor country’s destiny.

PDVSA’s shadow budget

Once again we read that PDVSA has been given instructions to purchase goods and services it requires to operate from sources outside national borders, limiting thereby local purchases. The reason for this policy is purported to be the fight against inflationary pressures. Although we have continuously heard declarations issued by Government sources to this effect, the official petroleum sector vehemently denies it.

Evidently, it did not take long for local suppliers of goods and services to raise the roof with severe criticism. The latter is obviously based on the outright injustice brought on them and the local economy by an evident preference given foreign suppliers. The brief observations that follow address other aspects of this initiative.

Above all, it is important to note that there is no direct link between local purchases and inflation, specially in the case of PDVSA. Should the oil industry purchase goods locally instead of importing them, the State always has the option of selling hard currency against Bolívares, thereby soaking up the possible excess liquidity caused by these transactions. By the way, in order not to be disqualified from the roster of possible suppliers of services to the oil industry, I am willing to invoice any services they could possibly require in US$ and from the location they prefer. The only thing left for me then is to make my peace with the tax man.

Evidently, it is necessary to import should PDVSA’s demand of local goods and services eventually result in such strain on supplies that prices go through the roof. In this case, imports would not be the result of the application of economic policy (hare-brained or not) but of a simple and usual business common sense that dictates that you buy where it is least expensive.

These observations bring us around to the real question about the real scope of the oil industry’s operative independence or, if we look at the other side of the coin, the scope of the direct influence exerted by the National Executive on PDVSA and its operations.

If it is true that the Government has the power to instruct PDVSA to direct it’s purchases towards one source or another, when to pay its bills, etc., etc., without being subjected to legal norms and regulations such as the Law of Safeguarding of Public Patrimony (Ley de Salvaguarda del Patrimonio Público) and running circles around the Central Bank’s independence without so much as a polite salute, then I’m afraid we are in the presence of a parallel government of some import.

I am not a public servant, but I feel that should I be one and be appointed to sit on the Finance Committee of Congress, I would definitely consider my job belittled. Should I be called on to collaborate with the development of the national budget, which is evidently based on the use of a few small printed bills, it is possible that the game of Monopoly would have immediately come to mind. In addition, I would surely be intensely jealous of those who, being directly in charge of budgeting the use of real resources such as PDVSA’s, have much more to say in the future of our country.

By saying this, I am not inferring that Congress should be the entity in charge of PDVSA’s budget. A democracy is based on the existence of a system of checks and balances. Therefore, if the National Executive, with or without reason, insists on intervening directly in the oil industry’s activities, it is clear that it is necessary to regulate the limits of this interference.

A few months ago for similar ends, I suggested the creation of the figure of the “Oil Ombudsman”. Initially this was aimed at simply informing the common citizen, objectively and truthfully, about the state of the national oil industry. In Swedish, the word “Ombudsman” means something like the spokesman and representative of public interest. It is a figure used in many countries in areas that are infinitely less important than the oil industry is to Venezuela.

Today, we are all trying to evaluate the consequences of the recent reorganization of PDVSA and would all like to clear up the issue of the instructions supposedly issued as far as PDVSA’s purchases are concerned. We all must feel the need to go talk to someone credible who could clearly answer our questions about matters related to the efficiency of the industry as well as about possible consequences of Government intervention in the same. If accusations of intervention are false, would it not be comforting to hear this from a neutral source as well?

It is probable that neither the National Executive nor the petroleum industry is keen about the possibility of having an external observer hanging around the halls. However, due to the all-important nature of the oil industry for Venezuela as a whole, it is our responsibility to request the existence of one.

A child's question about the economy

During the last few years economic policy in Venezuela has given rise to some basic questions and issues that often go unnoticed or unanswered since many of them are so simple that they border on the infantile. When addressed, the answers frequently offered to these questions are similar to those we often give in desperation to our children when they overdo the question bit, that is, “because that’s the way it is” or “because I say so”!

I honestly believe that the future of our country depends to a high degree on the answers to some of these basic questions. Although I have studied in various countries, hold a post-graduate degree, and am a professional with lengthy experience in many areas related to the national economic scene, I will let my inner child roam and assume the role of that questioning boy for a brief moment.

There is firm consensus, both inside Venezuela as well as internationally, that our public administration has been basically inept, or more precisely, has been incredibly incapable of managing our resources. How can it be possible, then, that the Agenda Venezuela includes, as a fundamental element, a considerable increase in the income generated for the public sector, and more so, how can it be possible that the International Monetary Fund has recommended such increases?

Why, if the country had a positive trade balance which should have resulted in a stable currency, did we have to suffer through a mega-devaluation (which impoverishes the private sector and enriches the public sector) and how can it occur to anyone to call this “orthodox”?

In general terms, the last thing the economists would have recommended for a country submerged in a deep recession would be an increase in taxation. Why, then, have fiscal charges been increased in Venezuela, resulting in an even deeper recession and how can it occur to anyone to call this “orthodox”?

If there is a firm consensus, both inside Venezuela as well as internationally, that the future of the country is based fundamentally on a drastic reduction in the size of the public sector and that such policies have been applied by our self-proclaimed neoliberal planning ministers to whom they have become almost a religion, then why has the public sector grown in relation to the private sector, year after year after year?

Oil is, as is a Picasso painting, an easily liquidated asset. Why should we be so enchanted with the income created by the oil aperture if we have not yet been told what will be done with it and where it will be spent. A bit like selling your home without knowing beforehand where you will move to or what the cost of a new house will be.

For years we have accused the international banking community of deceiving us and having smothered us in devilish foreign debt. Why, then, are we now supposed to be pleased as punch that the foreign banks are again showing confidence in Venezuela and are going to increase lending in the country?

If after a few months of Agenda Venezuela, during which recession has deepened, the public sector has grown and no major inroads have been made on reforms corresponding to vital sectors such as the judiciary, health and education, then who does the International Monetary Fund work for when they congratulate the authorities on their performance and, in the same breath, insist on increasing gasoline prices?

We have always known that we are a society of rentiers based on our oil income, that while petroleum reserves last we will basically always be a society of rentiers and that most of our problems stem from the fact that we are simply inefficient rentiers. Why, then, do we insist on the search for an economic model based on the elimination of this society of rentiers instead of finding one that will insure that we become competent rentiers?

We know that the oil industry is not by itself a great employment generator. We also know that due to the overvalued exchange parity caused by this oil income it will always be difficult for labor intensive economic activities to remain competitive. Why do we insist on being so purist in the application of neoliberal policies, for example, in the establishment of toll charges for access to public parks, while we come close to fainting at the thought of offering a bit of support and protection to the greatest of our national parks called “agriculture”?

It would be easy for Dad to answer his children’s queries with a simple “go ask the economists” but then, what else can I, as an economist Dad, do?

Here a translation to spanish