Venezuelanalysis en Blog: 2006-03-12

U.S. National Security Strategy Cites Venezuela as a Challenge

Caracas, Venezuela, March 17, 2006—Yesterday, the White House made public its 2006 National Security Strategy, the second document to be released by the US government which discusses Venezuela as a regional problem in the past month and a half.

“In Venezuela, a demagogue awash in oil money is undermining democracy and seeking to destabilize the region,” the report says, listing Venezuela as a challenge which “[demands] the world’s attention.” By contrast, it complements oil producing Saudi Arabia’s “preliminary steps to give its citizens more of a voice in their government.”

In another apparent reference to Venezuela, the report says, “The deceptive appeal of anti-free market populism must not be allowed to erode political freedoms and trap the Hemisphere’s poorest in cycles of poverty.”

In the past years of the Chávez administration, Venezuela and the United States have disagreed on the value of what the US calls free market policies. While Venezuela’s private sector has grown as a percentage of the Venezuelan economy since the election of Chávez, the government has implemented some protectionist measures including exchange controls and staunch opposition to the US backed Free Trade Area of the Americas agreement. Government officials have also been vocally opposed to “neoliberal economic policies.”

The NSS implies that these types of actions are a threat to the security of the United States. It lists “[igniting] a new era of global and economic growth through free markets and free trade” as one of eight tasks the US must accomplish to meet the challenges of the modern world and says protectionist economic policies stem from a “path of fear.”

The report justifies its concerns about the dangers of protectionism by saying such impulses “put at risk the benefits of open markets and impede the expansion of free and fair trade and economic growth.” However, between1980 and 2000, years of economic liberalization, the region saw an almost 8 fold decrease in economic growth over the previous 20 years, according to a study of the Washington-based Center for Economic and Policy Research.

Another document mentioning Venezuela, the Quadrennial Defense Review, released early last month by the Department of Defense, said, “Slow economic growth, weak democratic institutions and continuing stark economic inequality have led to a resurgence of populist authoritarian political movements in some countries, such as Venezuela.” Press reports said the mention of Venezuela was notable, since the QDR rarely mentions countries by name.

EU Observers Blame Lack of Confidence in Venezuelan Elections on Campaign

Caracas, Venezuela, March 16, 2006—The lack of confidence of the opposition sector in the electoral process is the main problem with last December’s parliamentary elections, said the Electoral Observer Mission of the European Union. The observers released their final election report yesterday, which outlined a wide variety of areas that functioned well, those that presented problems, and recommendations for how the system could be improved.

José Silva Pineda, the head of the observer mission (EUEOM) presented the report in a press conference yesterday, where he stated, “The lack of confidence in the electoral process is the principal problem that we have observed.” He went on to explain, “All recommendations go in one direction only, in the direction of attempting to create the necessary conditions to increase the confidence of the citizens in the electoral system.”

When asked where this lack of confidence came from, according to the EUEOM’s analysis, Silva replied that it had to do with the fact that there was no real electoral campaign about political issues, but only about the trustworthiness of the electoral process.

“The electoral campaign limited itself to only one subject, which is the electoral process. There was no discussion about fiscal policies, economic policies, health policies, environmental policies, different visions of society. The only thing that was discussed was the electoral process, whether or not there was fraud,” said Silva.

Silva specified that lack of confidence is a “feeling,” implying that it might have no basis in reality. Making a parallel to people’s feelings about travel safety he said, “For example, traveling by plane is safer than traveling by car, but still there are people who are more afraid of traveling by plane than by car – it is a feeling.”

Also, when asked about their evaluation of the December elections, Silva said, “We have no doubts that the results [of the December election] are legitimate.”

A Variety of Problems and Non-Problems

The report mentions a variety of problem areas with the electoral process, such as the lack of congruence within the legal framework, where some aspects of the old electoral law are not adapted to the new constitution, thereby leaving much room for interpretation.

Also, the report criticizes the use of the so-called “twin” voting system, whereby party alliances can give disproportionate representation to stronger parties. According to the observers, this system is technically legal, but circumvents the spirit of the constitution, which says that party representation should be proportional.

According to the report, “The use of images featuring public officials for campaign purposes was widespread. The excessive resort to the use of cadenas [state broadcasts on all channels] during the campaign period was also inappropriate and did not contribute to the improvement of the political climate.”

On the key issue of whether actual votes cast could be correlated with voters’ names, as the opposition argued, the report states, “The possibility of endangerment of the secrecy of the vote was evaluated by EU EOM experts as remote. The breach of the secrecy of the vote could only be possible if the sequence of both the identification of the voters and the votes cast was reconstructed.”

With regard to the opposition parties’ boycott of the December elections, the EU observers said that they were surprised by the move, given the parties’ earlier commitment to participate.

“The EU EOM took note with surprise of the withdrawal of the majority of the opposition parties only four days before the elections. The withdrawal took place after those parties had previously announced their participation to the process if the CNE would eliminate the use of the fingerprint capturing devices,” says the executive summary of the report.

The CNE had indeed promised that it would not use the fingerprint scanners, which were supposed to prevent double voting, but which opposition parties argued could be used to identify how people vote. The parties withdrew from the election anyway, citing distrust of the CNE as their main reason.

As for the reliability of the voting machines, the EU observer report states, “The manual audit of the voting receipts that followed the transmission of the results revealed a high reliability of the voting machines.”

However, despite this, the process itself did not contribute to defusing Venezuela’s highly polarized political climate. “The Parliamentarian Elections did not contribute to the reduction of the fracture in the Venezuelan society. In this sense, they represented a lost opportunity,” says the report.

CNE President Praises Report, Condemns Press Conference

CNE President Jorge Rodriguez expressed displeasure about how the report was presented, saying that Silva’s presentation, particularly with regard to the lack of citizen trust in the electoral process contradicted the overall relatively positive tone of the report.

According to Rodriguez, Silva told the CNE that the automated voting system is completely reliable and that there is no reason not to trust the voting system. Rodriguez referred to the section of the EU observer report which says, “the system developed in Venezuela is probably the most advanced system in the world to date.”

Rodriguez concluded that, “to say if there is or is no trust in the CNE one needs to ask Venezuelans,” suggesting that the lack of a formal survey does not permit the observer mission to make statements about a supposed lack of trust.

Recommendations

Rodriguez ratified that the CNE would take the report’s recommendations into serious consideration.

Among these recommendations is to create a new voter registry that is based on a modernized citizen registry, rather than have two separate registries that currently cannot be compared to one another.

Other recommendations include appointing a CNE board that enjoys the trust of broad sectors of society, elimination of the “twin” voting system that distorts proportional representation, the introduction of a data protection law, so that voter information is kept confidential, and the re-evaluation of not allowing for public campaign financing.

Uruguay and Venezuela: Need to Strengthen Mercosur

Uruguay's President Tabaré Vazquez and Venezuela's President Chavez met in Caracas during a press conference in the Miraflores presidential palace.
Credit: Ronald de Hommel

Uruguay's President Tabaré Vazquez and Venezuela's President Chavez met in Caracas to sign numerous cooperation agreements.
Credit: RNV Archive

Caracas, Venezuela, March 14, 2006—Venezuelan President Chávez and Uruguayan President Tabaré Vázquez signed a series of agreements and conventions in the Venezuelan capital today, as part of a three-day visit by the Uruguayan President. During their common press conference, both Presidents stressed the need to transform and strengthen Mercosur, the Common Market of the South (encompassing Brazil, Argentina, Uruguay, Paraguay, and Venezuela).

According to Chávez, Mercosur should give a good example on the way to Latin American integration and recognize the “asymmetries” between the Latin American economies. “Mercosur is still affected by the negative sides of capitalism. Mercosur will either transform itself, or it will be on the same path as the CAN, the Community of Andean Nations, a project wounded to death,” according to the Venezuelan leader.

Chávez stressed his disapproval about the recently signed free trade agreement between Colombia and the USA, in Spanish the TLC. “I call those trade agreements little FTAAs,” Chávez said, referring to the Free Trade Area of the Americas (FTAA). “With all respect to Colombia, I see free trade as a crime, as an illusion. Colombia will feel the negative impacts of it as well. The country will be invaded by imports of cheap rice and corn from the USA. Venezuela has been against the FTAA from the beginning. The USA has been pressuring smaller countries to join the FTAA. Since it has become clear in Mar del Plata last year that the USA would not succeed in pushing through the FTAA, the USA has changed its tactics and is now opting for smaller free trade agreements, such as the TLCs [bilateral free trade agreements].”

President Tabaré made it equally clear that his country is not interested in free trade agreements either. “I will say it very clear: my government has no interest in signing free trade agreements with the USA. We do want to sell more of our products to the USA, to Europe and to Arabic countries.”

During their press conference, President Chávez, made it clear that Uruguay would be welcome to join the planned gas pipeline, which should transport gas over 7,000 kilometers from Venezuela through Brazil to Argentina. “Venezuela has the world’s eighth biggest gas reserves,” according to Chávez. Bolivia even has the biggest gas reserves in the world. In that light, we should connect Bolivia, Uruguay, and Paraguay to the gas pipeline as well.”

According to Chávez, Latin America finds itself in a very special moment of time. “For the integration of Latin America, it is now or never. This is not something rhetorical, I really feel that the circumstances for Latin American unity have never been better during the last 200 years than now.”

According to the Venezuelan President, Latin America should use its natural resources better to achieve regional sovereignty. “Venezuela has the biggest oil reserves in the world and together with Bolivia we have the biggest gas reserves. Apart from that, we have the biggest water reserves. Last night, I was talking with Tabaré about the great rivers we have in Latin America. We could connect these rivers, the Orinoco, the Amazon and the Rio Plata and use them as main arteries for Latin America.”

Tabaré Vázquez and Chávez seemed to get on very well personally. “There are days, of which you know already before they have ended, that they will be unforgettable,” said Chávez. “This is one of these days.” Tabaré countered by saying that, “Only with friends you can feel really at home,” and in Caracas he “felt at home.” Vázquez: “I didn’t come here for political tourism, I came here to work.”

In the morning hours, Tabaré and Chávez visited the endogenous development nucleus Fabricio Ojeda, as part of the Mision Barrio Adentro, in Catia. In this center for local development, the Uruguayan President was shown local health and employment projects in this workers’ neighborhood in Western Caracas.

Later that day, various Ministers signed 12 agreements and contracts between the two countries, mainly in the fields of technology cooperation, satellite use, software production, oil refining, housing, energy, and health.

Since Tabaré took office in March 2005, the two countries have signed various agreements in the field of energy and agricultural cooperation. Venezuelan state oil company PDVSA will help with increasing the production capacity of oil refinery La Teja in Uruguay to about 50,000 barrels a day. Since June last year, Venezuela has already sent roughly seven million barrels of crude oil to Uruguay, in exchange for Uruguayan products such as cattle, software, and housing, according to President Chávez during the press conference. The two countries cooperate in the continent-wide Telesur TV channel as well.

Venezuela Increases Taxes for Foreign Oil Companies (Again)

Caracas, Venezuela, March 15, 2006—According to Venezuela’s oil minister, oil companies operating along the so-called Orinoco Oil Belt will see a 16 percentage point increase in income tax.

"There is no doubt that the oil companies in the Orinoco belt have to pay a 50 percent income tax; a reform of the existing law is justified," Oil Minister Rafael Ramirez told reporters yesterday.

The tax increase affects oil produced in joint ventures with Venezuela’s state-owned company in the region of Venezuela where one of the largest reserves of extra-heavy crude in the world are located.

Ramirez’s announcement came after an earlier statement by Jose Joaquin Cedillo, tax agency's head of special contributions, which said that the agency was unsure if income taxes for the companies were going to be increased.

The Chávez administration has raised royalty payments on oil from as low as 1 percent to as high as 30 percent. When initially implementing the Hydrocarbon Law which allowed for the increase, the administration lowered some income taxes.

In another move that increase oil revenues for the state, Venezuela’s state owned oil company PDVSA converted its operating service agreements, accords by which foreign oil companies were allowed extract difficult to get at oil, into joint ventures. The Venezuelan tax agency has also cracked down on foreign companies who owe back taxes.

Cedillo also told the press that the government was considering increasing taxes on natural gas to 50 percent.

Oil revenues in Venezuela make up nearly 50% of government income, and have, in part, funded the growing social programs in the South American country.