Tag Archives: nicaragua

May
29
2012
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ICYMI: Venezuela’s PDVSA oil company is bloated, ‘falling apart’

USA Today
May 28, 2012
By Peter Wilson

Venezuela oil company bloated falling apart MB1I24FL x ICYMI: Venezuelas PDVSA oil company is bloated, falling apart

La Victoria, Venezuela — Beatriz Rodriguez sits in a long line under a sweltering sun, waiting for state oil company Petróleos de Venezuela to deliver cylinders of natural gas she uses to cook her family’s meals.

She and her neighbors haven’t had gas for two weeks, and her patience is running out.

“I complained, and they told me I should use firewood,” Rodriguez, a mother of three, fumes. “Firewood, they told me. And we’re supposedly an oil power.”

Venezuelan President Hugo Chávez points to the state takeover of his country’s oil industry as one of his revolution’s great successes. He boasts that his renegotiation of oil agreements made by his predecessors has improved oil production and allowed Venezuelans to guide the direction of its major export.

New discoveries have pushed Venezuela, which was the USA’s fifth-largest crude supplier last year, to No. 1 in the world for proven oil reserves.

Exploration of Venezuela’s 21,000-square-mile Orinoco belt shows that its oil deposits exceed the proven reserves of even Saudi Arabia. But critics claim that the there’s no telling much of the oil will ever make it out of the ground. They say Chávez is diverting profits toward social spending rather than investing in Venezuela’s energy production.

Chávez’s “Socialism for the 21st century” policies have included the confiscation of foreign-owned facilities and the bloating of state oil company Petróleos de Venezuela S.A., or PDVSA, with patronage hires. As his election approaches, some experts believe mismanagement of Venezuela’s oil could be the issue that derails Chávez’s hold on power.

“The lack of direction, investment and maintenance are wrecking the oil and natural gas industries,” says Jose Bodas, secretary general of the FUTPV, one of the country’s largest oil unions. “PDVSA is falling apart.”

Oil and petroleum products account for about 95% of Venezuela’s exports and contribute more than a third of its GDP. Petrodollars also fuel Chávez’s socialist spending.

But reliance on oil revenue has led to the abandonment of other economic sectors. Much tillable farmland remains idle amid attempts by Chávez to increase food output, and Venezuela continues to import two-thirds of its food. Chávez uses oil revenue to subsidize the cost of the imported food, but shortages of basic goods are not unusual .

Chávez has also used the oil wealth to underwrite artificially low domestic gasoline prices of 11 cents a gallon, which is among the cheapest in the world.

Chávez, who has been undergoing cancer treatments in Cuba, says PDVSA is running better than ever. Upon the recent drilling of a new well, he posted an online message May 3 to Oil Minister Rafael Ramirez: “Venezuela, an oil power! Doing well, Rafael and PDVSA. Congratulations and onward.”

Critics charge that the president is destroying the company by packing it with loyalists rather than qualified personnel. PDVSA’s payroll has more than doubled to 115,000 employees since Chávez took office in 1999, and debt has risen 10-fold since 2006 to $34 billion.

Those increases have seemingly accomplished little: Venezuela’s oil production has dropped more than 25% since 1998 to its current 2.4 million barrels a day, according to OPEC.

Accidents plague the company’s operations as well, causing frequent shutdowns of PDVSA’s four domestic refineries and blamed in the deaths of 67 workers since 2004.

Oil spills increased about 70% to 4,052 incidents in 2011, according to the PDVSA annual report released in April. A major oil spill, one of several, cut off drinking water to the eastern city of Maturin for more than six weeks earlier this spring. Venezuela now finds itself importing components for production for natural gas and gasoline.

Ramirez, the oil minister who also heads PDVSA, did not respond to requests for an interview about the charges. Venezuela’s inability to develop its energy resources is the result of Chávez shifting PDVSA’s focus from petroleum and natural gas to politics. Instead of investing at home, the firm has poured resources into energy projects in countries that are Chávez’s international allies, such as Cuba, Bolivia and Nicaragua.

At home, the firm has been put to work implementing Chávez’s many social programs. Last year, PDVSA said in a preliminary report that it invested an estimated $27 billion in social programs, compared with $15 billion in energy projects. Plans to build natural gas complexes, new refineries and boost production have been pushed aside.

“Chávez has used PDVSA to implement government’s policies,” says Luis Oliveros, an oil professor at the Central University in Caracas. “It’s now engaged in housing construction and pig farming. Not surprisingly, the company has lost its vigor.”

Making matters worse, PDVSA’s social contributions aren’t open to public scrutiny, and may be wracked by corruption.

“PDVSA is running on autopilot right now,” says Pietro Pitts, an analyst at Caracas-based Latin Petroleum. “I have no idea where they are spending their money.”

Development of the country’s extra-heavy-oil belt, or Faja, is symbolic of the problems Chávez has caused. The belt has an estimated 235 billion barrels of crude the consistency of tar that needs to be refined to lighter blends before being exported. Five years ago, Chávez seized four joint ventures in the Faja, a decision that led ExxonMobil and ConocoPhillips to pull their operations out of the country.

Since then, production in the Faja has stalled, and new projects have been slow to get off the ground. Part of the problem is that PDVSA needs to build refineries to upgrade the oil. Each upgrade costs billions of dollars, and PDVSA’s new partners — including state oil companies from Cuba, Belarus, Vietnam and Uruguay — don’t have the capital or expertise.

Chávez’s opponent in October elections, Miranda state governor Henrique Capriles Radonski, has made Venezuela’s oil industry an issue.

Capriles Radonski, who trailed Chávez by about 13 percentage points in recent polls, has promised to make the company more efficient and return it to its core oil and natural gas businesses. He has also pledged to revise alleged sweetheart deals between PDVSA and Cuba, China and others.

“Petróleos de Venezuela can’t be used as a political institution,” he said after winning a primary to become the opposition candidate. “We have to have a more efficient management.”

That call resonates with many in the country, including Rodriguez. Tired of waiting for deliveries of natural gas, she finally bought an electric hot plate. Three days later she couldn’t use it when the state power company began programmed blackouts in her neighborhood as part of electricity rationing.

“I can’t win,” she said. “What good is being rich in oil if we have to go through this?”

To read this article on USA Today, please click here.

 
Nov
17
2011
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Chávez Buys a Crooked Election in Nicaragua

DSC 0754 150x150 Chávez Buys a Crooked Election in NicaraguaJosé R. Cárdenas served in several foreign policy positions during the George W. Bush administration (2004-2009), including on the National Security Council staff. He is a consultant with Vision Americas in Washington, DC.

Some within U.S. policymaking circles argue that Hugo Chávez represents no real threat beyond Venezuela’s borders. Therefore, a proactive U.S. policy isn’t really needed in response to Mr. Chávez’s destructive policies. That belief was once again disproven in Nicaragua, where earlier this month erstwhile dictator Daniel Ortega was unconstitutionally re-elected president courtesy of hundreds of millions of dollars in aid from Hugo Chávez.

It is estimated that since his first election in 2006, Ortega has received anywhere from $1.5 to $2 billion in assistance from the Venezuelan caudillo to consolidate his power in Nicaragua, run roughshod over its democratic institutions, and pave the way for his perpetual re-election. (Exact figures are impossible to pin down since the transfers are not made public. However, it is thought the aid from Chávez amounts to between 7 and 8 percent of Nicaragua’s GDP.)

Not surprisingly, Ortega’s election with 63% of the vote was marred by irregularities. Observers from both the European Union and the Organization of American States, the only groups allowed in Nicaragua to observe the vote (Nicaraguan NGOs were denied observer credentials), registered deep concerns about the process.

Luis Yáñez, a Spanish legislator, said 20 of the EU’s 90 observers reported “inexplicable” difficulties gaining access to polling stations.  “I don’t understand why there are so many obstacles,” she said, “so much opacity and so many tricks in a process that should be clean and transparent.”

The State Department weighed in with its concerns here.

Moreover, in the run-up to the elections, the government manipulated voter rolls, spent Venezuelan money lavishly on social programs, and bought up numerous media outlets to broadcast nothing but government propaganda.

That Ortega was even up for re-election was itself a violation of the Nicaraguan constitution, which expressly forbids a sitting president from running for re-election. Ortega, however, took care of that minor problem in 2009 when he got cronies on the Supreme Court to rule that the ban was a violation of his “human rights.”

There is no question that Ortega has made good use of Chávez’s largesse, from lining his own pockets to subsidizing scores of domestic programs targeting the marginalized and disadvantaged. There has been Zero Hunger, Zero Usury, Roads for the People, Housing for the People, scholarships, medicines, and even street parties – all funded by Albisa, a privately held company set up by Ortega to channel Chávez’s assistance into social programs as well as personal investments.  The books are closed to the public, however, and Ortega has full discretion to spend the money as he pleases.

It is true that Nicaragua is enjoying good economic times: prices for commodities are up and Ortega has by and large left the private sector alone to pursue its interests. The latter, in turn, has largely ceded the political arena to the Nicaraguan president and sees no benefit in challenging the status quo. It is a Faustian bargain.  Even as the economic sector remains vibrant, the institutions of democracy are in the process of being hollowed out, as they have been in Venezuela, Bolivia, and Ecuador.

Many now fear that Ortega will use his newest mandate to formally change his country’s constitution to legitimize his indefinite re-election. If his Sandinistas win 56 votes in the National Assembly (up from 38), their super-majority will allow him to pass any reform he wants without any need to confer with the opposition or anybody else. Ortega will thus control the legislature, the judiciary, the electoral authority, and the majority of the media.

Such is the fruit of Chávez’s largesse: gutting democratic institutions and paving the way for a return to caudilloism, or strongman politics in Latin America. This is precisely what U.S. policy has sought to overcome in the region over the last several decades, at the cost of millions of dollars in resources and extensive diplomatic efforts.

It may be that Ortega’s brand of authoritarianism poses no security threat to the United States, but it does represent a negation of the values we as a country have sought to project, and a betrayal of those who have risked their lives to see democracy take root in the region. The United States owes them the effort to outwardly defend democracy and the rule of law from its ever-present enemies.  That task should begin by identifying who our enemies are and proactively thwarting their endeavors.

 
Oct
18
2011
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Chávez Advances His War Against Independent Media Giant Globovisión

In its most recent offensive against the free media, the Venezuelan government imposed a harsh sanction on Globovisión for its coverage of last summer’s prison riots. National Telecommunications Commission President Pedro Maldonado announced Tuesday that Globovisión must pay an “immediate” fine of up to 7.5% of its gross earnings for 2010, which can amount to $2.1 million.

Reacting to the government’s announcement, Globovisión Vice President Maria Fernanda Flores said the network has “no way of paying the fortune imposed by this sanction.” Flores added that the measure is yet another government ploy to silence the station.

The Venezuelan government’s move coincides with the meeting of the Inter-American Press Association (IAPA) in Lima, Peru. A member of that body’s freedom of expression committee validated the notion that President Chávez’s sanction on Globovisión is a roundabout way to silence the independent station. “The political objective is to shut down all the voices who are critical or independent,” said Claudio Paolillo.

In a speech that reflected a sense of crisis, IAPA President Gonzalo Marroquín said: “We are in a war between authoritarianism and democracy.” The free press is under increasing attacks in countries like Venezuela, Ecuador, Bolivia, Nicaragua, and Argentina, where governments resort to political prosecutions and economic pressure to censor independent media outlets.