October 28, 2009

Dear Editor

Quico says: I was about to send this as an email to an editor who asked me to write something about Chávez's hypertrophied presidential office budget. But as the rant took shape, I found myself thinking... "hmmmm, did I just write a post without meaning to?"
Dear [Name withheld],

Thanks for getting in touch. It's always a bit funny getting to realize which kinds of stories about Venezuela pique a foreign editor's interests: if you'd asked me a week ago, I wouldn't have guessed that a largely bureaucratic story about the Presidential Office's budget allocation would get so many papers abroad interested, though in retrospect I guess I can sort of see why it's a resonant theme. My blog partner, Juan Nagel, sure got into it.

I don't think I can write it, though, for two reasons. The first is a bit technical and has to do with the way the budget process works in Venezuela, or rather, doesn't work. The second goes more to the heart of the issue...

First, the technical bit: Venezuelans who follow these things all know that the official budget the Finance Minister presents to our National Assembly each year is more like an opening gambit than a finalized statement of what the state expects to spend in the following fiscal year. For as long as anyone can remember, Venezuelan law has allowed the government to go back to parliament in the course of the fiscal year and ask them to top up whichever accounts have run dry earlier than expected, a handy little procedure known as an "additional credit" ("crédito adicional").

On some abstract plane, I guess having some mechanism in place to make sure the budget is flexible enough to adjust to changing realities is a good idea. But as with most good ideas in Venezuela's political system, this one has been abused out of any semblance of good sense over the years.

I'm not blaming Chávez here, this is one of those old-regime vices the revolution just sort of forgot to revolutionize. But the long and the short of it is that initial budget figures are an extremely misleading thermometer of how much a given government office in Venezuela will spend at any given time, because actual spending is often many multiples of the original figure, thanks to "additional credits."

In this case, in particular, the amount the government is budgeting for Chávez's office in 2010 is several multiples what they had budgeted for 2009, but I doubt very much it's what they actually spent this year: take the time to go through the additional credits and I bet the rise looks a lot less scandalous.

So it seems likely that what we have here is a kind of accounting mirage: the government deciding to ask for more of what Chávez will spend up front rather than returning to the parliamentary teat again and again over the course of next year. If you were so minded, you could even see this as an advance in terms of monetary transparency. (Though, of course, to make Venezuelan budgets genuinely useful as analytical and planning tools they would need much tighter controls over the "additional credit" mechanism overall, and the government sure isn't about to consider such a thing.)

I tried to think of a pithy way to explain all that in 3 sentences in a way that would make sense and wouldn't put your readers to sleep, but couldn't really think of one.

But beyond the accounting angle, there's this thing that's been gnawing away at me about the way the presidential budget is being reported abroad: when you're talking about a political system like the one we have, the whole notion of a "presidential office" budget that's somehow separate from the rest of the budget seems quaintly out of place. In Venezuela, every ministry and every agency's budget is at the president's unrestricted discretion...that's what petrostate autocracy boils down to!

You could multiply the examples here. I could tell you about Chávez's explicit threat to private shopping mall owners last week to get their own power generators or face power cuts from the public utility companies: a guy who micromanages the operations of even parastatal agencies like the utilities like that doesn't need a ringfenced private budget to spend as much as he wants on whatever he wants, he can just pick up a phone, call any agency head, issue a direct order and get his way, pre-existing budget commitments be damned.

I could go into the details of Fonden, the government's hyper-opaque "national development fund" which hasn't presented a balance sheet in public in over a year, whose actual holdings are a matter of simple-conjecture, but which by most accounts has at least several billion dollars and, according to some government spokesmen earlier this year, as many as $50 billion at its disposal: all money that's spent at Chávez's discretion, with simply no oversight, no previous budgeting, no form of outside accountability or control whatsoever.

I could go into the way the New PDVSA's management also spends money discretionally, on Chávez's orders, before handing that money over into the finance ministry's budgeting stream, such that that nearly endless money-stream is also, in effect, part of Chávez's no-oversight, no-controls budget.

When you think through the realities of the way money gets spent in a country like ours, where no public institution is ever able to put a check or a balance on the president's whim, getting upset over a $341,000 allocation for the president's clothing seems grotesquely out of place. I mean, what we're focusing on here is the fig leaf, the part they had the decency to declare, the equivalent of the profits Vito Corleone reported through Genco Olive Oil.

It's the millions upon millions of dollars they're spending off the books, to fund FARC or Iranian uranium exploration in Bolívar state, or extremist groupies' presidential campaigns in the rest of the hemisphere that I'm worried about. It's the unbudgeted, unreported, unaccounted for and officially non-existent billions flowing from PDVSA through various financial intermediaries and into the accounts of Ricardo Fernández Barrueco and Pedro Torres Ciliberto and Arné Chacón that I'm concerned about. It's the whole black underbelly of the parallel, off-the-book Chavista Second (and Third, and Fourth) Budget that we need to focus on, not the vanilla $1.4 billion they had the modesty to own up to!

In conditions like these, writing a story about the presidential office's official budget allocation is, in itself misleading. A first world reader looking into is bound to read the story and think, "so...they have budget debates, we have budget debates, they have controversies about particular budget items, we have controversies about particular budget items, they have venal politicians who make a grab for the sweet life while in office, and so do we!...hey, Venezuela seems like a pretty normal country!"

But it's not like that, my friend...it's just not like that at all...