Thinking through a Rosales presidency

Lost in all the campaign horse-race excitement is a simple question: if he did manage to beat Chavez, what would a Manuel Rosales presidency actually be like? How does the guy go about governing in an institutional environment dominated entirely by chavista appointees? Is he really up to it?

The scenarios are pretty dire.

• How does Rosales negotiate a budget with a 100% chavista National Assembly?
  
• What happens when the chavista-controlled Supreme Tribunal declares Mi Negra unconstitutional?
  
• How does he deal with the barrage of investigations from a Chavez controlled Comptrollership and Prosecutor General?
  
• How does he deal with the 22 chavista state governors?
  
• How does he take the 30,000 Kalashnikovs out of the hands of the Cuban trained Frente Francisco de Miranda?
  
• What does he do with the tens of thousands of Cuban doctors, and the hundreds (or thousands) of Cuban security agents in the country?
  
• Last but not least, how does he handle Leader of the Opposition Hugo Chavez?
  

The short answer is that he will be forced to call a new Constituent Assembly...but then, what happens if he loses the elections to appoint its members?

Folks, even if Rosales wins, it's not the end. It's merely the beginning.

Here a coup, there a coup, everywhere a coup coup...

Introductions are in order. Over the next few weeks, international wo/man of mystery JayDee will be posting occassionally on Caracas Chronicles. JayDee breaks the by-now-established CC mold in that s/he is actually IN Caracas. Imagine that! Further details withheld to avoid the wrath of our masters in Langley.
-Quico

JayDee says: One of the most interesting facets of Chavez's political strategy is to see how he uses the threat of "The Gringos are Coming!" as a weapon. In the last month, he has stated that Zulia police failed to take him out while he was campaigning. He followed that one up a few days latter with a bizarre claim that his spy in the white house has informed him that George W. has sworn to assassinate Hugo before leaving office in 2008.

From a political standpoint - It's a brilliant maneuver as slick and dark as anything Karl Rove or Dick Cheney have ever dreamt up. Chavez is constantly putting Rosales on the defensive while simultaneously linking him with arguably the most unpopular gringo in Latin America since at least Ronald Reagan. Most recently, the Chavez administration has been talking up the imminent U.S. backed coup against Evo Morales in Bolivia, and one has to wonder what the ulterior motive is here. We have all debated the possibility of the U.S. invading Venezuela, a prospect I happen to find very, very unlikely. But with Iraq going down the drain, Iran holding itself proudly in defiance of the U.N., and North Korea going nuclear, it seems almost ludicrous that the C.I.A would be working overtime to bring about Evo's downfall.

On the other hand, Morales has been facing a number of protests in country from what should be the his most rock solid constituency.

Is Hugo simply trying to show his fellow revolutionary how to discredit the opposition?

Personally, I have much more faith in Evo than I do Hugo. But it will be interesting to watch and see if he starts to fall in line with Chavez's scare tactics.

The Sacred Right to Vote

Katy says: The following post was written by a few loyal readers. It talks about how to vote, and what to do to defend our votes. In the spirit of real participatory democracy, I am reproducing it verbatim.

PS.- The picture - my idea, not theirs - is, of course, of Aung San Suu Kyi, one of the world's greatest living heroes. May her struggle inspire us.

"In order to make Rosales win the presidential election in December, we need to do two things:

1. Vote.
2. Defend our votes.

It sounds rather simple but past elections have taught us that it is not. Since we don’t plan to lay down and watch our country turned into another Cuba, we have put our heads together to think about the following question:

How can we defend our votes on December 3^rd?

These are the answers we came up with:

Negotiating with the CNE is like going into a blind dark alley and there is nothing new in this regard. The only way to get the CNE to behave is to force it to do so, and to do that, we need the people to back that up. And for the people to back it up, we need informed and prepared people, ready to defend their vote not on December 4, but on December 3 and before.

Perception is the first part of the equation, so an avalanche of clearly identifiable voters, in each and every precinct, has to be part of the strategy. Clear preparation of each individual that will be part of this avalanche is the main clue of the strategy.

Opposition voters could wear white T-shirts with the message: “Maldito el soldado que usa sus armas contra su propio pueblo”. When a National Guard in a voting station sees for 200 times in a row the same message, he will think twice about his actions. The effect of T-shirts with a message could multiply on its own and reduce the fear in the voters.

Fear is another clue element which should be shifted from voters to armed groups. Voters carrying cameras and video recording devices around the voting centers would make the armed groups aware of the fact that their actions are being filmed and recorded. Armed groups need to be left with the uncertainty about how many of their planned abuses will show up clearly demonstrated at some point in the future.

Since in previous events -the regional elections in 2004 come to mind-, the minister of the interior and justice declared that it was forbidden for electors to gather around voting centers to wait for the vote count, it is foreseeable that this time around they’ll do the same. This possibility should be addressed by Rosales before the government presents it as an accomplished fact. Anyway, if people feel safe and protected by one another, they might not care about legalities.

Rosales’ team could wisely benefit from this preparation process to boost the campaign. Certain phrases could be repeated and transformed it into a kind of mantra: “Peaceful revolutions have happened before, why not in Venezuela?” Thousands of citizens peacefully but forcefully defending their votes would be quite a thing to see.

The manual counts have to be extremely well documented with pictures, movies, times, and dates, with the presence of valid officials, judges, notaries, attorneys (there have to be quite a few non-aligned ones). Actas should have the signature of 10, 100, or even more witnesses and multiple copies should be made, especially if the electronic count does not match the paper count. Meetings should be held with international observers before the fact, to ensure they are aware of what is going on.

Remember that the main goal is to force the CNE to play fair and to accomplish it even the obvious needs to be watched.

-Make sure that the principle of 'one person one vote' is followed (ink in the pinkie and vigilant table witnesses).
-Make sure the boxes have not been stuffed before or after the vote.
-Make sure the actas are not manipulated.
-Corroborate the content of the voting boxes against the local machine 'acta'
-Corroborate the local 'actas' against the CNE reports.
-Corroborate the CNE report arithmetic.
- Demand to have the random selection done with a completely manual system, like the Spanish lottery (or something of the sort), to avoid 'spiked' databases.
-Vote early, and make anything possible to reduce the delays that will be imposed in the process.

“The only way to get things moving is to instill hope, to act with the conviction that things can be better, so that that conviction instills hope in others. The multiplication effect of this attitude, taking the challenges for what they are, breeds the creativity to overcome the problems, there is no need to be naïve about them, there is no reason to be blinded by optimism, but there is the need to do something about it. Apathy would not create such conditions. That's why any Opposition candidate's first priority has to be to instill hope, has to be to show Venezuelans that the great majority want change, so participation is the key and apathy is stopped.”

EB

Colaborators: Edgar Brown, Virginia, Damn, Ruben pero Hojillas, Gustavo and Cristina.

Making a believer out of me...

Here's the TV version of Hugo's Love Offensive.



This one, I think, is much worse than the print version. The forced smile. The awkward reading. The gawd-awful music in the beginning. The entire thing is just so incongrous, so gringo-consultant-style, so jarringly out-of-synch with everything that's come before. Really, it's very strange.

I'm still baffled about who exactly the ad is aimed at, but I guess we can reason it out by process of elimination. His hardcore base likes his fire-breathing style - they're not buying this. NiNis were never really invested emotionally with Chávez - he has no love to rekindle with them. And his opponents? It'll only anger them.

So who's left? Transactional chavistas: poor people who were never ideologically aligned with Chávez, but did have a strong emotional bond with him and appreciated his government's handouts. And, in particular, transactional chavista women.

If that's the case, if Chavez is worried enough about losing transactional chavista women's votes to recast his entire campaign to appeal to them, that is very good news for Rosales indeed. Because they have held the key to victory all along: without poaching at least a few transactionals, the numbers just don't add up to 50%+1 for Rosales.

However you interpret the reasons behind Chávez's dramatic change of campaign strategy, though, it's hard to avoid the impression that the guy is seriously worried now. Candidates just do not make message U-Turns on this scale when everything is honky-dory and they're cruising to victory. No way.

Because, lets be clear: the U-Turn couldn't be more complete. There is a wide abyss between "10 millones por el buche" and "Vote for me because I love you." There's just no way to square those two (Por amor por el buche?) Will the chavistas who loved Macho Man Chavez stay on board for the new, fuzzy, touchy feely Chavez? Is the switch even credible at this point? I really doubt it...

Plain old bonkers...

This ad is so, so far off the deep end, when someone described it in the comments section I thought it had to be a hoax. In fact, it is a half-page ad in today's El Nacional.



Aside from the unabashed weirdness of the message, the thing that strikes me is that this is really awful positioning. It's an ad about what Chavez needs, not about what the voters need. Me, me, me, me, me. Vote for MEEEEEE...

Then there is that odd, pleading tone. That sulking request for more time, coupled with the promise of endless love. There are odd overtones here of the cycle of domestic violence. After abusing his partner, "the batterer is frequently sorry, feeling guilty and willing to try anything to make up. There may be flowers or gifts, dates and romance as in the beginning of the relationship." He tries to pull the old heartstrings, to rekindle a romance he fears he has badly harmed. Please take me back, he whispers. Whatever I did, I did out of love. I only need more time.

Thing is, some of us remember him in abuse mode only too well...

Venezuelans who get it

Katy says: The following is a translation of an interview with Jean Paul Rivas, the President of CruzSalud. It was originally published in Debates IESA, in its July-September, 2006 issue. It does not appear to be available online.

"We can't see the poor from the highway"

Insurance for the poor? Anyone who has traditionally worked in the medical insurance business knows this is not a question that requires much discussion. The poor are, supposedly, unable to afford an expensive service such as medical attention. However, in the last year and a half, a novel entrepreneurial experience is tending to those caraqueños that insurance companies do not take into account.

Jean Paul Rivas is an entrepreneur with more than fifteen years of experience in the insurance and pension business. A year and half ago, along with three other partners, he founded CruzSalud, a company that offers pre-paid medical care to some ten thousand affiliates in the barrios and other populous zones of Caracas.

CruzSalud sells medical plans ranging from 18 to 40 thousand bolívars per month, which include home medical care, emergency care, dental emergencies, all the supplies needed to get either emergency care or an operation in a public hospital (ranging from the doctor's robe to an electronic scalpel), specialized medical consultations and lab tests. It has ambulances and care units that allow them to reach all of Caracas, 24 hours a day. The easiest way to pay the monthly fee is to buy a pre-paid card in drug stores, kiosks, bakeries and other authorized places, and to activate it just like you would a pre-paid cell phone card.

Sixty employees, including doctors, work in CruzSalud, and they also employ some eighty external physicians. A call centre takes emergency calls day and night, offers up information and renews memberships. Its headquarters is in the Lebrún industrial zone in Caracas, and it has administrative offices in the San Miguel and La Línea barrios of Petare.

Q: Where did the idea to start CruzSalud come from?
JPR: The only thing that is sure to grow in Venezuela is poverty. Before starting CruzSalud we projected the growth in the insurance market for the next ten years: we concluded the market was going to decline because, every day, fewer and fewer people will be able to buy insurance. Regrettably, the number of poor people is bound to go up for several reasons: political, economic, and demographic. The poor are a large market with collective, not individual, purchasing power; in them, we saw a market we could do business with. There are fifty insurance companies in Venezuela, fighting each other for ten percent of the population. Who is looking at the needs of the other ninety percent?

But there's something more: that ten percent of the population used to be twenty percent some twenty years ago. In other words, before, those same fifty insurance, plan administrators and pre-paid assistance companies were fighting for twenty percent of the population, and now they are fighting for ten percent. What percentage will they be fighting over in fifteen years, given the economic rhythm the country is in?

Q: Did you make actuarial calculations?
JPR: We didn’t do any calculations. It was more of a perception, an intuition about what was going on in the market. After having worked in this industry for fifteen years, you realize that the market is contracting, in spite of the numbers the Insurance Superintendence sometimes publishes. According to those numbers, the market is growing, yes, but in terms of bolívars, not in terms of people insured. If premiums go up by thirty percent, sales go up by thirty percent. But, are there thirty percent more people insured? No.

Q: So you discovered the poor.
JPR: No, I think other people discovered the poor.

Q: You identified them as a market.
JPR: That is what we did, and it remains a gamble. It’s not the same to talk about the poor than to talk about poverty. Poverty from a macro, actuarial or sociological point of view is one thing, but it’s quite another to look at the day-to-day life of the poor. The difference is that poverty, from an economic point of view, perhaps isn’t such. For example, when you go to a place like Petare you see people from different socio-economic levels. For some people, Petare is all in the D or E segment, but the truth is that there are differences: A, B, C, D and E segments.

The owner of the local hardware store, who has his car, who puts it away early so it won’t get stolen, whose kids go to a private college: he belongs to segment A, but one tends to think of him as being in segment D. The kid in the front of the drugstore smoking crack, he belongs to segment E. You have to understand the economics of the poor: because of his dynamics, he can have five thousand bolívars every day, but he never has thirty thousand bolívars; he earns today, gets paid today, plays today and needs to eat today. That is the life of the poor. You have to understand the lady who gets up at five in the morning and only has seven thousand bolívars in her pocket at the end of the day, who never has seventy thousand bolívars, and who buys two tomatoes, a quarter of a cabbage, a cube of chicken broth and a cigarette.

Those of us from the upper-middle class have a hard time understanding poverty. That is what we’ve been learning in CruzSalud, we’ve begun entering their world. When you realize that 85 percent of Venezuela is like that, then you understand that we are the outsiders. If we think the poor have to adapt to us were going in the wrong direction; we are the ones who have to adapt to them. We are not a mass-market company, we don’t advertise on television to reach the barrios. We go into the barrios on foot with our doctors, our nurses and our home units, and we open offices in the barrios.

Q: So then we must realize we are a minority.
JPR: Yes, and we will be an even smaller minority as time goes by. You have to realize how much money the informal sector moves: billions of bolívars, and more than half of the economically active population. People spend 4 billion bolívars a day in gambling and lotteries. Who’s got that kind of money in their pockets? It’s four billion bolívars that are coming from somewhere. How many businesses in Venezuela deal with 4 billion bolívars per day? Very few.

Q: What are the products you offer people with low incomes?
JPR: We offer the health services they need. Although they need a lot, we go as far as they can pay. Something that surprised us when we began to design the products was that their true need wasn’t coverage for one hundred million when they need it, but having somebody to call. People in the middle class always have a doctor handy: a brother-in-law, a cousin, a friend, and a neighbour. The poor have to wait until some nurse they know comes home at night. That is why we developed a call centre, where people can call and have a doctor available twenty-four hours a day.

The first thing they do is not believe you: “and you are going to come all the way up here?” They sign up and then they test us: “I feel bad, come over.” They test you to see if it’s true, because they’re not used to buying intangibles or services but concrete things. You have to build trust with them.

Now, how do you charge nine or eighteen thousand bolívars per month in the barrios? With prepaid cards. For them it’s not strange to buy prepaid cards. We managed to to talk to them in their commercial lingo. They don’t go to the bank. The street vendor who goes to the bank loses his spot, the jeep driver who goes to the bank wastes all day. The only time they have to go to the bank is on Sundays at Sambil. The solution, from their standpoint, is not to make a bank deposit. They don’t have a credit card and they are not on payroll, they work on their own.

Q: Where do these ideas, this way of seeing the world, the country and the poor come from?
JPR: They came when we realized the insurance market was not growing, that companies were spending millions of bolívars taking customers from each other. Then we wondered: where is the vision? Where is the ambition to do much more? There was a market opportunity, a way of helping the country.

Q: What do you mean by “helping the country”? How do you show us you’re honest about that?
JPR: Helping the country implies doing things like we do in CruzSalud: when, for a few thousand bolívars we can give a child paediatric care and give him medications, and making that a sustainable business. That is my particular way of helping my country. When we help a patient, when we hire a young doctor about to get married or wanting to get married who wants to buy her own apartment, and by hiring her we are helping her achieve her goals, those little things are what help the country.

Q: Are you a variation of Barrio Adentro?
JPR: We go into the barrios, although not as “adentro.” We don’t go to where cars or motorcycles can’t reach, or where people need to walk for 45 minutes to get there. We don’t go there, Barrio Adentro is there. Those are the places where people live in extreme poverty; where people don’t have anything to eat and can hardly afford a product like ours. We operate in the more established barrios. For example, in Petare we are in El Carmen, Maca, El Carpintero, La Línea, and we are also entering Catia, Caricuao and the 23 de Enero.

Q: What is your relationship with Barrio Adentro?
JPR: We’ve become a complement to Barrio Adentro. There are people who believe in the Cuban doctors, there are those who do not, but people certainly feel like someone is there for them. Sometimes they don’t have supplies, they have certain needs, sometimes they work, other times they do not. On the other hand, we always work. People now have options they did not have before; they have the choice of something I like to call “comfort in their zone”: both programs in their barrio. People in the barrio with higher incomes can pay for a private plan, then there’s us and whoever can’t pay anything goes to Barrio Adentro.

Working in popular zones is not like opening an office in Acarigua from the Caracas headquarters. To open a health module in a barrio, the nurse has to be from the area. You need “validators:” people from the area who can certify you are there to do good and will not take advantage of them. When you settle down in a barrio you have to get to know the community boss, the organized community in the street. They are more organized than we think they are. We get to sit down with the Barrio Adentro doctor, with the lady from the salon, with the man from the drugstore, with the neighbour and with the street vendors across the street, because it’s an intense lifestyle.

Aside from our offices in Lebrún we are in a private residence in La Línea, in Petare. We rented out half of the living room, put a front window and that’s where our doctor receives patients. The people who own the house have been there for 25 years. When you are a part of a community everybody knows you, everybody wants to get to know you and find out what you’ve come to do. The difference with the middle class is huge: it’s common that in a building the years go by and people don’t know each other. In Caracas’ residential districts, people who live in one block don’t know anyone beyond the second to next house. But they should know, because helping each other is important.

Q: How did you learn all this? Did you consult a sociologist?
JPR: We spent a year planning this thing. We went to the barrios, we walked, we observed, we spoke to the people. We studied models from other countries. These systems work well in India and Nepal. We realized that in underdeveloped countries, public and private health care systems tend to complement each other. We decided to study what is being done in those countries; we did not go study the Spanish or the Swedish systems. When we entered in Venezuela, we realized that we were more like India and some African countries than developed ones, so we went there to see what was being done there.

Q: You discovered the poor as a people, but also as a community. You talked about having to establish connections with the owner of the salon, the guy who owns the drug store, etc.; so people in the barrios have to know one another because they have to help one another.
JPR: We did not discover them; we can’t see the poor from the highway. Someone had to make that step. People like us don’t do it for fear of their personal safety, because they don’t know how to navigate and because it’s an unknown world. We wanted to be pioneers and we were not afraid. Last year we made more than 2,500 house calls in the barrios, 24 hours a day, and we have not had the first incident with personal safety. Of course there is a lot of crime, like in the rest of the country, and a lot of poverty. We decided to enter in an organized manner. Traditional marketing says that you have to think “these are my costs, this is my price, and whoever can afford it has to pay, and if not they can look for something cheaper.” But when your market is that 85 percent of poor people, you have to know what their willingness to pay is, and whether you can actually help them or not.

Q: So Michael Porter is right? You develop a good product or service if the customers are demanding?
JPR: Customers in the barrios are very demanding; because, though it may seem than five or ten thousand bolívars is not a lot, it is to them. Once in Petare I was told the nearest CAT Scan was in Sabana Grande. When I told them there were two in La Urbina, they told me they were talking about the nearest one in terms of their pocket, not in terms of distance. When they find out that for the 400 bolívars that a bus ticket costs they can save 1,500 bolívars on a cheaper scan, they are willing to spend an entire morning in line waiting. The value of money is great to them, so they become demanding customers. When they pay CruzSalud those ten or twenty thousand bolívars per month they expect a lot in return, they expect you not to disappoint them.

Something else: not only are they demanding, but also they protect you as long as you’re good and efficient. We’ve had a lot of things happen to us. They will call at three in the morning with a sick child, with a temperature of 40 degrees. So the person calling tells the paramedic: “When you are nearby, call me and I will go with the child to the police module and you can see him there.” People know their limitations, they know where they live and they don’t want the doctor to have a bad experience, because they know that if the doctor has a bad time he won’t come back. In middle class sectors, when they call for an ambulance and it hasn’t arrived in five minutes they call a hundred times and start complaining. In the barrios people don’t complain as much, but they expect a lot more from you: they expect you to live up to your promises. It’s a pact of words, you could almost not have to write written contracts, but you have to shake hands, you have to look them in the eyes so they can trust you. The mistake a lot of people in the A/B segments make is that, to them, people in the barrios are like the people they employ in their homes. But the barrios are filled with businessmen, entrepreneurs, and college graduates; it’s a complex world.

One of the big challenges of private companies going into low-income segments is that there is no formal economy. When you rent a space in a barrio, nobody is going to draw up a lease and it will not get notarised. How could a multinational possibly rent a space in a barrio without signing a contract?

Q: There is an extended system of micro credits that can loan up to a million bolívars without a single paper being signed.
JPR: All based on the word of the client, because their greatest asset is their word and they are not willing to lose it because they have nothing else. They don’t have luxury goods, they don’t have a home or a car; what they have is their honesty and their credibility and they are not willing to lose it.

Q: Why have so few of the minority in Venezuela dared to reach out to this other part? If the insurance market is not growing, isn’t there a prime business opportunity there? Why were you guys the first to make the leap? Why hasn’t there been any competition?
JPR: Because it’s very hard to adapt to the lifestyle in the barrio. For a bank, for example, the business of micro-financing is difficult because you can’t open a branch in a barrio nor can you hire a manager willing to work there and attract customers. The technological platform is of no use there either, because people earn weekly wages; you can’t draw up a credit document and notarise it because there are no notaries. When traditional companies try and enter, they realize there are no channels, they can’t reach the people so they have to invent their own channels.

Little by little, though, comfort zones in the barrios are beginning to grow. It’s a phenomenon of today’s Venezuela. Companies are making the effort to reach places like the 23 de Enero with movie theatres, with shopping malls that are as close as possible to where people live; they are taking comfort to where people live. It’s one of the great things we are beginning to understand. A generation ago, people living in marginal areas studied so they could move to a better area. That is ending because the country doesn’t allow it anymore. People are getting married and live in the same place where they have always lived. “Why should I move since everybody knows me here and nobody hurts me? Why should I go somewhere else if I’m fine here? Let’s make one more roof, I keep on studying, I get married and I live here.”

Q: What are your short-term goals in terms of growth?
JPR: We want to end 2007 with close to one hundred thousand members.

Q: In a year and a half you plan on multiplying your existing customer base by ten?
JPR: A year ago we didn’t have anybody and now we have ten thousand! And that’s just Caracas. This is a market of millions of people. We plan on opening elsewhere in the country, where obviously growth will be slower but where there is a great market as well. If the traditional insurance and medical industries compete for 3 million people and there are 20 million nobody is paying attention to, I think we’re being conservative. There will be competition for sure, but the market has great growth potential. Companies will have to specialize more and more or face a steep decline; there is no other way to grow in Venezuela in the next five to ten years.

Q: What is CruzSalud’s biggest challenge?
JPR: From an entrepreneurial point of view, growth. We have great plans for creating jobs and improving people’s lives. That’s what we have done from day one. That’s our way of growing.

Keller details...

A little bird sent me a PDF summarizing Keller's 3rd quarter 2006 poll, and I thought I'd share a couple of key slides. This is that poll whose headline finding was Chavez 50%, Rosales 37% - taken soon after Manuel Rosales established himself as the opposition establishment's single candidate against Chavez in December's presidential election.

Annoyingly, there is no Methodology slide, so I don't know what size of towns were polled - only the total sample size (n = 1,000.) All I can say is that Alfredo Keller is a generally professional, reliable public opinion researcher.

So, what do we have? First off, that revealing question pollsters love to ask - overall, how are things going in the country?

click to enlarge
The red line captures positive responses, the blue line negative ones. As you can see, the trend this year is for perceptions to sour: positive responses are down 9 points since the start of the year, and negative answers up 10 points.

Still, a solid 60% of respondents gave a positive response, with less than 40% giving a negative answer. That's a tall mountain for an oppo candidate to climb.

Then, we have Keller's political segmentation slide. While this kind of excercise is mostly down to the pollster's judgment - the way Hinterlaces slices the electoral pie, for instance, results in many more NiNis than using Keller's standard - it's true that a segmentation excercise carried out with consistent methodology over time can give a good idea about trends:

click to enlarge
Now, the trend is for "neutrals" to turn against Chavez, while the number of chavistas stays pretty stable.

Still, the absolute numbers are fairly daunting. At the start of the campaign - and the fieldwork for this poll was done very soon after Manuel Rosales was annointed Single Oppo Leader - the task facing him was to sweep essentially all the NiNis while retaining his base and winning over at least some chavistas. Basically, he has to clean Chavez out comprehensibly, in the middle of a public-spending led, oil-boom fueled consumption bonanza.

Impossible? No.

Very, very hard? Yes.

Policing the comments section

Katy says: I have begun regulating the comments section. There are no fixed guidelines, and I won't catch all offenders, but here are the points to keep in mind before posting something:

• If you post a comment that has no value for the discussion, it will be deleted.
• If you post an incendiary comment that only looks to provoke the anger of other posters, it will be deleted.
• If you post something offensive that has no wit and has been said a million times before, it will be deleted.
• I will not explain my choices for deletions.
• Do not take it personally if I delete a post of yours.
• If I don't like the tone you use in a comment, it will be deleted.
  
• I will exercise my rights to censorship in an absolutely discretionary way, following the guidelines set forth in Venezuela's Media Law.
  
• I will not parse through a comment selecting the good portions and the bad ones. If there is something that makes a comment deletable, it will be deleted in its entirety even if the rest is brilliant.
  
• I won't be banning all the time, only when I have a few moments on my hands.
• Quico has offered to help me enforce standards on the comments section.
  

Open thread on "the avalanche"

Katy says: Manuel Rosales held a big rally in Caracas over the weekend, called "The Avalanche." I could not follow it since weekends are generally bad for me, but I did want to leave a post so people could comment on it.

Our fellow bloggers Daniel, Miguel, Alek and many others have a lot of information on the rally, some of it first-hand.

My favorite part about the event was that Rosales got up there surrounded by his wife, his kids and his baby. No old-time politicians, no military goons, no Fidel, No Evo, No Eva - just a guy, and his family, and hundreds of thousands. Kind of a refreshing photo-op, don't you think?

What do you make of this event? Do you have personal experiences to share?

PS.- Thanks to loyal reader captainccs for the picture below.

Where's the muckraking spirit?

Reading over Katy's latest post, I'm struck with a mixture of exasperation and despair over the state of Venezuelan journalism. Because, you see, I'm in no doubt that the horror stories about corruption she tells are true - and that other cases out there must make the ones she tells seem vanilla. Given all that, I just can't work out why nobody in Venezuela takes the time to investigate, document, and publish the evidence on this stuff.

I mean, poor Iris Varela: she goes to all the trouble of finding a Merc SUV without tinted windows specifically so that people will see her in it and nobody has the decency to take a photo of it. And what would it take to dig up some documentary evidence on JR's Margarita hangout? One or two marginally competent reporters with enough institutional backing to spend a couple of weeks on the story, that's all.

Too scared to print it under your name, or in your newspaper? Hell, what's Noticiero Digital for? (Or, for that matter, Caracas Chronicles?) Somehow, though, these stories never seem to get commissioned. It's infuriating.

"Que se me quemen las manos ... "

Katy says: This news item made me chuckle. In it, they quote Chávez saying that when he leaves Miraflores he'll be "as poor as when he came in." Since he is planning on leaving after he's dead and dead men don't carry cash, technically he'll leave even poorer than when he came in, but never mind. His collaborators and close confidants can't say the same thing.

While in Caracas, I heard horror stories from eyewitnesses to the ill-gotten wealth of chavistas. From direct sources, I learned, for example, that when a famous congresswoman known for her bright red hair bought her Mercedes Benz SUV in cash, the dealer asked her if she wanted tinted glass on her windows, and she said she did not because she wanted everybody to see her in that car. I learned about the brother of a chavista mayor of a large municipality who lives in a posh four-story penthouse in eastern Caracas (yes, four-stories). He has ten bodyguards waiting for him in the parking lot, and he owns a fleet of cars that includes 3 Hummers, a Porsche SUV and a BMW SUV. He is the head of appropriations of the municipality.

I heard stories about former presidents of the CNE building themselves multi-million dollar homes in Margarita designed by renowned architects. I heard stories about congressmen I am acquainted with who walk around wearing $5,000+ tailor-made suits and gold Rolex watches, dining at Caracas' poshest restaurants while doing business with the Italian government. I learned of acquaintances of mine who, by virtue of being related to PDVSA's higher management, have become "toll booths" for getting into the business of exploiting gas in our country.

People aren't stupid. Corruption is everywhere in Venezuela, and the fact that Chávez feels the need to address the issue means that it's becoming a big liability for the government.

The picture of the week

Katy says: Alek Boyd deserves some sort of award for this spontaneous shot of Manuel Rosales on the campaign trail. Have a good weekend everyone!

Bolivian court blocks Morales

Katy says: I don't typically comment on stuff from other countries, but this news item about Bolivia is tangentially related to Venezuela.

For those who can't read Spanish, Bolivia's Supreme Court has denied a request by the Morales government to grant "supra-constitutional", "originarian" powers to Bolivia's Constitutional Assembly. In other words, the Court says that Bolivia's Assembly must work within the bounds of the current Constitution because "originarian" powers can only be given to an Assembly when "a State is being created", such as when Bolivia itself was created in the 1820s. It clearly said this was not the case right now.

This strikes me as a major blow to the Morales administration's attempts to establish a revolution in the mold of Hugo Chávez. Let's recall that the beginning of the process in Venezuela did not come about when Chavez was elected. The process really began when the Supreme Court at the time decided to grant the Constitutional Assembly all-encompassing powers, causing justices such as Cecilia Sosa to resign in disgust.

This decision paved the way for a Chávez-controlled Assembly to do away with all existing powers, including the recently-elected Congress, the Prosecutor General and the Supreme Court itself. As a result, we have had to put up with the unchallenged powers of the Ivan Rincons, Isaías Rodriguezes, Clodosbaldo Russians, Francisco Carrasqueros and other assorted yes-men.

The Bolivian Supreme Court seems to have learned something from our histoy.

PS.- Speaking of Chávez's yes-men, I was surprised to learn while I was in Caracas that Jorge Rodríguez's wife works in Miraflores. She is Chávez's chef. That's some bond the three of them have.

Final de la Marcha - Discurso de Manuel Rosales

Cocoplums and the State

Katy says: A trip to Venezuela is a homecoming. Something about waking up and seeing dilapidated American cars from the 70s and 80s roaming the streets stirs my memories, awakens my saudade. Whether it's the constant honking of horns, the sight of thousands of trees with their trunks half-painted in white, the smell of my mother's lilac bushes or eating traditional, homemade Maracaibo cocoplum jam, Venezuela is a feast for my senses. My country is a place where even in the middle of any city, you have to clean the iguana droppings from your car, the loud chirping of crickets keeps you up at night and the howling of guacharacas announces the break of day.

Venezuela is also a place where sidewalks are an afterthought, traffic lights are mere suggestions and everybody, everywhere is having car trouble. People in Caracas spend two, three, four hours in traffic every day and simply assume it as "the way things are," as if everyone living in large cities had to go through the same. The country's exhuberant nature would look a whole lot better if it didn't have to be viewed through steel bars.

The first airplane I flew in was also having mechanical problems, so the airline gave me 24 hours in Panama City to compensate. Panama City is pretty nice, with impressive skyscrapers and an attractive historic downtown that is slowly reviving. There's poverty there, but I got the feeling during my short stay that it was shrinking, and that conditions were getting better. There is a real sense in the country that tourism is the wave of the future, so they take special care in presenting a clean, safe city.

One of the things that impressed me was how we were able to drive next to the Presidential Palace, which as you can see from the picture was guarded by a few soldiers and nothing else. The turnover of the Canal and the planned expansion seemed to bring about an infectious optimism to the people I spoke to, regardless of their political leaning. I left hoping to find some of that in Venezuela.

Instead of finding hope, I landed in Venezuela finding that the aesthetic of our cities says one thing only: poverty. I had trouble trying to grasp why it is that Venezuela simply looks poorer than other places in Latin America in spite of having a similar culture, similar geographies and somewhat similar standards of living. I concluded that rentism is to blame for much of the bad aesthetics of our cities, for the feeling of chaos that suggests something is not right.

For example, driving through Venezuela you can sense the neglect in public works. Sidewalks are sort of there, sort of not. Streets are full of potholes, public works take forever to complete and the general decorum of the cities is shoddy. Graffitti is common, there is garbage everywhere and the streets belong to gangs. La Chinita Airport in Maracaibo, for example, was renewed a few years ago, yet you can still see significant cracks on walls surrounding air-conditioning vents and in ceilings. Hallways are small and crowded, and even though it presents itself as a modern airport, the guy at customs doesn't even have a computer. It would seem as though anything having to do with the State is done in bad taste, without proper care, with no concern for doing things the best possible way.

One of the reasons for this is rentism. Theorists say two of the reasons States need to exist are: to provide public goods and to intervene in markets or situations where there are negative externalities. But in Venezuela the State - the Petrostate, that is - is there to dole out the wealth, to support a rentist society.

A public good is a good that continues to satisfy other people's needs when consumed. For example, when I walk on a sidewalk, the sidewalk stays there for the next person to use. Defense and justice are public goods. These are goods that are typically not provided privately, so they are one of the reasons States exist.

Externalities occur when one person's consumption causes another person's disutility. For instance, smokers cause negative externalities because their habit not only causes harm to themselves but also take up valuable health-care resources from society, be it in the form of second-hand smoke cancer or in the form of enormous health care costs the State has to cover. The control of externalities is another reason to have a State, so that somebody can tax the smoker and provide the incentives for him or her not to smoke anymore or, if they do, to have enough funds to be able to pay the extra health-care costs their smoking causes to society.

In Venezuela, it seems that the provision of public goods and dealing with externalities are simply not a priority for the State. When crime rates soar, traffic jams sink entire cities into gridlock and lakes suffer from horrendous pollution, one would expect a normal government to care, to do something about it. But neither the current nor previous Venezuelan governments cared about this stuff. All they care about is rents - how to hand them out, how to get favors from people who recieve them, how to produce more of them. The government's entire structure is built around this notion, one of the consequences being that there is total chaos on the streets. Other places in Latin America don't seem to suffer from this.

Some entrepeneurs are beginning to get around this idea. For example, I found out about CruzSalud, a private company that sells insurance to people in the barrios. For a monthly fee of 18 to 40 thousand bolívars, customers in barrios have access to house calls, emergency care, as well as complete health-care kits should they have to go to a public hospital which includes syringes, cotton and scalpels.

A normal State would do its best to have functioning hospitals, since proper health care provides positive externalities for society as a whole. But when the State's attention is turned to creating and distributing rents, some privates see opportunities. It's too bad the CruzSalud can't figure out a way to solve Caracas's traffic problems.

Other entrepeneurs take advantage. One of the most shocking things I learned was that street vendors in highway traffic jams are now selling ice-cold beer to drivers. I confronted a friend who happens to be the President of an entrepeneurial association, asking him whether beer manufacturers didn't feel the need to control the illegal sale of their product. He simply shrugged, telling me it was the role of the State to control that and the company could do nothing about it.

Part of that may be true, but the whole argument goes against modern business ethics. Large private beer companies usually control the shelf where their product is placed on, in every supermarket they sell to. They even control things like the temperature of the refrigerators that hold their products. Surely, I told him, they can control the five or six guys selling beer in the most popular traffic jams. Selling beer in highways causes enormous negative externalities, but neither the State nor the company seem to care, since both are focusing their efforts on their rents.

So think about it the next time you walk around the streets in Venezuela and see people race by at double the speed limit or you trip on a poorly constructed sidewalk. In countries with similar income levels as Venezuela, public goods are not so poorly provided, externalities are taxed. And while you're at it, appreciate the good things around you, like the cocoplums. Luckily there are some things the State hasn't been able to screw up yet.

Your tax bolívars at work

Katy says: I'm back from my trip and I've updated the other blog with my own pictures of the use of government funds in the campaign. I'll be posting some more this week on my impressions of Venezuela, but I leave you with the pièce de résistance, which hangs from the former building of PDVSA Chuao. This pic manages to offend on four levels because:

1. It's funded with taxpayer money;
   
2. It's hanging at the UNEFA, which I believe is a military building;
   
3. It portrays part of Guyana as belonging to Venezuela, something that is still being disputed and something the military should be more careful about; and
   
4. It's a political ad featuring a small child which may or may not be legal, but is certainly disgusting.

Selling Mi Negra

You can think whatever you like about Mi Negra, but electorally what's relevant is not so much the proposal itself but how it's communicated to the voters. Rosales starts with one hand tied behind his back on this one: CNE regulations allow only 2 minutes of paid advertising per TV-station per day: just four ads. (But, of course, that doesn't apply to cadenas.)

So Rosales has to make the most of his very limited paid TV time. How's he doing on this? Have a look at these two TV spots:

---

So, whaddayathink?

Jagshemash, dear legislators...

This one's crazy enough you could pass it off for a Borat skit,

"In US and A, first you go to university and then you become congressman. But in Kazakhstan, first you go to parliament, and then to university!"

Turns out that the Chavez government, shocked by the ignorance of the people they nominated to the National Assembly, has given the nation's legislators marching orders to go back to school. In this case, it'll be the Armed Forces Experimental University (UNEFA) that will in charge of indoctri...erm, teaching the new parliamentarians such cutting edge topics as Marxist Analysis.

Pedro Carreño, we're helpfully told, will go study Law, while Cilia Flores has set her sights on a doctorate.

Now, the questions this poses - to say nothing of the comedic possibilities - are almost endless. Precisely how ignorant do you have to be before Francisco Ameliach thinks, "christ, this guy needs some schooling!"? What criteria did chavismo use to pick its Assembly candidates? If as Chavez keeps saying, Socialism for the XXI Century is nothing to do with old style Marxist socialism, why do A.N. members need instruction in, erm, Marxism? And what exactly happens if an Assembly Member flunks his Marxism course? Do they get to repeat, or is their mandate immediately revoked?

Horrified snickering aside, the serious subtext to this latest bit of revolutionary dadaism is the Nth low point of parliamentary oversight in the Chavez era. The history of the world's Marxist legislatures is not exactly known for the muscular exercise of their watchdog duties, to say nothing of proper debate over legislation. With no exceptions I can think of, Marxist legislatures limit themselves to rubber-stamping executive dictats and convening once a year to shower the leader with applause. Petty bourgeois concerns over the separation of powers and such and such are openly scoffed at.

And so Article 187, Paragraph 3 of the best constitution in the world (The assembly shall exercise oversight functions over the government and the Public Administration...) joins the long list of openly mocked constitutional promises.

Certainly, this has pretty much been the situation in Venezuela for years already. It's just that now National Assembly members will have the diplomas to prove it.

Baffling Chavista Imbecility du Jour

El Universal sez:

The Venezuelan Central Bank, the National Institute of Statistics and various executive branch agencies are developing new mechanisms to measure the impact of the government's social programs.

Referring to the effects of Mision Mercal on inflation, Minister for Nutrition Erika Farías, said "the current indices and methods are neither ours nor caribbean. They are imported from elsewhere." On that basis, and following the head of state's innitiative, "we have to invent the indices to measure the revolution." She added that this is a very complicated matter, and they will have to take into account variables such as "mathematics and love."

The Antidote to Petropopulism

Here's a question I've been mulling: is Mi Negra, Manuel Rosales' plan to hand out a portion of Venezuela's oil rents directly to poor families via a debit card, a populist proposal?

That, certainly, is how Vicepresident José Vicente Rangel, feigning unawareness of the massive glass palace chavismo inhabits on this topic, described it: "pure populism." Is that so?

Petropopulism: as Venezuelan as papelón con limón
In Venezuelan political economy, populism has a specific meaning. It describes the quid pro quo whereby politicians dole out oil rents selectively to their supporters in return for, well, political support. This is what I've called the Petrostate Trick: "turning oil money into political power - or, more precisely, turning control of the state’s oil money into control of the state - in a self-perpetuating cycle."

That chavismo's power is based largely on this sort of petropopulist arrangement seems really, really obvious to me. But that's nothing new: every Venezuelan government since at least the Trienio (1945-1948) has sustained its support through some twist on the petrostate trick. Medina and Pérez Jiménez had the Banco Obrero, CAP had Corpomercadeo and Chávez has Mercal. The cronies have changed over the years; the underlying mechanism hasn't.

The system works by distributing oil rents selectively, channeling the money primarily to your own political supporters. In this way, you set up an incentive structure that helps perpetuate the party in power, rewarding support for the official line and punishing dissent.

Mi Negra's sotto voce radicalism
By this reckoning, Mi Negra is not a populist proposal. Just the opposite: as billed, it constitutes a radical challenge to the deeply entrenched petropopulist mindset.

If oil rents are distributed following objective rather than political criteria, the incentive structure that underlies the petrostate model crumbles. By delinking recipients' political views from their claim on oil rents, a properly implemented Mi Negra would represent the start of a truly revolutionary change in Venezuela's political economy and political culture.

Under a scheme like Mi Negra, people would stake their claims on the nation's oil rents as citizens, not as political clients. And, all the prickly implementation issues aside, this is its most appealing feature. It would end the indignity too many poor Venezuelans now suffer of having to pimp out their political beliefs for a Mision check. It would end the implicit threat that now hangs over too many transactional chavistas that to Think Different could mean risking your livelihood.

For all of Chavez's revolutionary rhetoric, the fact is that delinking political support from oil rent distribution would constitute a far more radical break with the country's political traditions than anything his government has done in eight years.

Chavez and his seven friends

Katy says: This has been a hectic week for me here in Caracas, and I will be sharing my impressions with you next week. But this little news item made me want to give you a preview. It is about the Portuguese government's displeasure with the use of its Prime Minister's picture in Chavez's presidential campaign.

Other foreign ministries should take notice of this other sign, since it greets you while driving up from the airport into Caracas. I wonder what the governments of Uruguay, Paraguay or Chile think of their presidents' image being used in signs for Chavez's election paid for with taxpayer money.

PS.- The sign is similar to the one with the Portuguese Prime Minister, and it reads "Breaking the blockade - Venezuela deserves respect!" It's anyone's guess which blockade he is referring to.

"Though President Chavez maintains in excess of 50 percent support, only 16 percent of Venezuelans agree with his confrontational style with the US"

In this excellent introduction to the politics of Chavez's US-bashing, Vinod Sreeharsha skillfully brings gringo readers up to date...

A taste:

While many Americans may have heard President Chavez's extreme rhetoric for the first time last week, William Brownsfield, the U.S. Ambassador to Venezuela, carries a list with him of all the accusations President Chavez has leveled at the United States. The tally exceeds 30, including blame for deadly floods, a local bus driver strike that never occurred and the bombing of a regional Electoral Committee office.

One often-repeated claim of Chavez's is that the United States is about to invade Venezuela. Following the 2005 U.N. General Assembly session, President Chavez, while interviewed on "Nightline," cited as evidence documents referring to an Operation Balboa. But Balboa turned out to be a war-game exercise run by Spain. The original documents were not even in English.

Venezuelan Frieda Lopez, when asked if she supports her president, says, "For now, but my problem is economic." Assessing the threat of a U.S. invasion, she says that, "It is not credible."

If economic relations with the United States were to rupture, President Chavez's supporters would be among the most directly impacted. Many of their social programs are funded directly by oil revenue, and the United States still accounts for 50 percent of Venezuela's oil exports, according to Veneconomia, a Venezuelan economic consultancy.

And Che Guevara T-shirts notwithstanding, Chavez supporters depend on U.S. products as commerce between the two countries has skyrocketed in recent years.

Eduardo Garcia lives in Petare, one of Caracas's largest barrios. When he looks around his neighborhood, Garcia says, he sees many Motorola cell phones and GE televisions. Garcia says his Chavista neighbors, like all good Venezuelans, "like to buy things, especially imported products."

Garcia is positive about the Chavez government. "I like the change it is generating," he says. When asked if he fears a U.S. military invasion, he laughs. "No, you really think the U.S. will invade Venezuela?"

Better yet, read the whole thing...

Chavismo as Slapstick

In this New Republic piece, Sacha Feinman has a look at the zanier side of boliparanoia. Great reportage. Great fun.

LA GUAIRA DIARIST
Bananas

"It isn't a secret as to who might come. Venezuela is oil-rich, and the imperialist countries have kept an eye on our natural resources for some time now," explained Captain Jose Nuñez of the Bolivarian Naval Police.

It was eight o'clock on a Wednesday morning in June, and I was seated, sweaty and barely awake, along with a group of 20 other journalists at a naval base in La Guaira, Venezuela. Packed into a sparsely furnished conference room, we listened to the captain explain why the government of President Hugo Chávez had decided to invite the press to a week's worth of war games. The military wanted the world to know that Venezuela was ready to greet the "imperialists" should they decide to stop by for a visit.

This day's demonstration had been billed as the largest and most action-packed of those scheduled. A mock invasion was set to take place on the beach, with the government using tanks and companies of "elite amphibious fighters." "Seven hundred and twenty-five professional naval combatants and approximately 2,200 civilians will be involved in the day's activities, and we will show how we have integrated the people with the military," the captain stated.

To "get it" you really have to read the whole thing...

Focus, damn it, focus!

Sorry to carp, but seeing this story about Rosales's campaign on Globovision's website made me despair all over again.

The Globo journo had to write up five - count them, FIVE - different themes in a five paragraph piece to cover what Rosales had said. So what's a poor voter to make of it? Is this campaign about how much Rosales loves Jesus? Or is it about maintaining the misiones? or opposing the fingerpring scanners? Or about public employees' pay? or is it about poll numbers?

The problem is that Rosales doesn't have an elevator speech - he has six or seven of them, which he mixes and matches in a not-very-coherent way. The guy needs to settle on ONE elevator speech, and he needs to be much, much more focused on it as he campaigns.

Because the torrent of different themes, with no connecting thread running through them, just dillutes his message. It stops him from imposing his vision of what this campaign is about. And it wastes the very narrow window of opportunity he has to win over people outside his already committed base.

Message discipline is as much about what you deliberately don't say - to avoid drawing attention away from your elevator speech - as it is about the elevator speech itself. No doubt many voters will find it heartwarming that he intends to govern under divine guidance, but that is not in his elevator speech so he should not be talking about it.

Staying on message when fielding questions
Granted, Rosales was fielding questions at an impromptu press huddle. Still, if he can't wrestle control of the agenda when talking to stenographing journos, what chance does he have against Chávez? A key part of message discipline is learning to answer any question anyone throws at you in a way that brings the discussion back to your elevator speech.

Q: Do you think Bush is the devil?
A: I think Chavez said that to distract our attention. After all, he promised to distribute oil rents to everyone's benefit, but he didn't follow through. Too much oil money is going to other countries and to corrupt officials, and common people only get their hands on it if they wear a red t-shirt...

Q: What about collective bargaining for public employees' pay?
A: The public employees have been subjected to the same political exclusions everyone else has. In my presidency, we will make sure that oil money is distributed fairly and cleanly, with no exclusions.

Q: What about the fingerprint scanners?
A: The government still thinks it can intimidate people into voting the way they want, because no one wants to risk their mision money. They're holding the people's oil money hostage, and that's wrong. Venezuelans are tired of this kind of exclusion, they're tired of having to put on a red t-shirt just to make ends meet. With Mi Negra everyone will get an equal share of the pie: chavistas, non chavistas, and everyone in between.

Q: Will you keep the misiones?
A: Of course we will, but they will be better. Everybody knows that too much Mision money is being stolen by corrupt officials, or funding hospitals and housing in other countries. In my presidency, we will make sure that doesn't happen.

Q: How about the polls?
A: The polls show that every day, more people agree that Chavez did not keep his promise to spend our oil money for every Venezuelan's benefit...etc.

This is a basic political skill, folks, almost a stereotype. A candidate should never answer the question he's asked; he must always answer the question he wanted to be asked.

Looking at it from Pepe Apolítico's standpoint...
Why is this important? Because the vast majority of people - and especially of NiNis - spend far less time thinking about politics than you and me.

The people Rosales needs to win over do not sit down to read the newspaper, much less a political website. When the news comes on the radio, they instinctively reach for the dial to scan for music.

They do not seek out political information, and they do not absorb it in big long chunks. They get it in little shards. A few seconds of news overheard on the radio. A glimpsed headline. A couple of soundbytes from the TV news report. That's your window of opportunity for reaching them. And you can't waste even a second of that, because CNE has limited paid ads on TV to just 4 per day!

Unless you focus on a single storyline, the information such voters get becomes totally muddled.

In today's little shard, Pepe Apolítico hears that guy from Zulia talking about how much he loves Jesus. The day before, he heard him going on about some voting machines. Before that, something about some black girl in his family - didn't understand what that was about. Maybe tomorrow he talks about collective bargaining for public employees - but hell, he's a buhonero, collective bargaining has exactly no meaning for him.

Messages conveyed in this way do not help to build up a narrative, a coherent storyline that answers, in Pepe Apolítico's mind, the question of what this campaign is about.

Only if the message is focused can Pepe Apolítico really take on board the storyline Rosales wants to establish as THE thing that's at stake in this election. And if Rosales can't seize control of the agenda, it'll be very hard for him to win.

Bush and what army?

This NYTimes piece on the sorry state of the US Army's Third Infantry Division is as good a place to start as any if you're trying to grasp what a swindle Chávez's the-gringos-are-coming scare tactics really are:

The enormous strains on equipment and personnel, because of longer-than-expected deployments, have left active Army units with little combat power in reserve.

Other than the 17 brigades in Iraq and Afghanistan, only two or three combat brigades in the entire Army — perhaps 7,000 to 10,000 troops — are fully trained and sufficiently equipped to respond quickly to crises, said a senior Army general.

Most other units of the active-duty Army, which is growing to 42 brigades, are resting or being refitted at their home bases. But even that cycle, which is supposed to take two years, is being compressed to a year or less because of the need to prepare units quickly to return to Iraq.

The groovy-rebel-lefty ideology chavismo has built treats US military power as essentially inexhaustable - but it only takes a marginally competent reporter to chronicle how silly that view is. So on top of the fact that if Chávez really wants to get invaded that bad he has to wait in line behind bigger threats to US security like Iran, North Korea and Syria, there's the reality that the US military doesn't have the resources to sustain another large-scale offensive right now. Poor Chávez, he'd be so disappointed to hear it...

Role reversal

Electioneering in the television age is really a matter of fixing a series of symbolic associations in voters' minds. Candidates do this by composing a very simple story, a kind of "elevator pitch," designed to answer the question "what is this election about?" The trick is to answer that question using a very simple story that resonates with voters more than your opponent's little story does.

For the Rosales camp, this election is about the best way to redistribute oil rents. His very-simple-narrative goes something like this:

Chávez promised to distribute oil rents to everyone's benefit, but he didn't follow through. Too much oil money is going to other countries and to corrupt officials, and common people only get their hands on it if they sign up for the Chávez cult of personality. Vote for me because I have a plan (Mi Negra) to put the nation's oil money in your pockets in a fair and transparent way, with no political exclusions.

Chávez's elevator speech, on the other hand, goes something like:

I am good and the United States is evil. People who oppose me are U.S. stooges, so voting against me is an anti-patriotic, nearly treasonous act. A vote for Chavez is a vote for multipolarity. Vote for me so, together, we can defeat the US's hegemonic threat to world peace and stability.

Practically every newspaper headline Chávez has generated this year plays on some variation on this theme. The guy seems to think about very little else these days. Foreign Minister Nicolás Maduro's little catch-and-release routine yesterday at JFK, and the diplomatic spat it caused, reinforces once again Chávez's choice of strategic positioning for this election.

Frankly, I'm staggered that Chávez is sticking by this theme. I don't have the research to prove it, but it seems really, really obvious to me that a discourse that's so abstract, so detached from people's day-to-day concerns, so obviously of interest to ideological partisans only, can't possibly get many Venezuelans' blood pumping.

So compared to the situation leading up to the Recall Referendum in August 2004, the roles are almost exactly reversed.

Back then we had an opposition that kept droning on about abstract categories of very limited relevance to poor people's everyday concerns (i.e. "freedom," "tolerance," "checks and balances," "voting conditions," etc.) and a government focused narrowly on the here-and-now of what poor people need (i.e. money, distributed through misiones.)

In the three months leading up to the recall vote, the polls turned around dramatically, as people abandoned an opposition whose discourse just didn't resonate with their concerns in favor of a government whose actions did.

That was then. Today, it's the government that's struck off on some weird, abstract tangent, talking about things that just don't put an arepa on the table. And it's the opposition that has rediscovered the theme that first propelled Chavez into power all those years ago: oil rents, and how to share them out.

Can Rosales pull off some unlikely come-from-behind win? Well, Chávez still has a very comfortable lead, and Rosales has serious shortcomings as a candidate. But there's no question that Chávez is trending down, and Rosales up. If Chávez doesn't snap out of it, if he doesn't realize that his strategic positioning this time around is way off track, anything could happen.

Mi Negra è mobile

Katy says: One of the main quibbles I have with the “Mi Negra” scheme that Manuel Rosales is proposing (see Quico’s interesting posts on the subject here and here ) has to do with a very un-sexy topic: volatility.

Volatility is just a fancy term for the tendency of Latin American economies to go through repeated boom and bust cycles, with GDP tracking cyclical raw material prices. Volatile economies have volatile inflation rates, and more common currency and banking crises. If all this sounds like the story of your family’s checking account, that’s because Venezuela is an extremely volatile economy.

The problem is that, with Mi Negra, the shocks that originate in international oil markets would be democratised - passed from the trading floors of London and New York straight through to Venezuela's poor households. Is this really a good idea?

A bit of economics
This graph is from a working paper by Anoop Singh of the IMF. On the top, you see average GDP growth by region.


As you can see, Latin America lags other regions in terms of GDP growth. The bottom part shows the standard deviation of growth, in other words, volatility. Not only is Latin America the most volatile of the four regions compared, but also the periods where volatility has been the highest coincide with periods where growth has been the lowest.

The intuition linking high volatility to low growth is straightforward. More volatile economies face more uncertainty, and when uncertainty is high, so is risk. High risk makes financing more difficult and expensive to obtain. And when financing becomes more expensive and scarce, investment lags. Which provides the link to growth: economies that don’t invest enough - on roads and schools, say, or to build factories or bring in new technology - see growth stall.

Much of the volatility in Latin America comes from the ups and downs in government spending. Venezuela is a prime example: when oil prices are high, spending usually soars, and when they fall, down goes public spending with them.

It doesn't have to be that way. Governments have the financial tools at their disposal to help make their economies less volatile. Among them are institutionalised savings instruments like the long-forgotten FIEM. Governments also have access to foreign credit to help make it through low commodity price periods. The sheer financial muscle that governments have can help lessen the risks associated with resource-dependent economies.

But only if they pursue sound, counter-cyclical fiscal policies - which, more often than not, they don't.

Case in point: the current oil boom. With oil prices many times higher than what has been budgeted, the Chavez government is running a deficit this year, mostly because there's an election coming. One shudders to think what would happen if oil prices take a big tumble.

Color de hormiga
One would like to think Rosales has a better solution on offer. But Mi Negra not only doesn't address the problem of volatility, it could make things worse. By transferring a fixed amount of oil revenues directly to poor families, it buffers the government from a portion of oil-cycle volatility, and shifts the risk into the living rooms of poor Venezuelans.

Think about it: when oil prices are high, Venezuelan families would earn, say, 600,000 bolívars per month. If oil prices were to collapse, those same families could see their “Mi Negra” incomes drop to, say, 100,000 bolívars a month: an 83% drop in their income.

Try explaining that to Doña Juanita and Juan Bimba.

Unlike governments, poor families don't have access to the financial instruments or the know-how you need to deal with the risk of a volatile oil market. By bringing oil market volatility into Venezuelan barrio-dwellers' pocketbooks, Mi Negra could severely undermine its own political viability.

So far, nothing Rosales has said suggests they are even thinking about this problem. But they better start, if they want Mi Negra to be politically and financially sustainable in the medium term.

It's a difficult, but not impossible, task. For example, a fixed portion of Mi Negra incomes could be used to fund a real Stabilization Fund, one linked to medium-term oil price trends and designed to force families to save some of their Mi Negra income for bad times or for retirement. That, however, would mean less money up front for poor families, sort of like a big deduction in your paycheck. And we all kind of resent it when our paychecks come with huge deductions, don’t we?

Mi Negra is, in principle, a fine idea, and if implemented correctly it could truly revolutionize Venezuelan society and bring millions out of poverty. But it seems that by proposing an amount up front, they are putting the cart before the horse and setting themselves up for confusion and anger when, later on, they have to explain that the amounts will not be what they'd first trumpeted.

For sure, it's still early in the campaign, and I'm sure the Rosales camp will publish more details on Mi Negra in the coming weeks. As they draft those, they should realize that, if Mi Negra doesn't incorporate some mechanism to mitigate the oil market's inherent volatility, it could do more harm than good.

Selling guns to FARC? Moi?

A blast from the past: Vladimiro Montesinos, the one-time power-behind-the-Fujimori-throne in Perú, has been convicted to 20 years in jail for secretly selling 10,000 guns to Colombia's main communist guerrilla, FARC.

Montesinos, you may recall, spent the better part of a year hiding out in Venezuela directly after the Fujimori regime collapsed. With very evident high-level support, Montesinos was personally guarded by two DISIP (intelligence police) agents - Rolando and Otoniel Guevara, now in jail for the murder of Danilo Anderson. Their involvement in the Montesinos cover-up was flushed out by opposition journalist Patricia Poleo, who was later - bizarrely - accused of conspiring with them to murder Anderson. (If you find all this impossibly confusing, you are in, erm, ample company.)

The point? Put him in hands of independent investigators, and JVR's secret buddy - and, one can't help but suspect, role model - it turns out he was arming FARC. (Plus, remember, Montesinos was nominally right-wing.) So, when we fret that Venezuela's Kalashnikov purchases are going to end up in narcoguerrilla hands, are we paranoid, or merely realistic?

Would you hand over power to Satan?

Five years ago, when I started writing about Chávez's strategy to "demonize" his political enemies, I never imagined the guy would get literal on my ass.

But today, having seen Chávez take his remarkable ad hominem rant calling Bush, literally, "the devil", to the most public forum on the planet, we can only revisit longstanding questions about the Chavez's democratic bona fides.

Dissent is the work of the devil
I've always interpreted Chavez's highly personal attacks on his opponents (whether puntofijistas or gringo imperialists) as part of a broader strategy aimed at delegitimating dissent. His discourse implicitly rejects dissenter's right to vie for power.

Within Chavez's political imagination, the problem with those who disagree with him is not that they are wrong but that they are evil. This is why he has always replied to opposition arguments not with reasoned rebuttals but with personal attacks.

Because, when it comes down to it, I can have a debate with someone I disagree with. I can share the nation's public institutions with someone who is merely wrong. But I cannot allow pure evil a role in public life. I have a duty to stop it, by any means at my disposal.

Satan's minion
Now, Chavez has been very explicit in this election cycle. In his fantasy ideology, Manuel Rosales is just George W. Bush's stooge. It's not surprising that Chavez takes this line, since for years his standard operating procedure has been to blame any and every problem he, Venezuela, or the world has to the US, and to dismiss all who disagree with him as US stooges.

The new twist is that, having equated Bush with the devil, Chavez is now arguing that Rosales is, in effect, an agent of Satan. A purveyor of pure evil. Now, lets take this line of argument seriously for a moment, and work through its implications.

If you truly see the world in those terms, don't you have a duty to make absolutely sure that the devil does not get into power? Aren't you duty-bound to do whatever it takes to prevent that? Doesn't election fraud become a patriotic obligation if the alternative is to hand your nation's reins over to beelzebub?

Justified skepticism
Unless we dismiss Chavez's rhetoric as mere paja, we have to believe that Chavez sees stealing an election - if need be - as a kind of moral imperative. A dirty job, perhaps a sordid one, but certainly a much lesser evil than the alternative.

In the end, it's Chavez's caricaturish manicheanism that feeds opposition skepticism about whether the guy would ever hand over power if he lost an election. Such skepticism is neither paranoid nor unreasonable: it flows directly from the content of Chavez's discourse. It's the only reasonable conclusion you can come to if you take the guy seriously.

Because Chavez's radical repudiation of the legitimacy of disagreeing with him - shown, again, in JVR's tacit approval of violence against Rosales campaign events - is fundamentally incompatible with democratic alternation.

I can alternate in power with my opponents only if I see political differences as normal, as a result of human beings' natural tendency to have different views on any given subject. But I cannot alternate in power if I think that political differences are the result of the fact that I am good and my opponents are Satan spawn.

Which is why even those of us who are convinced that a debate about CNE's rectitude is futile can't help but think twice about it when we hear Chavez talk this way.

¿Quién es más golpista?

Recently, we've found that chavistas are shocked, shocked that somebody who has actually participated in a coup attempt might think he's fit to be president. Will wonders never cease?

Seriously, though, how do Rosales and Chávez stack up in the old coup-o-meter?

Rosales	Chávez
Signed a document to certify he attended a ceremony that went on to endorse a coup against an elected government.	Spent over 10 years leading the planning, organization and promotion of a coup against an elected government.
Sat in an audience lending tacit support to a plan to shut down all of the nation's democratic institutions.	Drafted a plan to shut down all of the nation's democratic institutions.
Apologized for his participation in a coup attempt.	Repeatedly celebrates and brags about his participation in a coup attempt.
Was a bit player in a coup where the army took power without firing a shot.	Organized and led a guns-a-blazin' putsch that left dozens dead.

10 million votes ... $600 million

Katy says: I thought this article from the Jamestown Foundation's Eurasia Group on the arms deals between Chávez and Russia was interesting. According to the author, the planes Chávez is buying are second-hand, overpriced and pretty useless; useless, that is, unless you're trying to buy your way into the UN Security Council and need cash to be re-elected in your own country at the same time.

What astounded me was the figure for the alleged kickbacks in this deal: $600 million is a lot of change.

Hinterlaces: Chávez 48% - Rosales 30%

Hinterlaces, the polling firm run by Caracas political oracle Oscar Schemel, has just released its beginning of September poll, showing Chávez falling below 50% for the first time, Rosales at 30%, and a large chunk of undecideds (20%.)

As always, given Schemel's methodology, Hinterlaces identifies a huge chunk of the electorate as "Ni Nis" - politically unalligned people who tend to have mixed feelings about Chávez but are highly critical of the opposition political class. Schemel places the group at a startling 46% of the electorate just 3 months before the vote.

How does Rosales win over this key group? By engineering his own
Sister Souljah moment, to symbolically distance himself from the oppo old guard. Thing is, that's hard to do when you've appointed Sister Souljah to your campaign command...

Can Mi Negra lead to sustained economic growth?

Yesterday, I dealt with some of the Social Policy questions raised by Rosales' proposal to hand out a debit card to millions of poor families in order to distribute oil rents. Today, I want to deal with some of the development economics of the proposal.

First off, lets be honest here: Mi Negra is basically about electoral politics, not about development strategy. Given the pressures of the moment, that's understandable. But the question still bears asking: Can Mi Negra help foster and sustain economic growth?

To answer that, it's important to get back to basics. Probably the most fundamental choice all economic actors make, day in and day out, is whether to consume now or to consume later. To spend or to save? That is the question...

There is good empirical evidence showing that countries that save more and consume less grow more quickly over the long term. As I've argued before, this is really a tautology: just a fancy way of saying that, on average, countries that choose to consume less now in order to consume more in the future actually do consume more in the future.

So, from a long term growth perspective, the most important question facing Mi Negra is what it will do to Venezuela's savings and investment rates. If Mi Negra leads to more saving and more investment, it will be a net asset to Venezuela's long term growth. If the bulk of the money handed out is consumed right away, it will not help the country grow faster in the long term.

Now, conventional wisdom has it that poor people in Venezuela can't afford to save: they're too economically pressed to favor a little more consumption later over a little less consumption now. Economists would say their "marginal propensity to consume" is very high. Which is neither surprising nor irrational. If I am hungry now, of course I would rather eat 1 arepa today than 1.06 arepas in a year's time.

But the story is more complicated than that. Part of the appeal of Mi Negra is that it would bring a huge mass of new customers into Venezuela's financial system. If you're going to issue people a debit card, you will also have to issue them bank accounts to deposit the money they are going to debit. Mi Negra would vastly expand the client base of Venezuela's banking system. Given that, if clients do nothing, the default option is for money to just accumulate in their accounts, their marginal propensity to consume may be lower under Mi Negra than is usually realized.

This is important because a healthy financial system is a key mechanism linking higher savings rates to faster growth. Economists have good evidence to show that financial deepening leads to faster growth.

But as some recent research indicates, Venezuela's financial sector has shrunk along with the rest of the economy in the last 30 years. Today, it's one of the smallest and weakest in the world relative to the size of the country's economy. UCLA researcher Matías Braun notes that, in Venezuela, "bank credit to the private sector amounts to just around 9% of GDP, ranking the country in position 132 out of the 157 countries where the figure is available for the 2000s." If Mi Negra helps to raise that number, it would brighten Venezuela's long-term growth prospects considerably.

So I think the picture is inconclusive. While handing out money to poor people may seem like an odd way of raising saving and investment rates, handing out bank accounts to poor people is an excellent way of doing so. Certainly, it's a far more promising option than the chavista method, which relies on handing out cash to political supporters without involving the financial sector at all.

Some people surrounding Rosales are already busy trying to include some sort of mandatory savings element into "Mi Negra." From a development strategy standpoint, this is all well and good because, hell, anything that reduces people's marginal propensity to consume is all well and good from a long term growth perspective. But, of course, any such proposal dilutes Mi Negra's vote-getting appeal: it's much harder to pander for votes with some abstract, hard-to-understand pledge that mandatory pension contributions will be made on your behalf than with promises of free money now.