Jul
6
2010
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Venezuela is an ‘Animal Farm’ thanks to Chavez

Animal Farm in Venezuela (Photo Credits: Google Images)This blog was originally posted by the Huffington Post.

Last May, a private farm amidst Venezuela’s rolling green countryside was expropriated by the country’s president, Hugo Chavez. As Chavez later described, the farm’s owner “is out there crying and saying he is going to get his land back. Well, he’ll have to topple Chavez to get this back, because that farm belongs to the revolution now.”

The farm’s owner is Diego Arria. While Chavez has labeled Arria an “unburied corpse” of Venezuela’s past, Arria has hardly been a lifeless corpse.

Seventy-year-old Arria has served as Assistant Secretary General of the United Nations, Venezuelan ambassador to the United Nations, and as a personal advisor to former UN Secretary General Kofi Annan.

Arria captured the world’s attention when, as president of the U.N. Security Council, he condemned the failure of the international community to act against Serbian President Slobodan Milosevic for his brutal treatment of Bosnian Muslims. He was a star witness during the prosecution of Milosevic for the genocide at Srebrenica. Prior to his UN tenure, Arria had been a leading political figure in Venezuela, serving as governor of the capital Caracas in the 1970s.

In 1988, Arria purchased the farm – named “La Carolina” in memory of his deceased daughter – for $300,000. The property was then in ruins. Arria renovated and restored the property, developing it into a farm complete with an organic coffee plantation and grass-fed cows producing 600 gallons of milk daily.

Under the pretext of confiscating “unused land,” Venezuela’s National Land Institute stormed onto the property on May 1 with a platoon of soldiers. The uniformed men raided the farmhouse at gunpoint. They took Arria’s clothing and even his horse-riding boots as trophies.

Thirty-eight families depended on La Carolina for their livelihoods. They were told to find employment elsewhere. The cows, which Chávez claimed on television were “starving,” were given away as gifts. One of them ended up on a barbeque spit, cooked for President Chavez himself. I contacted a former employee at La Carolina who told me that the farm’s horses were slaughtered and sold as “beef.” The seizure of Arria’s farm and the plundering of his property has nothing to do with Venezuelan law or “reclaiming unused land.” In fact, the Venezuelan government is the largest landowner in the country and most of its holdings lie unused.

I feel partially responsible for Arria’s current predicament. I extended an invitation to him in April to speak at the Oslo Freedom Forum, a human rights conference in Norway that this year included Lech Walesa, Rebiya Kadeer, Anwar Ibrahim, and Garry Kasparov.

It was Arria’s participation in this conference that compelled him to speak out against Chavez’s human rights violations. Arria had told media covering the event that Chavez would one day face international justice for his crimes against the Venezuelan people. The reaction of the Chavez government to Arria’s statements was swift and implacable.

This expropriation was punishment for Arria’s criticism of Chávez. Chavez even presented photos of the farm on Venezuelan state television. He gloated that “It looked like Falcon Crest” comparing Arria’s farm to the winery estate featured on the American television show from the 1980s and underlined the presence of a swimming pool was a sign of its “bourgeois” nature. This sort of comment seeks only to sow resentment in the minds of those who believe inequalities of wealth represent an injustice that requires correction through theft.

The epic irony is that Chávez’s own family started with little wealth when he became president in 1999. His father and brothers now own extensive landholdings in the Venezuelan state of Barinas. They have acquired so much ill-gotten wealth – and display it with so much ostentation and vulgarity – that various European media outlets have called the Chavez’s “Venezuela’s Royal Family.” A rarely reported story was the internal fallout among Chavez’s cronies, when Stanford Bank collapsed amidst fraud so did several billion dollars worth of funds ransacked from the Venezuelan treasury.

Despite the new wealth for the Chavez family and Venezuela’s governing clique, the country suffers from elevated amounts of “critical” poverty and is currently one of the most violent countries in the world. Venezuela’s economy is in ruins, but Chavez continues to fund various international controversial projects. He provides support for the FARC terrorist army in Colombia (which recently includes the public revelation that he has kept them well-stocked with Swedish missiles purchased by Venezuela). He was also recently exposed in Spain as having facilitated training for Basque ETA terrorists in FARC camps. His penchant for villains and rogues extends to alliances with Belarus, Iran, Libya, Syria, Zimbabwe, and especially Cuba. Chavez also continues to send billions of petrodollars in aid to prop up the governments of Bolivia, Cuba, Ecuador, and Nicaragua – all despite the desperate needs of many of Venezuela’s own citizens.

Since 2006, Venezuela has carried out more than 800 expropriations across industries and involving all sorts of property: farms, radio stations, television studios, factories, private residences, banks, butcher shops, sandwich shops, steel mills and, most probably in the near future, the main Venezuelan beer company. There is a clear intention to terrorize a population with the fear of being expropriated in case of dissent or criticism of the government. From a legal perspective, there is an intention to replace jurisprudence surrounding the concept of private property with the term “social property” meaning: it belongs to everyone but will be controlled by the state.

Despite facing the wrath of Chavez, Diego Arria will not give up. He spent the month of May visiting government officials and organizations across Europe, discussing the seizure of his farm and denouncing the Chavez government. Upon realizing the lethargy and ignorance in the international arena about the abuses committed by the Chavez government, Arria has become the most eloquent and tenacious spokesman for those affected by the expropriation abuse. In June he met with the Council of Europe, the International Labor Organization (ILO) in Geneva, the Spanish parliament, and even the International Criminal Court at the Hague. As a result of Arria’s efforts, Chavez ordered another one of Arria’s properties seized in mid-June: a 90 acre orange orchard. Once again the employees were kicked off the land. Undaunted, Arria’s one-man effort continues and this month he will be visiting Canada, México, Colombia, Chile and Brazil.

In order for world opinion to mobilize against Chavez, he must be revealed as the petty authoritarian and enemy of individual rights that he is. This is a far more accurate view than the heroic champion of the poor and enemy of capitalism and Yankee imperialism as his apologists (most recently Oliver Stone) have tried to disguise him. Venezuela has lived under 11 years of Chavez. He has declared that he will rule until 2030. What will become of Venezuela in the next twenty years?

Despite an attachment to his farm La Carolina, Arria told me that he is willing under one condition to give up his farm to Chavez. That is, “so he can retire there now – provided that he gives us Venezuelans our country and our peace back.”

 
Jul
6
2010
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editor
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Chávez “terrorist” was kidnapped in Guatelama

According to El Universal, the man that Chávez is accusing of a plot to kill him, was actually kidnapped in Guatemala before being transported to Caracas. Is this “terrorist plot” even real???

Additionally, the newspaper El Mundo is reporting the kidnapping of Francisco Chávez Abarca.

The wife of the Salvadoran citizen Francisco Chávez Abarca, who is currently arrested in Venezuela where he has been accused of “terrorism,” did not rule out that he was “abducted” in Guatemala by a group of Venezuelans and taken to the South American country.

“He was in Guatemala; in fact, he told me that his telephone card was running out of balance and that he would call me later. How is it possible that he appears overnight in Venezuela?” said his wife Karla Guadalupe Trigueros, a Salvadoran online newspaper reported on Monday.

According to the Venezuelan government, Francisco Chávez Abarca was a “close associate” to anti-Castro activist Luis Posada Carriles, convicted in Venezuela for the bombing of a Cuban airplane in 1976.

 
Jul
2
2010
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Chavez Crackdown on Brokerage Leaves Traders Jobless

This article was first published by Bloomberg Business Week.

Trader Jofmar Heredia was thrown out of work when Venezuelan President Hugo Chavez shut the unregulated currency market in May and seized about 40 brokerages, accusing them of setting artificial rates, capital flight and money laundering.

Heredia, 31, said she’s worried she may never find a job at a bank again because of Chavez’s crackdown.

“I’m unemployed and leaving my resume in banks but no one is calling,” said Heredia, who worked at Proinversion Sociedad de Corretaje CA in Caracas. “A lot of my friends in brokerages taken over by the government have been let go.”

The brokerage business is in danger of becoming obsolete in this socialist nation, said Noris Aguirre, president of clearing firm Caja Venezolana de Valores. Since November, Venezuela’s securities regulator has taken control of about 35 percent of the 112 trading firms and closed four after they were blamed for the 27 percent drop in the bolivar through May 18. That may leave up to 2,500 without jobs even as Chavez says his biggest economic priority is preserving employment.

Chavez, a 55-year-old former paratrooper who’s been in power for 11 years, said the country doesn’t need such companies and accuses them of exploiting loopholes to become rich. The government banned investment instruments known as mutuos in February — which are akin to repurchase agreements, or repos — and prohibited brokers from trading in a new currency market established last month. Securities firms use repos to borrow money to finance positions in bonds and other securities.

In a speech on May 23 to supporters, Chavez said his country should eliminate brokerages.

Chavez Takes Control

“We’re going to respond strongly against these thieves that are trying to wash their hands now,” Chavez said. “There’s no economic reason for the weakening of the bolivar. It’s a huge fraud against the republic.”

The government took control of the country’s largest brokerage, Econoinvest Casa de Bolsa, after raiding it on May 24, arresting four directors and ordering it to cease operations for a week pending an investigation. Of the 420 workers at the company, 126 have resigned, according to the nation’s regulator. The directors are being held at the national intelligence service in Caracas awaiting final charges against them for illegally trading foreign currency and association with delinquency.

Rene Buroz, the lawyer for the directors, declined to comment, as did an Econoinvest public relations official, who asked not to be identified in accordance with company policy.

No Opportunities

Nelson Venero, a 32 year-old accountant, lost his job at the end of May after working for five years in the brokerage industry. After securing a job at AVC Valores Sociedad de Corretaje and a pay raise with a dollar bonus in October, he said he was fired after the government seized the company in May.

“This limits operations so much for brokerages that I don’t see any opportunities for them,” Aguirre of Caja Venezolana de Valores, which helps manage bonds and equities owned by brokerage houses, said in an interview. “They’re allowed to buy and sell company shares, but all of the companies that traded on the stock market have now been nationalized.”

Chavez nationalized Cia Anonima Nacional Telefonos de Venezuela, the phone company known as Cantv, in 2007 to boost the state’s hold on the economy. The government has also taken over assets from Exxon Mobil Corp., ConocoPhillips, Ternium SA and Mexican cement maker Cemex SAB, which listed on the Caracas Stock Exchange.

Unregulated Market

The brokerage industry boomed between 2005 and 2010, growing 42 percent to more than 100 institutions, according to the securities regulator. Traders were hired to perform bond swaps as a means of obtaining dollars for companies that failed to receive government authorization to buy at the official exchange rate.

The bond trading set an implicit unregulated rate. That rate plunged to 8.2 per dollar on May 11, seven days before Chavez shut down that market.

The central bank re-opened the market on June 9, setting the maximum rate and limiting the amount of dollars for purchase. The average rate is now about 5.3 bolivars per dollar. In addition, there are two official exchange rates of 2.6 bolivars per dollar and 4.3 per dollar for imports.

“This was destined to happen,” said Roberto Gonzalez, 39, a former partner at a Caracas-based brokerage who left the firm last year. He declined to identify the company.

Tough Environment

Tomas Sanchez, president of the securities regulator known as CNV, said the number of brokerages will likely be cut to less than 20 and that most of the unemployed traders may be able to live off savings since they earned commissions in dollars.

“We know some workers will be affected by this situation but they enjoyed exorbitant benefits and have savings,” Sanchez said in an interview in Caracas on June 9. “Maybe the secretaries and couriers can be incorporated into the public banking system.”

Heredia said that she wasn’t paid in dollars and received a commission of about 10 percent of the value of bolivar transactions.

Raul Maestres, a consultant at Korn/Ferry International, an executive search firm, said their offices in Caracas have been inundated with resumes.

“It’s not the best moment to find work,” Maestres said.

Venezuela’s unemployment rate rose to 8.1 percent in May, from 7.7 percent a year earlier, as the economy slid into the first recession in seven years. Gross domestic product shrank 3.3 percent last year and will likely contract 2.5 percent this year, according to the median forecast in a Bloomberg survey.

Broker ‘Blackmail’

Brokers are “not going to blackmail us with the idea that this is going to hurt employment,” Ricardo Sanguino, the president of the congressional finance committee, said in an interview. “Many of them acted outside the law and created more problems than benefits.”

Venero, the unemployed accountant, said that he feels powerless to find work and that he may take a broker course in Panama, where Venezuelan banks have opened branches.

“I don’t think I’ll find work in the capital markets because they’ve been very hard hit,” he said in a phone interview. “A lot of friends are out of work.”