INCLUDED IN THIS ISSUE are two special reports: The US State
Department Venezuela 2012 Crime and Safety Report; and "The permanent crisis in Venezuela"
by Ambassador Jaime Daremblum who is a Hudson Institute Senior Fellow and
directs the Center for Latin American Studies."
Economics &
Finance
Venezuela is the only petro-state
with debt 50% more than GDP
Scarcity in Venezuela resembles
wartime situations
Government admits it is "very hard" to fight inflation
Government investigates U$D recipients
through Sitme
Commodities
Gasoline subsidy cost estimated at U$D 16 billion
PDVSA to invest U$D 25 billion in domestic oil production
Officials claim Amuay refinery will
be back to normal in April
Asdrúbal Chávez, vice-president of the Refining and
Commercialization Office of Venezuelan state-run oil company Pdvsa, and Jesús
Luongo, general manager at Paraguaná Refining Complex (CRP), say the Amuay
refinery in northwest Venezuela, will be at optimum operation level –the same
it had prior to the explosion in August 2012- by April, after completing repairs
in atmospheric distillation unit number five, which has been out of service
since the blast. Referring to Amuay's flexi-coke unit, Luongo said commissioning
is scheduled for March 15, but stressed that "it is very complicated" and may take between 7-10 days to
boost unit capacity to 64,000 bpd. (El Universal, 02-28-2013; http://www.eluniversal.com/economia/130228/venezuelas-amuay-refinery-back-to-normal-in-april)
International Trade
Weatherford sees U$D 60 million Q1
loss from Venezuela devaluation
Oilfield services company Weatherford International Ltd said on
Wednesday the devaluation of Venezuela's currency would cost it U$D 60 million
in the first quarter, for which it is already forecasting lower-than-expected
profits. The Venezuela loss for Weatherford was greater than the combined
impact on Baker Hughes Inc and Halliburton Co - bigger rivals with
less exposure to the country, which this month devalued the bolivar by 32%.
(Reuters, 02-27-2013; http://www.reuters.com/article/2013/02/27/weatherford-outlook-idUSL1N0BRDFV20130227)
Politics
Poll shows 56.7% believe Chavez will recover
DATANALISIS President Luis
Vicente León says the latest polls show most Venezuelans feel there is no power
vacuum despite the absence of President Chavez. He said 56.7% believe Chavez remains
ill but will recover; 14% say he will not recover, another 13% believe his
health is getting worse; 2.8% think he is dead, 1% believes he was never ill;
and 12.5% say they do not know or do not respond. 46% believe he is not currently
making decisions. More in Spanish: (El Universal, 03-01-2013; http://www.eluniversal.com/nacional-y-politica/130301/46-de-la-poblacion-cree-que-chavez-no-toma-las-decisiones)
Vice president says Chavez battling for health and life;
president out of sight
OAS's secretary general says "it is time to make decision" in
Venezuela, calling the judiciary a problem
"Get better,
but understand the country is also ailing”
Prosecutors bring influence peddling charges against
opponent of President Chavez
Government commission to investigate
“state terrorism” crimes in Venezuela between 1958 and 1998
The government has named a commission to investigate
“state terrorism” crimes it attributes to administrations that alternated in
power between 1958 and 1998. The group will be comprised of Attorney General
Luisa Ortega and other pro government officials. Maduro told people attending
the ceremony on the capital’s central square that the perpetrators of state
terrorism “never imagined that justice
would reach them.” (The Latin American Herald Tribune, 02-27-2013; http://www.laht.com/article.asp?ArticleId=696301&CategoryId=10717)
ALBA Foreign Ministers meet in
Caracas
The following brief is a synthesis of the news as
reported by a variety of media sources. As such, the views and opinions
expressed do not necessarily reflect those of Duarte Vivas & Asociados and
The Selinger Group.
SPECIAL REPORT - 1
Venezuela 2012 Crime and Safety Report
Overall Crime and Safety Situation
The U.S. Department of State
rates the criminal threat level for Caracas as CRITICAL. In 2010, Caracas
became the deadliest capital in the world with the highest murder rate in the
world, averaging one murder every hour. Much of Caracas’s crime and violence
can be attributed to mobile street gangs and organized crime groups. Caracas
continues to be notorious for the brazenness of high-profile, violent crimes
such as murder, robberies, and kidnappings. Armed assaults and robberies
continue to be a part of everyday life. Every Caracas neighborhood is
susceptible to crime. Reports of armed robberies occur regularly, day and
night, and include the generally affluent residential sections of Chacao,
Baruta, and El Hatillo, where host government, business leaders, and diplomats
reside. Studies and reports cite a variety of reasons for the critically high
and constant level of violent criminal activity in Caracas including: a sense
that criminals will not be penalized; poorly paid and often corrupt police; an
inefficient politicized judiciary; a violent and overcrowded prison system;
overworked prosecutors; and the presence of up to 25 million illegal weapons in
the country.
Crime Threats
Crime is by far the principal
threat in Caracas, affecting both locals and foreigners. According to the
Venezuelan government, the murder rate in Caracas was 91.71 per 100,000
inhabitants in 2011. However, according to the Venezuela Violence Observatory,
a non-governmental organization (NGO), the murder rate in Caracas in 2011 was
200 per 100,000 inhabitants, one of the highest rates in the world. Nationwide,
at least 19,336 people were killed in 2011, an average of 53 per day. Venezuela
had a murder rate of 67 per 100,000 inhabitants in 2011. That compares to 32
per 100,000 last year in neighboring Colombia (22.7 per 100,000 people in
Bogotá), 14 per 100,000 in Mexico, and 14 per 100,000 in São Paulo, Brazil’s
largest city. Venezuela had more murders than Mexico (18,601 murders in 2011),
which has four times the population (Mexico’s population: 113.4 million,
Venezuela’s population: 28.8 million). Most violent crimes in Caracas,
especially murder and kidnapping, involve firearms. There is no evidence to
indicate criminals and gang-related activities specifically target U.S.
citizens.
Crime in Venezuela can be
attributed to several factors: impunity from prosecution, a dysfunctional
judicial system, poverty, retribution, politics, gangs and drugs. Caracas
suffers from areas of extreme poverty, which provide gangs and criminal
elements with an environment conducive to crime and is subsequently difficult
to police. The majority of violent crimes in Venezuela take place in areas of
extreme poverty; however, due to their proximity to affluent
areas/neighborhoods and the extremely low cost of gasoline, it is relatively
easy for gangs and criminal elements to infiltrate these areas as well. Police
are unable to protect less affluent neighborhoods, and as a result, crime is
quite common, and criminals operate with impunity.
The majority of crimes that
tend to dominate Caracas are "express" kidnappings, carjackings,
robberies, and home invasions. Recently, there has been an alarming up-tick in
organized gangs’ targeting travelers using the Simón Bolivar International
Airport (CCS).
Home invasions involve large
groups of heavily armed criminals who take over houses or apartment complexes
and rob the owners and occupants. Home or apartment complex invasions are
usually well planned and involve the use of a person on the inside or a scam
(such as impersonating police, delivery personnel, or utility company
personnel) to gain access. These attacks do not appear to target any one
location or person specifically; police report that criminal gangs randomly
target a location because of the perception that the occupants are wealthy.
Home invasions have occurred in buildings where U.S. Embassy employees reside.
Levels of gratuitous violence are on the increase, and the majority of
criminals use lethal weapons in the course of carrying out their activities.
The majority of victims of
robberies who have resisted criminal demands have been seriously injured as a
result. Therefore, it is common practice in Caracas not to resist an attempted
robbery. The best defense to these types of criminal gangs is not to open your
doors to anyone that you are not expecting and do not know. It is important to
instruct your family members, domestic staff, and apartment-complex vigilantes
(guards) not to open the doors or accept deliveries from strangers. The Embassy
recommends that apartments have functional alarm systems and strong deadbolt
locks on all exterior doors.
Road Safety
Incidents of reported
carjackings and car robberies remain a common occurrence in Caracas. In 2010,
27,977 vehicles were stolen in Venezuela, making it the second most common
crime behind physical assault in the country. Statistics on car robberies in
2011 are not available. The Embassy has received reports of carjackings and
robberies in areas near the Embassy. They often occur during peak traffic hours
and at entrances and exits of major roadways. Perpetrators target
four-wheel-drive models for carjackings. Armed bandits have stopped and robbed
multiple travelers along the Caracas-La Guaira road, which connects the capital
region with La Guaira port and Simón Bolivar International Airport,
approximately 20 miles north of downtown Caracas.
Traffic jams are common in
Caracas (regardless of the hour) and are frequently exploited by criminals.
Armed motorcycle gangs often operate in traffic jams and tend to escape easily.
Be particularly vigilant when stopped in traffic jams. Cases of armed robbery
by motorcyclists and theft of other motorcycles have increased and may result
in death if the victim does not comply.
If possible, avoid leaving your
vehicle on the street when parking. Park inside a residential compound, in a
parking lot with an attendant, or at least within view of the location you are
visiting. When parking within a shopping facility lot, be sure to park as close
as possible to the store entrance and away from dumpsters, bushes, or large
vehicles. Be sure to lock your doors, close windows, and hide shopping bags and
gifts/valuables in the trunk, out of sight. If there are no secure parking
areas, select a well-lit and non-isolated spot as close to your lodgings as
possible and, if possible, away from trucks, buses, dense shrubbery, or small
buildings that might conceal thieves.
Driving regulations are similar
to those in the United States, although many drivers do not obey them.
Defensive driving is an absolute necessity. Motorcyclists weave in and out of
lanes, so caution is advised. Outside the major cities, night driving can be
dangerous because of unmarked road damage, repairs in progress, unlighted
vehicles, and livestock. It is a common practice to ignore red traffic lights
in the evening. Even in urban areas, road damage is often marked by a pile of
rocks or sticks left by passersby near or in the pothole or crevice, without
flares or other devices to highlight the danger. Many roads are unsafe, as rock
slides are common. Traffic fatalities are common. Stopping at National Guard
and local police checkpoints is mandatory. Drivers should follow all National
Guard instructions and be prepared to show vehicle registration, proof of
insurance, and passports. Vehicles may be searched.
If you are involved in a
traffic accident, Venezuelan law requires that you do not move the vehicle
until the traffic police arrive on the scene. It is recommended that you do not
leave the scene of an accident unless you feel you may be in danger.
Political Violence
Historical Perspective
The threat of political
violence remains an ever-present possibility. Civil disruptions are common in
Venezuela and even small and seemingly peaceful rallies can rapidly deteriorate
into violence without warning. Political marches and demonstrations are
frequent in Caracas and around Venezuela. Harassment of U.S. citizens by
pro-government groups, Venezuelan airport authorities, and some segments of the
police occurs but is limited. Venezuela’s most senior leaders, including
President Chavez, regularly express anti-American sentiment. The Venezuelan
government’s rhetoric against the U.S. government and American culture and
institutions has affected attitudes in what used to be one of the most
pro-American countries in the hemisphere.
Regional Terrorism and Organized Crime
Cross-border violence, kidnapping,
drug trafficking, smuggling, and cattle-rustling occur along the 1,000-mile
long Venezuela-Colombia border. Some kidnap victims have been released after
ransom payments, while others have been murdered. In many cases, Colombian
terrorists or local guerrillas are believed to have been the perpetrators.
Because of this threat, unofficial in-country travel by Embassy employees
within a 50-mile area along the entire Venezuela/Colombia border is generally
prohibited and only undertaken with the approval from the Chief of Mission. The
State Department warns American citizens not to travel within this same area.
U.S. citizens who elect to visit areas along the border region could encounter
Venezuelan military-controlled areas, may be subject to search and arrest, and
may be at increased risk from the Colombian-guerrilla terrorist threat.
International and Transnational Terrorism
The Embassy is unaware of any
large-scale terrorist attacks carried out on Venezuelan territory.
Colombia's National Liberation
Army (ELN) and the Revolutionary Armed Forces of Colombia (FARC) are designated
by the Secretary of State as Foreign Terrorist Organizations. Both groups use
Venezuela as a safe haven.
The State Department has stated
that the Lebanon-based terrorist organization Hezbollah is using Venezuela
mainly for fundraising. However, Venezuelan media reports suggest Hezbollah is
also active in training, money laundering, and arms trafficking.
Civil Unrest
Travelers should be aware that
violence, including exchanges of gunfire and tear gas, has occurred at
political demonstrations. Demonstrations tend to occur at or near university
campuses, business centers, and gathering places, such as public squares and
plazas. Marches generally occur on busy thoroughfares and attempt to disrupt
traffic significantly. Most major tourist destinations, including coastal beach
resorts like Margarita Island, have not been affected by protest actions.
However, the city of Merida has been the scene of frequent demonstrations, some
of them violent, including the use of firearms and tear gas. Travelers are
advised to take common-sense precautions and avoid large gatherings and
demonstrations, no matter where they occur.
There were reports of minor
criminal activity during the Venezuelan parliamentary elections that took place
on September 26, 2010. Presidential primary elections took place in February
2012, and the presidential election will be held on October 7, 2012.
On March 26, 2011,
approximately 100 protesters demonstrated in front of U.S. Embassy Caracas
against the U.S. involvement in Libya. Some protestors defiled Embassy property
and physically assaulted two members of the Embassy staff; there was one minor
injury.
Industrial and Transportation
Accidents
As the economic and commercial
center of the country and the most populated city, Caracas sees its share of
industrial and transportation incidents. Vehicle accidents involving hazardous
chemicals on the major highways are not common but do occur, causing roadways
to be closed for significant periods. Due to mountainous terrain, Venezuelan
roadways employ multiple large tunnels. When accidents occur inside these
tunnels, the flow of traffic is often blocked for hours until emergency
response services can clear the accident.
Pursuant to United States law,
the Transportation and Security Administration (TSA) is required to conduct
technical security visits to all international airports from which U.S. and
foreign airlines provide direct service to the U.S. With host-government
collaboration, TSA reviews airport operations using standards established by
the International Civil Aviation Organization. TSA last visited the Caracas
airport in January 2005 and those of Maracaibo and Valencia in November 2004.
In September 2008, the Department of Homeland Security (DHS) decided to post
public notices at U.S. airports stating that TSA had been unable to assess the
safety and security standards of Venezuelan airports; it also required carriers
to notify passengers in writing of the situation.
Due to government-mandated
foreign exchange controls and artificially low, regulated ticket prices,
domestic Venezuelan airlines have financial problems and may not be able to
procure replacement parts and pay for regular repairs. Industry analysts
estimate that of the 96 aircraft in the domestic fleet, only 43 are in service.
Delays and flight cancellations are common in the domestic airline industry.
When traveling with a Venezuelan airline carrier, travelers should review the
airlines' safety records prior to use. Some serious incidents have occurred in
recent years. For example, on March 22, 2010, a light airplane crashed due to
engine failure in the northern residential area of Guarapiche, leaving seven
dead. On August 23, 2011, a Laser Airlines flight was forced to return to the
airport due to electrical problems in the cabin. On September 26, 2011, an
Aeropostal passenger plane sustained substantial damage in a hard-landing
accident at Puerto Ordaz Airport. Upon landing, the airplane touched down
brusquely, causing both engine mounts to break from the fuselage. No serious
injuries were reported. In another incident that same day, an Acerca Airlines
DC-9 made an emergency landing after smoke was detected in the cabin.
Kidnappings
Kidnappings -- whether
traditional, express, or virtual -- are a growing industry in Venezuela.
Because groups that specialize in these crimes operate without fear of
incarceration, entrepreneurial criminals operate freely. Statisticians and
police have openly stated that only 20-30 percent of all kidnappings get
reported to the police. In 2009, reported kidnappings more than doubled from
the previous year; an alarming 9.2 incidents of kidnapping per 100,000
inhabitants in Venezuela were reported.
Express kidnappings are a
serious problem in Venezuela. Express kidnappings involved criminals forcing
their victims to extract daily cash limits from ATM machines or credit cards
until the card was shut off. Draining bank accounts was done while driving the
victim around the city for several hours. However, changes in Venezuelan law
restricting daily withdrawal amounts made this practice less lucrative. It has
become more common for criminals to drive victims around for several hours to
disorient them and allow time for family and friends to arrange ransom
payments. There are reports of ransoms ranging from a few thousand dollars to
US$50,000. As opposed to traditional long-term kidnappings, express kidnappings
last less than 48 hours. The Venezuelan government does not report kidnapping
statistics, but kidnap-for-ransom rates in Caracas have risen significantly in
recent years. According to data released by the Venezuelan government’s
Scientific, Criminal, and Forensic Investigation Agency (CICPC), 1,150 people
were held hostage in 2011 in Venezuela. However, CICPC has openly stated that
only 20 percent of all kidnappings get reported to the police. The NGO
Venezuelan Violence Observatory claims that 9,000 to 16,000 kidnappings occur
annually. Five abductions took place in Caracas every day during the last
quarter of the 2011, police sources said. In March 2012, the U.S. Embassy in
Caracas sent guidance to American citizens on how to react in express
kidnapping situations.
Another common practice is for
kidnappers to follow potential victims into building garages and kidnap them at
gunpoint. Kidnappings of U.S. citizens and other foreign nationals from homes,
hotels, unauthorized taxis, and the airport terminal do occur and are more
frequently being reported to the Embassy.
Use ATMs located inside banks
or hotels, rather than those on the street.
Both “virtual kidnappings” and
“inside kidnappings” have been reported to the Embassy. U.S. citizens should be
alert to their surroundings and take necessary precautions. Virtual kidnappings
involve scam surveyors who collect contact information on minors that is then
used to call parents for ransoms without the children actually being taken.
“Inside kidnappings” involve domestic employees being paid large sums of money
for keys and information to enter and kidnap children for ransom.
Drug and Narcoterrorism
The presence of Colombian
narcoterrorists along the border region is of particular concern. Cross-border
violence -- to include kidnapping, drug trafficking, and smuggling -- occurs
with impunity. Venezuela is a major drug-transit country. Lack of international
counternarcotics cooperation and a shift in the trafficking patterns in
Venezuela has enabled a growing, illicit drug transshipment industry. Venezuela
has become one of the preferred routes for trafficking illicit drugs out of
Colombia. While the majority of narcotics continue to pass through Venezuela to
the U.S., a rapidly increasing percentage has begun to flow toward Europe. U.S.
intelligence reports an increase of nine percent in cocaine volume departing
Venezuela to other countries, from 130 metric tons in 2010 to 143 metric tons
in 2011. The U.S. was the biggest importer of drugs in 2011, accounting for
nearly 94 percent (134,394 metric tons). The movement of drugs has fueled the
growth of crime and violence throughout Venezuela, evidenced by the continuing
growth of violent crimes by organized criminal groups.
Police Response
Police support varies, both at
the national and municipal levels. Police authorities cite a lack of resources,
under-staffing, payroll issues, and lack of response by the judicial and
correctional systems among the key reasons why response times are delayed and a
significant number of criminals go unpunished. While municipal police are often
tasked with responding to crimes, the national police are responsible for
investigating and prosecuting the cases. Challenging infrastructure problems
and prolific corruption within law enforcement and the judicial system continue
to be important factors in crime response and prevention. Venezuelan law
enforcement entities look for creative policing strategies to overcome these
obstacles, e.g. community policing base stations, motorcycle and bicycle
patrols, and augmented traditional foot and vehicle policing. The Minister of
Justice announced that police were involved in 15 to 20 percent of crimes in
2009, the last year figures were reported.
A study released in February
2010 revealed that 91 percent of all homicides reported go unpunished. The
small chance of being arrested for committing murder may be responsible for the
increase in violent crime. According to police contacts, armed robberies and
assaults increased by 20 percent and 18 percent, respectively, during the first
two months of 2012, compared with 2011 figures.
Tips on How to Avoid Becoming a Victim
Visitors should practice
common-sense preventative security techniques, just as they would in any large
metropolitan city in the world where crime is prevalent.
Below are some of the more
important tips visitors should follow to avoid becoming a potential crime
victim.
• Do not carry or wear valuable items
(such as jewelry and watches) that will attract the attention of thieves.
• Do not physically resist any robbery
attempt. While this is a personal decision, statistics show that resistance is
more likely to lead to severe consequences such as injury or death.
• Using public transportation is
strongly discouraged, as buses and the subway pass through high-crime areas and
are susceptible to robberies. In 2010, several public buses were stopped and
robbed while on the road between Caracas and Simón Bolivar International
Airport. All the occupants on board were robbed, and the drivers were killed.
Criminals have begun to target subway platforms as well.
• Avoid using international credit
cards while in Venezuela. Credit card fraud and scams have been reported to the
Embassy, even at respected local restaurants and major hotel chains in Caracas.
If travelers have to use a credit card, ensure that the credit card stays in
your sight and remember to monitor the billing activity on that card for
several months after you return home.
• Only use legitimate radio-dispatched
taxis at designated taxi stands or have your hotel call one for you directly.
Also, most centros comerciales (malls) have taxi stands, which have usually
been reliable.
• Be aware of the street environment
and avoid contact with those who may be looking for potential crime targets. Seek
a safer location. Go into a store, bank, or simply cross the street and alter
your route.
• Do not withdraw large amounts of
cash from banks or ATM machines. If you need to withdraw a large sum of money,
request a check. The Embassy has received reports of people who were targeted
and robbed as they exited local banks.
• Use well-traveled, well-illuminated
streets. Plan your routes before you leave for your final destination.
Corruption at the Simón Bolivar
International Airport is rampant. Both arriving and departing travelers have
been victims of personal property theft and muggings. The Embassy has received
multiple, credible reports that individuals wearing what appear to be official
uniforms or other credentials are involved in facilitating or perpetrating
these crimes. All travelers should be wary of all strangers, even those in
official uniforms or carrying official identification, and should not pack
valuable items or documents in checked luggage. Documents and valuable personal
items should be kept in carry-on luggage. The Embassy has also received
multiple, credible reports of victims of “uniformed” airport officials
attempting to extort money from travelers as they go through the normal
check-in and boarding process for departing flights. Furthermore, the embassy
has received reports that known drug trafficking groups work from the airport.
Local media reports indicate officers of the Venezuelan National Anti-Drugs
Office (ONA) and CICPC routinely arrest travelers attempting to smuggle illegal
drugs. Travelers should not accept packages from anyone and should keep their
luggage with them at all times.
The road between the Simón
Bolivar International Airport and Caracas is a notoriously dangerous road.
Visitors traveling this route at night have been kidnapped and held captive for
ransom in roadside huts that line the highway. Because of the frequency of
robberies at gunpoint, travelers are encouraged to arrive to and depart from
the airport only during daylight hours. If not possible, travelers should use
extra care both in and outside the airport at night.
In October 2011, an Avianca
Airlines flight crew was en route to the airport from the Marriott Playa Grande
Hotel at approximately 5:30 a.m. As the shuttle was approaching the
international terminal, three armed individuals boarded and demanded that the
driver keep driving and circle the airport. The crew was robbed of jewelry,
money, and electronic devices. Afterwards, they demanded that the driver let
them off at a pedestrian bridge and escaped to the nearby neighborhood called
Barrio Aeropuerto.
Areas to Avoid and Best Security Practices
Pickpockets and grab artists
operate in greater Caracas. However, they are mostly active in the historic
city center downtown: around the Plaza Simon Bolivar, near the Capitolio, in
the Sabana Grande area, in the Parque Los Caobos, and at crowded bus and subway
stations.
The crime threat in Caracas is
critical due to the violence and frequency of criminal activity throughout
Venezuela. Crime continues to be the principal threat to locals and visitors.
Armed street robberies are common in Caracas and most cities in Venezuela.
Victims have been robbed at gunpoint while walking on the street and while
driving. The high volume of vehicular traffic, combined with the poor
conditions of roads, has created major traffic problems within Caracas. Armed
bandits patrolling the streets on motorcycles prey on potential victims waiting
at traffic lights or stuck in heavy traffic. Keeping windows rolled up and
doors locked and keeping valuables out of sight (to include iPods, cell phones,
Blackberrys) are the best defenses against this type of random criminal
activity.
The poor neighborhoods that cover the hills
around Caracas are extremely dangerous. These areas are seldom patrolled by
police and should be avoided.
SPECIAL REPORT - 2
THE PERMANENT CRISIS IN VENEZUELA
By Jaime Daremblum
February 25, 2013
According to a leading Spanish
newspaper, Hugo Chávez's doctors have told his family that the cancer-stricken
autocrat will not recover from his illness and will not be able to resume the
Venezuelan presidency. Perhaps that's why his return to Venezuela was a
relatively subdued affair. Chávez reportedly arrived from Cuba—where he has now
received four surgeries—in the pre-dawn hours on Monday, February 18.
"There were no television images or photographs of him descending from the
presidential plane in a track suit and greeting officials on the tarmac, as
there were in the past," observed New York Times correspondent William
Neuman, "raising questions about whether the government was seeking to
keep a severely weakened president out of public view." For that matter,
Bolivian president (and Chávez acolyte) Evo Morales was not able to meet with
Chávez during his February 19 visit to Caracas.
Chávez came home to a nation in
crisis—a crisis largely of his own making. To be more precise: There is no
single crisis in Venezuela; there are multiple, interrelated crises that have
transformed an oil-rich society into a dysfunctional, violent,
inflation-plagued country with major food shortages and one of the highest
murder rates in the entire world. Venezuela is a place where athletes are in
danger of catching a stray bullet during their games. (Seriously: That actually
happened to a Hong Kong baseball player in August 2010.) As Nick Allen of the
Daily Telegraph recently pointed out, Venezuela now has more homicides than the
United States and the European Union combined, even though its population is
about 28 times smaller.
Between 2011 and 2012, its
already sky-high murder rate rose by another 9 percent, and its annual number
of murders rose by 12 percent, according to the independent Venezuelan
Observatory of Violence. Its capital city of Caracas has been "the deadliest
capital in the world" since 2010.
Here's how journalist David
Frum described his 2010 trip to Venezuela: "My visit began with a briefing
at the U.S. Embassy. 'You've been to Afghanistan?' Yes. 'You've been to Iraq?'
Yes. 'Well, congratulations. This is the most dangerous place you've ever
been.'" Indeed, Venezuela is a true gangster's paradise: a nation that has
emerged as a major cocaine hub, with a ruling regime that has empowered drug
kingpins, has maintained longstanding ties to the Colombian FARC, and has
purchased some 100,000 Russian assault rifles.
Not surprisingly, Venezuela has
a disgracefully overcrowded and violent penitentiary system. Last month, a
prison riot in its fourth-biggest city (Barquisimeto) left several dozen people
dead and more than 100 injured. According to the Associated Press, the jail
where this violence occurred was built for roughly 850 prisoners but was
holding approximately 2,400 at the time of the riot. Afterwards, Venezuelan
authorities evacuated the facility and discovered 106 guns, including
"revolvers, shotguns, submachine guns, and assault rifles used by the
military." They also discovered upwards of 8,000 ammunition rounds.
Venezuela's security crisis has
worsened its economic crisis. Under Chávez-style socialism, the government
routinely seizes broadcasting stations, banks, food factories, and other
private property. In the Heritage Foundation's 2013 Index of Economic Freedom,
no country scores worse for property rights than Venezuela—even Cuba (!) scores
higher in that category.
As you might imagine, the South
American nation has been suffering from massive capital flight, which is why
the regime long ago implemented draconian currency controls. Its fiscal
profligacy has produced runaway inflation and a huge budget deficit. Yet
Caracas dramatically ramped up money creation and government spending ahead of
Venezuela's October 2012 presidential election, to help guarantee another term
for the ailing Chávez. The numbers really are quite astounding: "In 2012
alone," notes former Venezuelan trade minister Moisés Naim, "the
money supply expanded 62 percent while public spending grew 52 percent."
Now the regime is trying to
close its enormous deficit and avoid a sovereign default. Thus, on February 8,
Venezuela announced a 32 percent devaluation of its national currency,
prompting citizens to rush out and buy a range of domestic appliances and other
imported goods before the prices went up. Harvard economist Francisco Monaldi
has predicted that the devaluation could increase Venezuelan inflation by 30
percent this year, and also slash real incomes by 20 percent. Obviously, this
would hurt the poor more than anyone else. Inflation is already running at 22
percent, and "about 70 percent of products consumed in Venezuela are
imported or assembled from raw material shipped from abroad," according to
Bloomberg News.
In other words, Chávez's
designated successor, Vice President Nicolás Maduro, may soon face an economic
challenge of historic proportions. Maduro will inherit an economy that ranks
sixth from the bottom in the World Bank's 2013 Ease of Doing Business Index,
and that ranks dead last for paying taxes. The Latin Business Chronicle has
reported that Venezuela requires 70 tax payments each year, "the highest number
in Latin America and more than double the regional average of 29."
The country's economic and
security crises would be easier to solve if Venezuela were still a real
democracy. But it patently is not. Chávez and his allies have been building an
elected dictatorship for more than a decade: trampling press freedom,
persecuting their critics, packing the supreme court, and granting the
president autocratic powers. Yet even by Venezuelan standards, the shenanigans
of the past two months have been truly outrageous.
Government officials insist
that Chávez is still officially the president—even though he was unable to
attend the inauguration ceremony scheduled for January 10 and was not sworn in
by either the national assembly or the supreme court, as the Venezuelan
constitution demands. (Incidentally, that constitution was written by Chávez
loyalists in 1999.) If Chávez's absence really is temporary, the constitution
says that Maduro must formally become president until Chávez can return to the
job. If his absence is permanent, the constitution says that the speaker of the
national assembly, Diosdado Cabello, must become president and must call an
election within 30 days. Yet neither Maduro nor Cabello has been made
president, and no election has been called. Venezuelan officials are thus
openly defying their constitution. They are behaving like the old Soviet
apparatchiks who would secretly plot leadership transitions behind closed
doors.
A constitutional crisis, an
economic crisis, and a security crisis: Add them all together, and Venezuela is
experiencing a permanent societal crisis that will outlive its dying autocrat.
Ambassador Jaime Daremblum is a Hudson Institute
Senior Fellow and directs the Center for Latin American Studies.
