Devaluation, stagflation, a toilet roll crisis, food rationing - no wonder President Nicolás Maduro prefers to dwell on conspiracies, real or imagined, in the face of the dour economic scenario he has inherited. And with global oil prices plateauing, his options are limited. It is probably no coincidence that many of the ‘Bolivarian’ countries, including Venezuela, Bolivia, Cuba, Ecuador and Nicaragua, have gone cap in hand to China since the death in March of former president Hugo Chávez (1999-2013).
Amidst all the noise in early June about ‘war planes’ and foreign paramilitaries (see box below), the Maduro government almost managed to bury the latest inflation figures, which were as bad as expected. The national index of consumer price inflation (INPC) was 6.1% month-on-month and 35.2% year-on-year in May, the central bank (BCV) reported on 6 June, giving accumulated year-to-date inflation of 19.4% in the first five months of 2013. Considering that inflation for calendar 2012 as a whole was 20.1% that is a grim result, and restores Venezuela’s crown as the country with one of the highest inflation rates in the world. It is keeping company with the likes of recent and current war zones like South Sudan, Ethiopia and Syria, its political allies Belarus and Iran and, of course, neighbouring Argentina.
The BCV said the latest figure showed the residual impact of February’s devaluation and a rise in the minimum wage from 1 May. Most damaging for the government, the food prices sub-index rose a shocking 48.1% in the 12 months between May 2012 and May 2013. Even including the impact of the 32% devaluation from BF4.3 to BF6.3/US$, that is still a hefty increase. And moving forward, food prices are set to be impacted further by an officially sanctioned upwards adjustment in the fixed prices of some basic foodstuffs, including rice, meat and dairy products, which will feed through in the coming months. Meanwhile the BCV’s much monitored ‘scarcity index’, which measures the availability of basic goods on supermarket shelves, was 20.5% in May, down marginally on previous months but still high (meaning that a fifth of basic goods were considered scarce).
The opposition leapt on the results, with the governor of Miranda Henrique Capriles Radonski accusing the Maduro government of destroying the country. Maduro denied that the government was contemplating another devaluation. Finance Minister Nelson Merentes insists that the central bank is accelerating the flow of foreign exchange (read dollars) to the private sector via the Comisión de Administración de Divisas (Cadivi), yet the (illegal) black market rate, which is now hovering at BF30.87/US$, almost five times the official rate, clearly suggests otherwise. The central bank and/or the state oil company Petróleos de Venezuela (Pdvsa) are expected to issue fresh debt, but that will not come cheap. The yield on the benchmark 2027 bond has gone from 9.18% in April, before Maduro was elected, to about 11% now.
Oil Minister and Pdvsa president Rafael Ramírez, who has been on tour in search of additional funds for the cash-strapped state company, said on 12 June that Venezuela was negotiating another US$4.0bn loan from China. Ramírez confirmed that China has funded Venezuela to the tune of US$36bn to date, in return for which he said Pdsva has shipped to China oil and derivatives to the value of US$16bn, with US$28bn left over, thanks to high oil prices (Ramírez did not explain the maths). “We have the fortune and advantage of having as a strategic ally the second world economy,” he said in Puerto La Cruz, Anzoátegui, adding that Pdvsa aimed to ship 1.0m barrels/day of oil and derivatives to China by 2014, from an estimated 626,000 b/d now.
Conspiracies, real or imagined?
On 10 June news agencies and media outlets ran a story entitled Chavista Guerrillas Issue Death Threat Against Venezuelan Opposition (or variations thereof). The item quoted the Fuerzas Bolivarianas de Liberación (FBL) as having announced “the preparation and immediate execution of an admirable offensive against all the interests of the bourgeoisie and the transnational companies that promote and support foreign interference and intervention; consequently all of their spokesmen, representatives and agents become a military objective”. This came after official announcements that a plot to assassinate President Nicolás Maduro had been thwarted and another about the uncovering of an elaborate scheme involving the purchase of military aircraft and the use of a US base in Colombia.
The FBL story is verifiable but the timing and context put it in a different light. The excerpts are accurate, but they lack an important detail: they are part of the fourth point of a proposal to “change the direction of the Bolivarian Revolution” addressed to all “the organisations that are part of the Venezuelan Popular Revolutionary Movement”, a proposal that appears towards the end of a lengthy communiqué entitled ‘We Still Have Time to Save the Bolivarian Revolution’. The media appear to have picked up the story from the Chavista online publication, Aporrea, but omitted the fact, clearly displayed by Aporrea, that the FBL had issued its communiqué 13 days earlier, on 29 May.
Just before the FBL story broke, on 9 June, former vice-president and defence minister, José Vicente Rangel, announced in his television programme, José Vicente Hoy, that he had received information on 27 May in San Antonio, Texas, that members of “the Venezuelan Right” had acquired 18 “warplanes” to be delivered in early November to “a US military base sited in Colombia”. He provided the coordinates he had been given for this ‘base’: 11°25’31” N, 72°7’46”W — which would put it close to Maicao in Colombia’s La Guajira department.
Rangel was careful not to actually endorse the veracity of this. He said, “This information must not be underestimated, given the present climate of media and political aggressions against Venezuela. Is an armed aggression, duly camouflaged, with the participation of mercenaries, being prepared? Could the security agencies check this information, which I don’t hesitate to describe as extremely grave?” President Maduro did not wait for any checks and repeated the story as fact, adding that the aircraft had been bought by a group of wealthy Venezuelans who live in Bogotá.
Next came the announcement by Interior Minister Miguel Rodríguez Torres that two groups of Colombian gunmen, said to have been connected to two separate “paramilitary” organisations, had been arrested on their way to Caracas on a “mission”, of which even the detainees knew nothing, but which he surmised might include the assassination of Maduro or some other government official. Rodríguez Torres said: “There will be people that will take this as a sort of joke [but in the last 14 years in Venezuela we have seen] things that surpass anyone’s imagination”. The leader of the political opposition, Henrique Capriles Radonski, had already dismissed the aircraft story as a joke.
As with the aircraft story, Maduro dropped the qualifiers and tweeted, “I ratify that from Colombia they are conspiring against our fatherland, the Right has again coordinated the entry of groups of murderers to our fatherland [...] We are facing a plan of the Fascist Right, with support from Colombia, for an assault on the political power”.
Pacific Rubiales denies any role in planes plot
The Canadian oil firm Pacific Rubiales on 25 June issued a formal statement denying allegations made by José Vicente Rangel in his 23 June weekly TV show that it was involved in the ‘planes plot’ against the Venezuelan government. Rangel alleged that former employees of Venezuela’s state oil company Pdvsa who were sacked by the late President Chávez after an extended strike at the company in 2003 and now are employed at senior level by Pacific Rubiales in Colombia were leading efforts to destabilise the government led by President Maduro. According to the statement: “While it is a general policy not to comment on market or media rumours, the Company would like to formally respond to completely untrue media reports published in Colombia. Recent articles, reported in various Colombian newspapers, claim that Pacific Rubiales is involved in a politically motivated plot against the Venezuelan government. The allegations are absurd and have no factual basis. Pacific Rubiales categorically denies these reports and any involvement in these untrue allegations.” End
- Maduro says Snowden would be welcome in Venezuela….
President Nicolás Maduro on 25 June said Venezuela would consider an asylum application from the fugitive US whistleblower Edward Snowden. "We say and advocate that someone in the world should stand with this young man and protect him, the revelations he has made with courage serve to change the world," he said. Maduro said Venezuela had not received any such request, but would evaluate any application for asylum, because "every case is a humanitarian protection".
- …Even as Venezuela’s chargé d'affaires mends fences in Washington
Venezuela’s chargé d'affaires in Washington DC, Calixto Ortega, on 25 June met with the US Assistant Secretary of State for Western Hemisphere Affairs, Roberta Jacobson, three weeks after the respective foreign ministers took a first step towards rapprochement on the margins of an the Organization of American States (OAS) assembly in Guatemala. President Maduro appointed Ortega on April 23.
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