Tuesday, February 11, 2020
What Does the Future Hold for US-Bolivia Ties?
Mark Weisbrot. CEPR. February 8, 2020
The Trump administration’s current and future behavior in Bolivia can best be forecast by its strong support for the military coup that overthrew the democratically elected government of Evo Morales on November 10. And no one disputes that Morales was democratically elected to his term that began in 2015.
The OAS is lying and cannot defend its accusations.
But there’s more: the Organization of American States (OAS), whose leadership under Secretary General Luis Almagro is strongly influenced by Trump and Senator Marco Rubio, played a leading role in the coup that brought this violent, repressive, racist, anti-indigenous government to power. The OAS did this by repeatedly claiming, falsely, or implying, that the Morales government committed fraud in the October 20 election.
One hundred and thirty-six economists and statisticians said the OAS charges were false. Members of the US Congress demanded answers from the OAS for their false accusations. Journalists have also tried to ask questions. All have gone unanswered for more than three months. Why? Because the OAS is lying and cannot defend its accusations.
The treatment of these transparent falsehoods—only eighth-grade arithmetic is necessary to understand them—by many US-based NGOs that claim to support “human rights” and “democracy,” is disgraceful. The same goes for most of the US media, including the editorial board of The New York Times, which for the first time in 17 years supported a military coup—provoking an angry response from more than 300 academic experts. The truth will come out.
To Survive, Venezuela’s Leader Gives Up Decades of Control Over Oil
Anatoly Kurmanaev and Clifford Krauss. New York Times, February 9, 2020
CARACAS, Venezuela — After decades of dominating its oil industry, the Venezuelan government is quietly surrendering control to foreign companies in a desperate bid to keep the economy afloat and hold on to power.
The opening is a startling reversal for Venezuela, breaking decades of state command over its crude reserves, the world’s biggest.
The government’s power and legitimacy have always rested on its ability to control its oil fields — the backbone of the country’s economy — and use their profits for the benefit of its people.
But the nation’s authoritarian leader, Nicolás Maduro, in his struggle to retain his grip over a country in its seventh year of a crippling economic crisis, is giving up policies that once were central to its socialist-inspired revolution.
Under Venezuelan law, the state-run oil company must be the principal stakeholder in all major oil projects. But as that company, Petróleos de Venezuela, or Pdvsa, unravels — under the weight of American sanctions, years of gross mismanagement and corruption — the work is unofficially being picked up by its foreign partners.
Private companies are pumping crude, arranging exports, paying workers, buying equipment and even hiring security squads to protect their operations in a collapsing countryside, according to managers and oil consultants working on the country’s energy projects.
In effect, a stealth privatization is taking place, said Rafael Ramírez, who ran Venezuela’s oil industry for more than a decade before breaking with Mr. Maduro in 2017, in a video address this week.
“Today, Pdvsa doesn’t manage our oil industry, Venezuelans don’t manage it,” said Mr. Ramírez. “In the middle of the chaos generated by the worst economic crisis suffered by the country in its history, Maduro is taking actions to cede, transfer and hand over oil operations to private capital.”
The haphazard changes to the oil sector, which have accelerated in recent months, are remaking the oil industry in a nation whose assertive energy policies had, since the 1950s, served as an example to developing countries of how to take control of natural resources.
And they are a stark retreat from the vision of Hugo Chávez, who was Mr. Maduro’s mentor and predecessor. Mr. Chávez nationalized in 2007 the giant holdings of Exxon Mobil and ConocoPhillips and packed Pdvsa’s leadership ranks with political allies dedicated to his socialist-inspired “Bolivarian revolution.”
But Mr. Maduro’s transformation of Venezuela’s oil industry has stemmed the collapse triggered by an American embargo. Sanctions imposed in January 2019 had wiped out about a third of Venezuela’s oil production, bringing it down at one point to the lowest level since the 1940s, according to data from the Organization of the Petroleum Exporting Countries.
Oil production now is still less than a third of the total in 1998, when Mr. Chávez took power. By late 2019, Venezuela had stabilized exports at about a million barrels per day, according to Bloomberg’s tanker tracking data.
The dribble of oil exports has provided Mr. Maduro with foreign revenue at the most critical moment of the country’s economic crisis, allowing him to adjust to sanctions and consolidate his rule.
In the country’s main oil export hub, José, key processing plants and piers are slowly coming to life after near total paralysis in the summer, when Pdvsa was cut off from the global financial system and struggling to cope without its biggest market, the United States, according to shipping agents and oil managers.
The unofficial, partial privatizations of the past year have been led by an unlikely reformer: Manuel Quevedo, a National Guard general with no known oil experience who was appointed by Mr. Maduro to head Pdvsa.
General Quevedo broke with the nationalist rhetoric of his predecessors to hand over operational control of joint oil projects to partners that include Chevron, Russia’s state-run company, Rosneft, some European and Chinese companies and groups of Venezuelan magnates.
“With Pdvsa in crisis mode, they are increasingly handing operational responsibilities and decisions over to the partners,” said Lisa Viscidi, a specialist in Latin American energy issues at Inter-American Dialogue, a Washington-based research group.
The concessions are gradually reducing Pdvsa to little more than a holding company collecting the state’s share of oil field revenues, with most of financial and strategic decisions taken by private partners.
This is a startling decline from just a decade ago, when Pdvsa was the pride of Venezuela and the cornerstone of its economy.
Until the start of the economic crisis in 2013, the company was the source of virtually all of Venezuela’s hard currency. It was also its biggest employer and penetrated all aspects of life in the country, running everything from supermarkets to parks.
Today, oil fields wholly owned by Pdvsa account for less than half of the nation’s remaining oil production, and their output continues to plummet.
Chevron has become the single largest foreign producer of oil in Venezuela, and a crucial part of the country’s stabilization over the past few months.
Its four joint ventures in the country are pumping a gross total of about 160,000 barrels per day, according to two industry sources familiar with the company’s projects, who spoke on condition of anonymity because they weren’t authorized to speak publicly.
Chevron quickly responded to the impact of American sanctions — such as the loss of American light oil that was used to blend with heavy Venezuelan crude to help it move through pipelines — by switching to Venezuelan light oil. By September, the company was able to restart its Petropiar heavy oil processing plant, which has formed the backbone of Venezuela’s oil export recovery.
A senior official with the Trump administration said the activities of Chevron and other foreign oil companies in Venezuela “are clearly of concern.”
But the U.S. government has given Chevron exemptions from sanctions, as recently as last month. “If Chevron is forced to leave Venezuela, non-United States companies will fill the void and oil production will continue,” said Ray Fohr, a company spokesman.
On the export side, Pdvsa’s biggest ally has been Russia’s Rosneft, which over the past year has grown to sell about two-thirds of Venezuela’s oil. Rosneft has quickly replaced Pdvsa’s American sales routes by diverting its oil to Asia, often obscuring the cargo’s source and destination to bypass sanctions, according to companies that monitor tanker traffic.
Barred from the global financial system, Pdvsa has also been forced to cede control to foreign partners in organizing exports, which goes against the country’s energy laws. Over the past few months, Chevron, Rosneft and Italy’s Eni have all directly exported Venezuelan crude.
Pdvsa’s opening of exports — oil cargoes worth millions of dollars — to anyone who can bypass sanctions to line up a vessel, insurance and a customer for the crude has even created a small cottage industry among Venezuela’s elite.
Now, the only thing that matters is that oil continues to flow, said one partner at a joint oil venture, as he scanned his phone, viewing the state company’s cargo offers.
“The historical struggle for resource sovereignty is being sacrificed for operational expediency,” said Antero Alvarado, an energy consultant in Caracas.
Venezuela’s new oil production has allowed the country to import essentials like food, medicine and fuel to keep the country running.
And there are indications that Mr. Maduro’s government wants to take the underhand liberalization further, even rolling back the watershed nationalization of the oil industry that took place in the 1970s.
A group of lawmakers installed at the head of the National Assembly by Mr. Maduro in January — amid an international outcry — has proposed changing energy laws to allow greater private investment.
“In these times of declining output, we have to give space to a national proposal that, first of all, shall give private capital greater participation in exploration, production and marketing of oil,” Leandro Domínguez, a lawmaker, said in a statement.
Mr. Domínguez’s proposal is not recognized by the United States and most European and Latin American countries, who continue to support a rival, opposition-led congressional leadership. The opposition lawmakers oppose any changes to energy laws under Mr. Maduro, creating a legal limbo for foreign oil companies.
Despite the recent changes, there are many reasons to believe Venezuela’s best days as an oil superpower are over, according to Amy Myers Jaffe, an oil expert at the Council on Foreign Relations, and other experts.
Venezuela could gradually recover production to 2.6 million barrels a day over 10 years, but only with investments of over $200 billion, according to projections by IPD Latin America, a consulting firm.
At a time when many oil companies are struggling with declining profits, executives are looking for cheaper and cleaner sources of oil. Even if a political settlement eventually lifts sanctions, Venezuela’s dirty oil, laden with sulfur and other impurities, may find far fewer investors.
Clifford Krauss is a national energy business correspondent based in Houston. He joined The Times in 1990 and has been the bureau chief in Buenos Aires and Toronto. He is the author of “Inside Central America: Its People, Politics, and History.”
Argentina won't repay IMF debt till recession over, VP Fernandez says
Reuters. February 9, 2020
HAVANA (Reuters) - Argentine Vice President Cristina Fernandez de Kirchner said on Saturday that the government will not pay “even half a cent” of its debt back to the International Monetary Fund before the country has exited recession.
“The first thing we have to do in order to be able to pay is to exit the recession,” Fernandez de Kirchner said at a presentation of her book “Sinceramente” (Sincerely) at Havana’s international book fair.
“If there is a recession no-one will pay even half a cent and the way you exit recession is through a lot of state investment.”
Argentina needs to restructure $100 billion in sovereign debt with creditors, including part of a $57 billion credit facility that the IMF extended the country in 2018.
Dealings with the IMF are key as Argentina hopes to avoid a default amid a currency crash, steep inflation and a contracting economy. An IMF technical mission is expected in Buenos Aires next week to discuss obligations owed to the fund.
Fernandez de Kirchner said Argentina should get a “substantial haircut” on its IMF debt.
A leftist and militant Peronist, she has traveled frequently to Communist-run Cuba over the past year to visit her daughter Florencia Kirchner who is undergoing medical treatment there.
Her book presentation was attended by Cuban President Miguel Diaz-Canel and a raft of other officials.
The Argentine ex-president launched Sincerely, a compilation of personal anecdotes and reflections, in Argentina last year.
His master's voice? Jair Bolsonaro posts video of himself watching Trump rant
Tom Phillips. The Guardian. February 8, 2020
But in recent weeks Brazil’s far-right president, Jair Bolsonaro, has taken his fixation with the US leader to new heights, livestreaming himself on Facebook as he watched his political idol in action.
The latest such appearance came on Thursday as Trump celebrated his acquittal by the Senate in his impeachment trial with a vitriolic and vulgar address to the nation.
More than 4,000 miles to the south, at the heart of Brazil’s very own political swamp, Bolsonaro sat down to watch – filming himself viewing Trump’s entire hour-long address and offering the occasional aside to the camera, hailing his North American hero or berating foes in politics and the press.
“We’re not the only ones with backstabbers in politics,” Bolsonaro sniped of Mitt Romney’s decision to vote against Trump in the impeachment trial. “They’ve found a Republican rat too.”
Critics have derided Bolsonaro’s Trumpian transmissions – the latest of which lasted 73 minutes – as an obsequious waste of presidential time.
“It’s pitiful,” complained Lobão, a Brazilian rock star who voted for Bolsonaro in 2018 but has since become one of his harshest critics.
Lobão said he was perplexed by Bolsonaro’s “amorous incontinence” towards Trump. How, the musician wondered, could Brazil’s president express such “snivelling, doormat like adoration” of a US leader while simultaneously being a hardline nationalist?
The leftwing senator Humberto Costa warned Brazilians would pay a high price for Bolsonaro’s fandom. “It’s not enough to be a doormat. One must show oneself to be a doormat,” Costa tweeted.
But Brian Winter, the editor-in-chief of Americas Quarterly, saw method in what many call kowtowing.
“I actually think this is serious and effective political messaging. Listening to Trump sends a strong symbolic message to Bolsonaro’s base that he is also leading the country away from socialism.
“A lot of Brazilians look at it and see boot-licking and betrayal of national sovereignty. But at least a third of the country looks at it and understands what he means and is pretty happy with it,” Winter added.
“In the minds of Bolsonaro followers, the US means capitalism, prosperity and public safety – the ability to have a gun, a growing economy. I think it’s really effective with his base.”
In Thursday’s broadcast, Bolsonaro berated those who accuse him of brown-nosing.
“Some people criticize me: ‘Look at him, licking Trump’s boots,’” he said, adding: “Look, you idiot, when they were sucking up to Maduro, Chávez and Fidel Castro you didn’t say anything, did you?
“I’m not worried about this,” the rightwing populist added. “If people want to criticize, that’s their right. But make it thoughtful, constructive criticism. Don’t just try to do the US president and me down.”
Winter said many senior military figures were uncomfortable with Bolsonaro’s courtship of Trump.
“I know for a fact the armed forces don’t like this symbolism because they are loyal to Brazil first, and Bolsonaro second. I’ve spoken with many generals who hate the fact that he’s out there saluting the American flag.”
But Winter suspected the live streams – which many believe are the brainchild of Bolsonaro’s politician son Eduardo, Steve Bannon’s representative in South America – would continue and that Trump would approve.
“I know … from people in the administration that Trump loves having an acolyte in any part of the world – but especially in a large, relevant country like Brazil. It appeals to his ego – and we know how important that is.”
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