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Wednesday, January 30, 2019

JD on Venezuela (all's well that gets oil wells)

Venezuela has suddenly become part of the news agenda, or maybe it is part of the 'fake news' agenda. It is hard to tell these days.

Unlike the majority of pundits and commentators, I have actually been to the country. For about three months in 1992 I was working in Caracas on a pipeline project bringing water to the capital to service the 'barrios' the shanty towns encircling the city. Most, if not all of these 'favelas' were without running water.

It was a long time ago and I have forgotten most of the details of what I was doing on the project but I did garner some vivid impressions of life there so here are a few. I will offer a few thoughts on the current situation later.

I had already worked for this company on another project in Zaragoza in Spain so I knew their ways reasonably well and they wanted me because I can speak Spanish and especially the engineering and technical terminology.

I was lodged in the CCT hotel which is itself incorporated into a very large shopping complex. First thing I noticed was the armed guards at every entrance to the shopping centre and not just one man with a pistol, there were four or five at each entrance and very visibly armed. Among all the shops were bars and restaurants as well as night clubs and through the windows of one I could see and hear some very lively and energetic dancing. Clearly these Venezolanos know how to enjoy themselves!
The office was somewhere downtown and a taxi from the hotel basement was the best way to get there. Taxis were all fairly nondescript American 'barges' which usually feel like floating about in a hovercraft. Up in the lift at the office block to the twelfth floor and sitting in the lift lobby was a uniformed guard with a gun and his back to the window. On the 12th floor? What sort of country is this?

As time passed I began to learn that Caracas is a sort of 'inside out' prison with all the good guys living their lives behind bolted and barred doors, and with all the bad guys free to walk the streets. I never felt threatened at any time but I was always aware of my surroundings. Lunch was a cafe/bar across the road and was very good. I especially liked the black beans with arepas, spicy and tasty.

I noticed that it rained every day regular as clockwork in the afternoons. A cloudburst of very heavy rain and it was literally a cloudburst. Something to do with the microclimate generated by the high altitude and the surrounding mountains. (Climate scientists do not like to acknowledge such things because it upsets their computer modelling; see previous post on climate.)

And then one day, during my final week there, our office manager was shot on his way home from work. He was driving home and was waiting at traffic lights when he had a gun pointed in his face through the open window. The robber took his watch and then shot him in the thigh. He then fired two or three bullets into the engine for some reason. I went to visit him in hospital and he was not seriously wounded but he did seem to have been traumatised by the episode and was nowhere near his usual cheery self. The hospital, by the way, was spotlessly clean and had an air of calm about it. I think our NHS could learn a thing or two from Latin America; a few years later I visited a colleague in hospital in Chile after he had a heart attack and it had the same air of unhurried calm and was spotlessly clean.

A couple of days before I left I was told by the senior project manager to go and get a ticket for the BA flight - "You have to be patriotic" or words to that effect.  So I went to the travel agent on the ground floor of the building to book the flight. Only two seats available, one in first class and the other one at the back among the backpackers. No contest, I'll have the first class ticket please! Project manager had gone back to Paris by this point so I didn't say anything and nobody checked in the weeks after. I am worth it anyway, that's my excuse! Later that afternoon there was a power cut in the building. When the power was restored we found out that there had been a bank robbery at the bank next door to the travel agent. The robbers had somehow interrupted the power supply which allowed them to do whatever they did.

I think I have related elsewhere how the company's 'Mr Fixit' took me to the airport and escorted me from kerbside to 1st class lounge in about 10 or 15 minutes just by waving his security pass at everyone! That's the only way to travel!

A few thoughts on the current situation starting with some background information taken from my copy of the South American Handbook, 1992:

* The Spanish landed in Venezuela (little Venice) in 1498, what they found was a poor country sparsely populated with very little in the way of a distinctive culture. It remained a poor country for the next 400 years or so, agrarian, exporting little and importing less.  Oil was discovered in 1914 and everything changed. It became the richest country in Latin America and the known reserves were estimated to last for 40 years. (i.e. until 2032)

* Only about 20% of the land area is devoted to agriculture and three quarters of that is pasture. (In effect, animal husbandry with little in the way of food crops)

* 84% of the population live in urban areas.

* Venezuela is Latin America's fourth largest debtor despite having foreign reserves of approximately US$20 bn accumulated by the mid 1980s from oil wealth.

Carlos Andres Perez was president of Venezuela while I was there in 1992 - https://en.wikipedia.org/wiki/Carlos_Andr%C3%A9s_P%C3%A9rez

Note the importation of 80% of food during his first term and the huge loan from Washington during his second term. If there are food shortages it means the supply chain has been cut and knowing how and why that has happened will be a clue to the reason for the current crisis. All of those loans will come with strings attached and any spending will be monitored by the 'money changers' with very little leeway.

 I watched the TV programme about Chavez last week and both Chavez and CAP seemed to me to be pursuing similar policies, trying to improve the living standards of their people. But they also made the same mistakes; relying solely on oil revenues and not investing in the future for when the oil runs out. The conditions attached to the various loans will probably mean that the social programmes of both Chavez and CAP will be abandoned in favour of 'austerity' as is happening in Europe.

During the last few days (at the end of January) the US policy on Venezuela has become blatantly obvious: regime change. And I look at the history of the continent and I cannot help but see that the US has supported every dictator in Latin America.

Since 1492 the imperial powers of Europe have sought to control the whole continent, both north and south. Spanish, Portuguese, Dutch, French and British have been playing a perpetual power game in order to exploit the 'Eldorado' of the new world. Now the US has joined the game and their main objective is oil, it is always oil for the US. It is the foundation of their foreign policy. I saw a comment somewhere that it wasn't really about oil because the US has more than enough oil in their own country. A very naive comment indeed; I first worked in the oil industry in the 70s and it was made clear to me that there were indeed massive resources in the US. Hundreds of wells have been drilled and capped and they serve as their reserve. Almost all of the American engineers I encountered would gleefully boast of how they were going to deplete the resources of other countries. After all, the supply is finite. The earth is not manufacturing oil any more. It was a great joke among Americans that when all of the foreign resources had been fully exploited then they would open the taps on their own wells.

With the whole world supporting the US actions except Russia and China who are lining up behind Maduro and the Venezuelan people, this is not going to end well so I leave the last word (28th January) to Ron Paul -
http://ronpaulinstitute.org/archives/featured-articles/2019/january/28/trump-s-venezuela-fiasco/

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Sackerson adds: these stories seem to imply that Venezuela "needs saving from itself"...

World Bank Reports Venezuela Oil Output Falling Since 2000


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