Posted by rogerhollander in Economic Crisis, Latin America, Venezuela.
Tags: Economic Crisis, Latin America, mark weisbrot, poverty, roger hollander, Venezuela, venezuela economy, venezuela inflation, venezuela poverty
Roger’s note: As a fact checking exercise I went to the web site of the World Bank cited at the end of this article. On its page for Venezuela I was unable to find data to confirm the statement that poverty has dropped by 20% in the past year. What I did find was a chart that showed that poverty as a percentage of population dropped to 25.4% in 2012 from 31.6% in 2011, which does mean a drop of 6.2%, which indeed is approximately a 20% drop for the previous year. This is the World Bank, folks, you can’t go wrong.
Women queue to buy toilet paper at a supermarket in Caracas as a result of the shortage of basic goods. (Photograph: Reuters/Jorge Silva)
For more than a decade people opposed to the government of Venezuela have argued that its economy would implode. Like communists in the 1930s rooting for the final crisis of capitalism, they saw economic collapse just around the corner. How frustrating it has been for them to witness only two recessions: one directly caused by the opposition’s oil strike (December 2002-May 2003) and one brought on by the world recession (2009 and the first half of 2010). However, the government got control of the national oil company in 2003, and the whole decade’s economic performance turned out quite well, with average annual growth of real income per person of 2.7% and poverty reduced by over half, and large gains for the majority in employment, access to health care, pensions and education.
Now Venezuela is facing economic problems that are warming the cockles of the haters’ hearts. We see the bad news every day: consumer prices up 49% over the last year; a black market where the dollar fetches seven times the official rate; shortages of consumer goods from milk to toilet paper; the economy slowing; central bank reserves falling. Will those who cried wolf for so long finally see their dreams come true?
Not likely. In the opposition’s analysis Venezuela is caught in an inflation-devaluation spiral, where rising prices domestically undermine confidence in the economy and currency, causing capital flight and driving up the black market price of the dollar. This adds to inflation, as does – in their theory – money creation by the government. And its price controls, nationalisations and other interventions have caused more structural problems. Hyperinflation, rising foreign debt and a balance-of-payments crisis will mark the end of this economic experiment.
But how can a government with more than $90bn in oil revenue end up with a balance-of-payments crisis? Well, the answer is: it can’t, and won’t. In 2012 Venezuela had $93.6bn in oil revenues, and total imports in the economy were $59.3bn. The current account was in surplus to the tune of $11bn, or 2.9% of GDP. Interest payments on the public foreign debt, the most important measure of public indebtedness, were just $3.7bn. This government is not going to run out of dollars. The Bank of America’s analysis of Venezuela last month recognised this, and decided as a result that Venezuelan government bonds were a good buy.
The central bank currently holds $21.7bn in reserves, and opposition economists estimate that there is another $15bn held by other government agencies, for a total of $36.7bn. Normally, reserves that can cover three months of imports are considered sufficient; Venezuela has enough to cover at least eight months, and possibly more. And it has the capacity to borrow more internationally.
One problem is that most of the central bank’s reserves are in gold. But gold can be sold, even if it is much less liquid than assets such as US treasury securities. It seems far-fetched that the government would suffer through a balance-of-payments crisis rather than sell its gold.
Hyperinflation is also a very remote possibility. For the first two years of the economic recovery that began in June 2010, inflation was falling even as economic growth accelerated to 5.7% for 2012. In the first quarter of 2012, it reached a monthly low of just 2.9%. This shows that the Venezuelan economy – despite its problems – is very capable of providing healthy growth even while bringing down inflation.
What really drove inflation up, beginning a year ago, was a cut in the supply of dollars to the foreign exchange market. These were reduced by half in October of 2012 and practically eliminated in February. This meant more importers had to purchase increasingly expensive dollars on the black market. This is where the burst of inflation came from.
Inflation peaked at a monthly rate of 6.2% in May, then fell steadily to 3% in August as the government began to provide more dollars to the market. It jumped to 4.4% monthly in September, but the government has since increased its auctions of dollars and announced a planned increase of food and other imports, which is likely to put some downward pressure on prices.
Of course Venezuela is facing serious economic problems. But they are not the kind suffered by Greece or Spain, trapped in an arrangement in which macroeconomic policy is determined by people who have objectives that conflict with the country’s economic recovery. Venezuela has sufficient reserves and foreign exchange earnings to do whatever it wants, including driving down the black market value of the dollar and eliminating most shortages. These are problems that can be resolved relatively quickly with policy changes. Venezuela – like most economies in the world – also has long-term structural problems such as overdependence on oil, inadequate infrastructure, and limited administrative capacity. But these are not the cause of its current predicament.
Meanwhile, the poverty rate dropped by 20% in Venezuela last year – almost certainly the largest decline in poverty in the Americas for 2012, and one of the largest – if not the largest – in the world. The numbers are available on the website of the World Bank, but almost no journalists have made the arduous journey through cyberspace to find and report them. Ask them why they missed it.
© 2013 Guardian News and Media
Posted by rogerhollander in Latin America, Media, Venezuela.
Tags: corporate media, el pais, Hugo Chavez, john lee anderson, Latin America, mark weisbrot, Media, new yorker, roger hollander, Venezuela, venezuela economy, venezuela education, venezuela health, venezuela poverty, yellow journalism
Published on Friday, February 1, 2013 by Al-Jazeera
Last week there was a real media hate-fest for Venezuelan president Hugo Chavez, with some of the more influential publications on both sides of the Atlantic really hating on the guy. Even by the hate-filled standards to which we have become accustomed, it was impressive.
Spanish flagship newspaper El Pais – known to be hostile to Venezuelan President Hugo Chavez – retracted its online and print editions after publishing on its front page a fake photo of Chavez using a breathing tube. (Reuters)
It’s interesting, since this is one of the only countries in the world where the reporting of the more liberal media – NPR or even the New Yorker – is hardly different from that of Fox News or other right-wing media (more on that below).
The funniest episode came from El País, which on Thursday ran a front page picture of a man that they claimed was Chavez, lying on his back in a hospital bed, looking pretty messed-up with tubes in his mouth. The picture was soon revealed as completely fake. Oops! The paper, which is Spain’s most influential publication (and with a lot of clout in Latin America, too), had to pull its newspapers off the stands and issue a public apology. Although, as the Venezuelans complained, there was no apology to Chavez or his family. Not surprisingly, since El Pais really hates Chavez. For a really funny pictorial response to El Pais, click here.
The New York Times, for its part, ran yet another hate piece on its op-ed page. Dog bites man. Nothing new here, they have doing this for almost 14 years – most recently just three months ago. This one was remarkably unoriginal, comparing the Chavez government to a Latin American magical realist novel. It contained very little information – but being fact-free allowed the authors to claim that the country had “dwindling productivity” and “an enormous foreign debt load”. Productivity has not “dwindled” under Chavez; in fact real GDP per capita, which is mostly driven by productivity growth, expanded by 24 percent since 2004 (for an explanation of why 2004 is a reasonable starting point, see here). In the 20 years prior to Chavez, real GDP per person actually fell. As for the “enormous foreign debt load”, Venezuela’s foreign public debt is about 28 percent of GDP, and the interest on it is about 2 percent of GDP. If this is enormous – well let’s just say these people don’t have a good sense of quantity.
The authors were probably just following a general rule, which is that you can say almost anything you want about Venezuela, so long as it is bad – and it usually goes unquestioned. Statistics and data count for very little when the media is presenting its ugly picture.
This is especially true for Jon Lee Anderson, writing in the January 28 issue of the New Yorker (“Slumlord: What has Hugo Chávez wrought in Venezuela?“). He mentions in passing that “the poorest Venezuelans are marginally better off these days”. Marginally? From 2004-2011, extreme poverty was reduced by about two-thirds. Poverty was reduced by about one-half. And this measures only cash income. It does not count the access to health care that millions now have, or the doubling of college enrollment – with free tuition for many. Access to public pensions tripled. Unemployment is half of what it was when Chavez took office.
I shouldn’t have to emphasise that Venezuela’s poverty reduction, real (inflation-adjusted) income growth, and other basic data in the Chavez era are not in dispute among experts, including international statistical agencies such as the World Bank or UN. Even opposition economists use the same data in making their case against the government. It is only journalists like Anderson who avoid letting commonly agreed upon facts and numbers get in the way of their story.
Anderson devotes many thousands of words, in one of America’s leading literary magazines, to portraying the dark underside of life in Venezuela – ex-cons and squatters, horrible prisons: “A thick black line of human excrement ran down an exterior wall, and in the yard below was a sea of sludge and garbage several feet deep.” He draws on more than a decade of visits to Venezuela to shower the reader with his most foul memories of the society and the government. The article is accompanied by a series of grim, depressing black-and-white photos of unhappy-looking people in ugly surroundings (I couldn’t help thinking of all those international surveys that keep finding Venezuelans to be among the happiest people in Latin America and the world – did Anderson never meet even one of these Venezuelans?).
I am all in favour of journalism that exposes the worst aspects of any society. But what makes this piece just another cheap political hack job is the conclusions that the author draws from his narrow, intentionally chosen slice of Venezuelan reality. For example:
They [Venezuelans] are the victims of their affection for a charismatic man… After nearly a generation, Chavez leaves his countrymen with many unanswered questions, but only one certainty: the revolution that he tried to bring about never really took place. It began with Chavez, and with him, most likely it will end.
Really? It sure doesn’t look that way. Even Chavez’s opponent in the October presidential election, Henrique Capriles, had to promise voters [SP] that he would preserve and actually expand the Chavez-era social programmes that had increased Venezuelans’ access to health care and education. And after Chavez beat him by a wide margin of eleven percentage points, Chavez’s party increased its share of governorships from 15 to 20 of 23 states, in the December elections that followed. In those elections, Chavez was not even in the country.
But it’s the one-sidedness of the New Yorker‘s reporting that is most overwhelming. Imagine, for example, writing an article about the United States at the end of President Clinton’s eight years – interviewing the homeless and the destitute, the people tortured in our prisons, the unemployed and the poor single mothers struggling to feed their children. Could you get away with pretending that this is all of “What Clinton has wrought in America?” Without mentioning that unemployment hit record lows not seen since the 1960s, that poverty was sharply reduced, that it was the longest-running business cycle expansion in US history?
This is an imperfect analogy, since many people outside the US know something about the country, and wouldn’t buy such a one-sided story line. And also because the improvements of the Clinton years didn’t last that long: the stock market bubble burst and caused a recession in 2001; the gains from the recovery that followed went mostly to the richest one percent of the population; and then the housing bubble burst, causing the worst recession since the Great Depression – from which we are still recovering. Unemployment today is considerably above the level of Clinton’s first year in office, and poverty has rebounded dramatically; and we could take another decade to get back to full employment. Whereas in Venezuela, progress has not been reversed; there really is no going back now that the majority of the country has gotten used to sharing in the country’s oil wealth – not just through government programmes but primarily through a higher level of employment and income in the private sector. Maybe that’s not “revolutionary” enough for Anderson, but it’s enough for Venezuelans to keep re-electing their president and his party.
As for the media, it is a remarkable phenomenon, this outpouring of animosity towards Chavez and his government, from across the western media spectrum. How is it that this democratically elected president who hasn’t killed anyone or invaded any countries gets more bad press than Saddam Hussein did (aside from the months immediately preceding invasions of Iraq)? Even when he is fighting for his own life?
The western media reporting has been effective. It has convinced most people outside of Venezuela that the country is run by some kind of dictatorship that has ruined it. Fortunately for Venezuelans, they have access to more information about their country than the foreigners who are relying on one-sided and often inaccurate media. So they keep re-electing the president and the party that has improved their lives – much to the annoyance of the major media and its friends.
© 2012 Al-Jazeera
Posted by rogerhollander in Foreign Policy, Latin America, Venezuela.
Tags: foreign policy, hillary clinton, Hugo Chavez, mark weisbrot, Media, roger hollander, Venezuela, venezuela election, venezuela government, venezuela politics, venezuelan government
Venezuela has an election for its national assembly in September, and the campaign has begun in earnest. I am referring to the international campaign. This is carried out largely through the international media, although some will spill over into the Venezuelan media. It involves many public officials, especially in the US. The goal will be to generate as much bad press as possible about Venezuela, to discredit the government, and to delegitimise the September elections – in case the opposition should choose to boycott, as they did in the last legislative elections, or refuse to recognise the results if they lose.
There’s no need for conspiracy, since the principal actors all know what to do. Occasionally some will be off-message due to lack of co-ordination. A fascinating example of this occurred last week when Senator John McCain tried to get General Doug Fraser of the US Southern Command to back his accusations that Venezuela supports terrorist activities. Testifying before the Senate armed services committee on March 11, General Fraser contradicted McCain:
“We have continued to watch very closely … We have not seen any connections specifically that I can verify that there has been a direct government-to-terrorist connection.”
Oops! Apparently Fraser didn’t get the memo that the Obama team, not just McCain, is in full campaign mode against Venezuela. The next day, he issued a statement recanting his testimony:
“Assistant Secretary Valenzuela [the state department’s top Latin America official] and I spoke this morning on the topic of linkages between the government of Venezuela and the Farc. There is zero daylight between our two positions and we are in complete agreement.
“There is indeed clear and documented historical and ongoing evidence of the linkages between the government of Venezuela and the Farc … we are in direct alignment with our partners at the state department and the intelligence community.”
Well it’s good to know that the United States still has civilian control over the military, at least in the western hemisphere. On the other hand, it would be even better if the truth counted for anything in these Congressional hearings or in Washington foreign policy circles generally. The general’s awkward and seemingly forced reversal went unnoticed by the media.
The “documented and historical and ongoing evidence” mentioned by General Fraser refers to material alleged to come from laptops and hard drives allegedly found by the Colombian military in a cross-border raid into Ecuador in 2008. Never mind that this is the same military that has been found to have killed hundreds of innocent teenagers and dressed them up in guerrilla clothing. These laptops and hard drives will continue to be tapped for previously undisclosed “evidence”, which will then be deployed in the campaign against the Venezuelan government. We will be asked to assume that the “captured documents” are authentic, and most of the media will do so.
US secretary of state Hillary Clinton‘s attacks on Venezuela during her trip to South America were one of the opening salvos of this campaign. Most of what will follow is predictable. There will be hate-filled editorials in the major newspapers, led by the neocon editorial board of the Washington Post (aka Fox on 15th Street). Chávez will be accused of repressing the media, even though most of the Venezuelan media – as measured by audience – is still controlled by the opposition. In fact, the media in Venezuela is still far more in opposition to the government than is our own media in the United States, or for that matter in most of the world. But the international press will be trying to convey the image that Venezuela is Burma or North Korea.
In Washington DC, if I try to broadcast on an FM radio frequency without a legal broadcast licence, I will be shut down. When this happens in Venezuela, it is reported as censorship. No one here will bother to look at the legalities or the details, least of all the pundits and editorial writers, or even many of the reporters.
The Venezuelan economy was in recession in 2009, but will likely begin to grow again this year. The business press will ignore the economic growth and hype the inflation, as they have done for the past six years, when the country’s record economic growth cut the poverty rate by half and extreme poverty by 70% (which was also ignored). Resolutions will be introduced into the US Congress condemning Venezuela for whatever.
The US government will continue to pour millions of dollars into Venezuela through USAid, and will refuse to disclose the recipients. This is the non-covert part of their funding for the campaign inside Venezuela.
The only part of this story that is not predictable is what the ultimate result of the international campaign will be. In Venezuela’s last legislative elections of 2005, the opposition boycotted the national elections, with at least tacit support from the Bush administration. In an attempt to delegitimise the government, they gave up winning probably at least 30% of the legislature.
At the time, most of the media – and also the Organisation of American States – rejected the idea that the election was illegitimate simply because the opposition boycotted. But that was under the Bush administration, which had lost some credibility on Venezuela due to its support for the 2002 coup, and for other reasons. It could be different under an Obama administration.
That is why it is so ominous to see this administration mounting an unprovoked, transparently obvious campaign to delegitimise the Venezuelan government prior to a national election. This looks like a signal to the opposition: “We will support you if you decide to return to an insurrectionary strategy,” either before or after the election.
The US state department is playing an ugly and dangerous game.
© 2010 Guardian News and Media Limited
Posted by rogerhollander in Foreign Policy, Honduras, Latin America.
Tags: Brazil, democracy, diplomacy, falklands, foreign policy, hillary clinton, honduras coup, honduras repression, Latin America, malvinas, mark weisbrot, porfirio lobo, roger hollander, zelaya
Hillary Clinton‘s Latin America tour is turning out to be about as successful as George W Bush’s visit in 2005, when he ended up leaving Argentina a day ahead of schedule just to get the hell out of town. The main difference is that she is not being greeted with protests and riots. For that she can thank the positive media image that her boss, President Obama, has managed to maintain in the region, despite his continuation of his predecessor’s policies.
But she has been even more diplomatically clumsy that Bush, who at least recognised that there were serious problems and knew what not to say. “The Honduras crisis has been managed to a successful conclusion,” Clinton said in Buenos Aires, adding that “it was done without violence.”
This is rubbing salt into her hosts’ wounds, as they see the military overthrow of President Mel Zelaya last June, and subsequent efforts by the US to legitimise the dictatorship there as not only a failure but a threat to democracy throughout the region.
It is also an outrageous thing to say, given the political killings, beatings, mass arrests, and torture that the coup government used in order to maintain power and repress the pro-democracy movement. The worst part is that they are still committing these crimes.
Today nine members of the US Congress – including some Democrats in Congressional leadership positions – wrote to Clinton and to the White House about this violence. They wrote:
“Since President Lobo’s inauguration, several prominent opponents of the coup have been attacked. On 3 February, Vanessa Zepeda, a nurse and union organiser who had previously received death threats linked to her activism in the resistance movement, was strangled and her body dumped from a vehicle in Tegucigalpa. On 15 February, Julio Funes Benitez, a member of the [water and sewage workers] trade union and an active member of the national resistance movement, was shot and killed by unknown gunmen on a motorcycle outside his home. Most recently, Claudia Brizuela, an opposition activist, was murdered in her home on 24 February. Unfortunately these are only three of the numerous attacks against activists and their families … “
Clinton will meet on Friday with “Pepe” Lobo of Honduras, who was elected president after a campaign marked by media shutdowns and police repression of dissent. The Organisation of American States and European Union refused to send official observers to the election.
The members of Congress also asked that Clinton, in her meeting with Lobo, “send a strong unambiguous message that the human rights situation in Honduras will be a critical component of upcoming decisions regarding the further normalisations of relations, as well as the resumption of financial assistance.”
This was the third letter that Clinton received from Congress on human rights in Honduras. On 7 August and 25 September members of Congress from Hillary Clinton’s own Democratic party wrote to her to complain of the ongoing human rights abuses in Honduras and impossibility of holding free elections under these conditions. They did not even get a perfunctory reply until 28 January, more than four months after the second letter was sent. This is an unusual level of disrespect for the elected representatives of one’s own political party.
For these New Cold Warriors, it seems that all that has mattered is that they got rid of one social democratic president of one small, poor country.
In Brazil, Clinton continued her cold war strategy by throwing in some gratuitous insults toward Venezuela. This is a bit like going to a party and telling the host how much you don’t like his friends. After ritual denunciations of Venezuela, Clinton said “We wish Venezuela were looking more to its south and looking at Brazil and looking at Chile and other models of a successful country.”
Brazilian foreign minister Celso Amorim responded with diplomacy, but there was no mistaking his strong rebuff to her insults: he said that he agreed with “one point” that Clinton made, “that Venezuela should look southwards more … that is why we have invited Venezuela to join MERCOSUR as a full member country.” Clinton’s rightwing allies in Paraguay’s legislature – the remnants of that country’s dictatorship and 60 years of one-party rule – are currently holding up Venezuela’s membership in the South American trade block. This is not what she wanted to hear from Brazil.
The Brazilians also rejected Clinton’s rather undiplomatic efforts to pressure them to join Washington in calling for new sanctions against Iran. “It is not prudent to push Iran against a wall,” said Brazilian president Lula da Silva.” The prudent thing is to establish negotiations.”
“We will not simply bow down to an evolving consensus if we do not agree,” Amorim said at a press conference with Clinton.
Secretary Clinton made one concession to Argentina, calling for the UK to sit down with the Argentine government and discuss their dispute over the Malvinas (Falklands) Islands. But it seems unlikely that Washington will do anything to make this happen.
For now, the next crucial test will be Honduras: will Clinton continue Washington’s efforts to whitewash the Honduran government’s repression? Or will she listen to the rest of the hemisphere as well as her own Democratic members of Congress and insist on some concessions regarding human rights, including the return of Mel Zelaya to his country (as the Brazilians also emphasised)? This story may not get much US media attention, but Latin America will be watching.
© 2010 Guardian News and Media Limited