Friday, December 10, 2010

Words of Wisdom

Mario Vargas Llosa on his Nobel acceptance speech making the claim for Liberal Democracy

No debemos dejarnos intimidar por quienes quisieran arrebatarnos la libertad que hemos ido conquistando en la larga hazaña de la civilización. Defendamos la democracia liberal, que, con todas sus limitaciones, sigue significando el pluralismo político, la convivencia, la tolerancia, los derechos humanos, el respeto a la crítica, la legalidad, las elecciones libres, la alternancia en el poder, todo aquello que nos ha ido sacando de la vida feral y acercándonos -aunque nunca llegaremos a alcanzarla- a la hermosa y perfecta vida que finge la literatura, aquella que sólo inventándola, escribiéndola y leyéndola podemos merecer. Enfrentándonos a los fanáticos homicidas defendemos nuestro derecho a soñar y a hacer nuestros sueños realidad.

Friday, December 03, 2010


Interesting cables from around election time

Did Evo steals votes?   when he clearly did not need to, in order to win the constitutional referendum, the US Embassy has some interesting thoughts on that.
Summary: With the January 25 constitutional
referendum rapidly approaching, all signs point to victory
for President Morales and his ruling Movement Toward
Socialism (MAS) party. Although the opposition has made

inroads into the MAS lead, most national polls point to
between 54 and 60 percent support for the proposed
constitution (with one government poll showing 66 percent),
and the MAS appears set to leverage its considerable rural
base to victory. After a series of national news articles
raised questions about significant fraud in the August 2008
recall referendum, the National Electoral Court has taken
pains to advertise the electoral rolls as secure. However, a
recent poll shows less than half of the public shares the

court's confidence, and the opposition believes significant
electoral fraud is likely. While cheating seems unnecessary
to secure victory for the MAS, padding their lead would give
the party leverage in congressional negotiations regarding
legislation implementing hundreds of vague constitutional
clauses. Opposition leaders continue to fear the MAS will
use any stalemate in these negotiations to close congress and
institute rule by decree. At both the national and regional
levels, the margin of victory matters. A landslide for the

MAS nationally, or large victories for the opposition in the
eastern departments, could spark more conflict. End summary.

Tuesday, November 30, 2010

The State Department Cables - Evo is Difficult Says Christina

Revelations about US-Bolivian relations from the infamous State Department Cables

Christina and Nestor Kirchner had good relations with Thomas Shannon Undersecretary of State during the Bush administration.  acting as a secret go-between for the US Government with Evo.

Colaboración en Bolivia
Los telegramas intercambiados entre la Embajada en Buenos Aires y la Secretaría de Estado muestran las buenas relaciones que llegaron a mantener Néstor Kirchner y la presidenta con la Administración de George Bush y su secretario de Estado adjunto para Asuntos de América, Thomas Shannon, y la difícil comunicación que existió, al menos hasta marzo-abril de este año, con la Administración de Obama y, sobre todo, con Arturo Valenzuela.
La confianza con Shannon llegó hasta el punto de que la presidenta aceptó "cooperar con el Gobierno de Estados Unidos en Bolivia". "CFK afirma que Argentina cooperará con el USG [Gobierno de Estados Unidos] en Bolivia, pero que tenemos que ser cuidadosos para que no parezca que existe una 'operación política' contra el Gobierno, dadas las sospechas de Evo", asegura el telegrama norteamericano. Shannon ya había dado seguridades a la presidenta argentina de que Estados Unidos garantizaba la integridad territorial de Bolivia e intentaba, con muy poco éxito, convencer a Evo Morales de que Washington no tenía nada contra él. "Evo no es una persona fácil, nos confía CFK, haciéndonos notar que Argentina tiene problemas para conseguir que Bolivia le abastezca de gas natural. Todos necesitamos paciencia, nos dijo", relata el entonces embajador Wayne. Poco antes, un telegrama informa de las gestiones que ha hecho el ministro de Exteriores argentino, a solicitud del embajador de Estados Unidos, para bajar la tensión en Bolivia respecto a Washington y garantizar la seguridad de su Embajada en La Paz. "Taiana nos informa de que ha llamado tres veces al viceministro boliviano para insistir en esos dos puntos".
Un despacho enviado por la Embajada en Buenos Aires antes de la visita de Shannon en agosto de 2008 expone claramente cuáles son las demandas de Estados Unidos al Gobierno argentino: "Esperamos que Argentina desempeñe un papel positivo en evitar un conflicto y llevar a buen puerto la democracia en Bolivia; que influya en el presidente ecuatoriano, Rafael Correa, para que se comporte con más moderación; que tome una posición más constructiva, madura y equilibrada en el conflicto colombiano y que influya positivamente en su contraparte venezolana".

 So much for Evo being threatened by the US:

* Shannon asked the Kirchners to reassure Evo that the US guaranteed Bolivia's territorial integrity (this was during the time that Evo was accusing the US of supporting the regional opposition in Santa Cruz which he claimed wanted to split the country)

* Shannon asked the Kirchners to try to convince Evo that the "US didn't have anything against him". trying to lower tensions
* The American Embassador in Buenos Aires asked Argentinian Foreign Minister Taina to intercede with Bolivian authorities to  "lower the tension in Bolivia" vis a vis the U.S. and to guarantee the "safety" of the American Embassy in La Paz. (This coming after mobs of Evo-supporters - with at least some officialist connivance- attacked the U.S. Embassy and nearly set it ablaze). 
* Christina Kirchner describes Evo as "not an easy person"

What emerges at least from this series of cables is a State Department from the past couple of years actually using diplomacy to deal with and get along with a rather prickly ideologue like Evo.    Far cry from trying to destabilize him as he claims.

The Kirchners also come across as having much better relations in private with the Bush Administration than they let on in public.

Sunday, November 07, 2010

Bolivias Shrinking Gas Reserves - The Price of Evo's Nationalization Part 1


Bolivia's government has finally confirmed what Bolivian analyst Hugo Del Granado reported a month ago,  tthat the country's natural gas reserves have dropped precipituously.

From Merco Press

According to a recent audit commissioned by the Bolivian government and conducted by US-based consulting firm Ryder Scott allegedly shows that the country has only 8.3 trillion cubic feet of proven gas reserves, sharply lower than the range of 12.8 trillion to 26.7 trillion that has appeared in contradictory official versions.
“It's a blow to the expectations that have been built up since the start of the decade concerning ... (factors) that gave Bolivia an economic advantage in the regional context,” energy sector analyst Hugo del Granado is quoted in La Paz press.

Del Granado caused a stir days ago when he published an article about a preliminary yet reliable report he had seen concerning a sharp drop in proven gas reserves, noting the government has been keeping the information secret since June.
Apparently the recent audit commissioned by the government and conducted by U.S.-based consulting firm Ryder Scott shows that Bolivia has only 8.3 trillion cubic feet of proven gas reserves, sharply lower than the range of 12.8 trillion to 26.7 trillion that has appeared in contradictory official versions.
Bolivia is “resisting the truth” because acknowledging the reality would mean losing its status as the second-leading natural gas power in South America, Del Granado said, adding that the country currently ranks fourth in the region in terms of proven reserves.
Venezuela has 200 trillion cubic feet of gas reserves, followed by Argentina, with 13.2 trillion; Brazil, 12.7 trillion; Peru, 11.2 trillion cubic feet; and Colombia, 4.4 trillion, according to figures cited by the expert.
Bolivia's former superintendent of oil and gas, Carlos Miranda, told the media that, if the drop in reserves is officially confirmed, Bolivia would be faced with “the nation's biggest-ever natural resources disaster.”

 Its A Gas --

Bolivian law requires an annual certification of its proved natural gas and oil reserves for the previous year ending December 31st, by an independent certification firm.   Proved reserves of natural gas are "estimated on the basis of geological and engineering data that make it possible to determine with reasonable certainty if the oil and gas found in known fields could be recovered in current economic and operating conditions", to use the widely accepted SEC definition.    In order to perform the certification,  certifiying company would send personnel to the country, go on-site to the gas fields and headquarters of everyone involved in oil and gas, and pore over seismic, production and financial data and present a certification report.

But Who's Counting?
 Carlos Villegas - President of YPFB, very recently Morales' Hyrocarbons Minister, a main architect of Evo's nationalization strategy, finally admitted that the gas reserves were at 12.8 Trillion Cubic Feet, after months of dodging the question of what the results of the 2009 certification were. 

Amazingly enough during his tenure running the nationalized hydrocarbons sector there has been no certifcation of reserves.  Ironically, the same "neo-liberal" governments Villegas made a career out of vilifying complied with this certification rather scrupulously.
 Bolivia previously used,  De Goyler & MacNaughton,  until 2006 when  Evo's government fired them.  Using a new methodology D & M had given a report lowering reserve estimates in some of Bolivia's major gas fields from 22,48 TCF in 2004 to 12,86 TCF for 2005 - leaving around 15TCF total.    Evo's government was angered with this report, saying it was "politically motivated" to harm Bolivia's nationalization process.   This argument is being used again, but without mentioning that Bolivia's largest gas producer Petrobras (and the multi-national that would be behind any of  D&M's dastardaly "plots") was vociferously against this report.    And alienating a State company like YFPB would not seem in character for a company whose client list includes many large State Oil Companies of countries with prickly rulers like Libya and Russia.  That also brings up the point that if the 2005 report if accurate could mean that D&M over-estimated gas reserves in the preceding 8 years to inflate corporate filings.   Then again, part of that downward estimate could have involved  the change in hydrocarbon laws and taxation regime in 2004 and 2005, that made recovering a certain percentage of that gas economically inviable and/or resulted in lower spending on exploration, maintenance, and drilling which would also affect the numbers down.   Problem with all of this is that the report and certification was not accepted by the government, and its contents are privileged information that can only be revealed by the government. 

 Whatever the real figures were for 2005, there was nothing to compare them to.  Morales' MAS administration violated existing (and current) laws requiring annual certification of reserves.  Any doubts from D&M's report, could have been resolved by simply hiring another auditing firm.   Despite a public licitation no one was hired to audit the 2005 year, and for that matter 2006, 2007 and 2008.  Finally another certification company Ryder Scott was hired to do the work

This goes to very basic transparency in resource management.   Evo's government has resolutely failed to show where reserves are at.  According to the 2010 report from Revenue Watch  Index of Transparency: Governments and the oil, gas and mining industries  Bolivia's State hydrocarbon sector ranks among the least transparent in the region.  below countries like Chile, Peru, Brazil, and Colombia whose state companies publish regular information on reserves, volumes of sales, etc.

As Revenue Watch points out the success of Chile and Peru:

According to this model, fisca lpolicy and tax collection is the finance ministry’s domain, an autonomous agency regulates and sets policy for the extractive sector, and a state-owned company is in charge of purely commercial activities. The existence of autonomous regulatory agencies overseeing exploration and production of hydrocarbons with relatively strong tax systems and publicly listed yet state-controlled companies creates multiple sources of information on these countries’ extractive sectors, which reflects strong
disclosure of information. They therefore provide examples of strong legal and regulatory structures
that, when implemented effectively, can enhance extractive sector transparency.
During the much pilloried "Neoliberal" administrations after 1997 there was actually a somewhat clear-cut division of responsibilities and independent regulation of the sector.   An independent Hydrocarbons Superintendency regulated all the players in the industry, and acted as a consumer watchdog in such areas as gas stations.  The Hydrocarbons Ministry set policy, and YFBP and its 00 employees were charged with supervising and enforcing the contracts with the private-party partners in exploration, production and refining.
These three public sector entities also provided detailed information on contracts, public licensing rounds, daily gas and oil production volumes, and annual reserves. 

Paradoxically "nationalizing" the hydrocarbons industry and centralizing its operations, has "deregulated" and de-institutionalized the entire sector.  Morales government folded the Superintendency transferring some of its functions into the Ministry of Hydrocarbons, in effect making the Ministry responsible for regulating itself.   YFPB is now theoretically in charge of the entire downstream and upstream sectors of the oil industry, with no real oversight.   The MAS has also De-professionalized and politicized the running of State entities placing political hacks and industry neophytes The ideologically charged and rather confusing MAS constitution has also further muddled the entire industry.    Meanwhile there is little real public information from the authorities, including something as basic as daily gas production which is released not by the State but by a third party company.

It is this ideological backwardness, lack of transparency, and downright technical ignorance that has set the stage for this gas catastrophe.  These conditions have created an environment where the companies with the know-how and money have stopped investing in the sector, which is why reserves are where they are at

Sunday, October 03, 2010

How FDR Banning Sales of Airplanes To Bolivia Led To Landmark Supreme Court Decision And To Bolivian mythology

At issue

On April 1934 a joint resolution of Congress was passed giving President Roosevelt the power to forbid the sales of arms to Boliva or Paraguay in the Chaco War.

Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That if the President finds that the prohibition of the sale of arms and munitions of war in the United States to those countries now engaged in armed conflict in the Chaco may contribute to the reestablishment of peace between those countries, and if after consultation with the governments of other American Republics and with their cooperation, as well as that of such other governments as he may deem necessary, he makes proclamation to that effect, it shall be unlawful to sell, except under such limitations and exceptions as the President prescribes, any arms or munitions of war in any place in the United States to the countries now engaged in that armed conflict, or to any person, company, or association acting in the interest of either country, until otherwise ordered by the President or by Congress.

Sec. 2. Whoever sells any arms or munitions of war in violation of section 1 shall, on conviction, be punished by a fine not exceeding $10,000 or by imprisonment not exceeding two years, or both. 

President Roosevelt then issued an executive order

Now, therefore, I, Franklin D. Roosevelt, President of the United States of America, acting under and by virtue of the authority conferred in me by the said joint resolution of Congress, do hereby declare and proclaim that I have found that the prohibition of the sale of arms and munitions of war in the United States to those countries now engaged in armed conflict in the Chaco may contribute to the reestablishment of peace between those countries, and that I have consulted with the governments of other American Republics and have been assured of the cooperation of such governments as I have deemed necessary as contemplated by the said joint resolution, and I do hereby admonish all citizens of the [p313] United States and every person to abstain from every violation of the provisions of the joint resolution above set forth, hereby made applicable to Bolivia and Paraguay, and I do hereby warn them that all violations of such provisions will be rigorously prosecuted.

And I do hereby enjoin upon all officers of the United States charged with the execution of the laws thereof the utmost diligence in preventing violations of the said joint resolution and this my proclamation issued thereunder, and in bringing to trial and punishment any offenders against the same.

And I do hereby delegate to the Secretary of State the power of prescribing exceptions and limitations to the application of the said joint resolution of May 28, 1934, as made effective by this my proclamation issued thereunder.

Curtis Wright Corporation, sold machine guns and airplanes to Bolivia, and was charged with a violation of the act.   It defended itself in Court arguing that Congress' resolution and President Roosevelts order were unconstitutional granting of power to the Executive and an overextension of power in commerce.

After the lower Court ruled against the government, the issue was brought before the U.S. Supreme Court.  In the landmark case, U.S. v. Curtis Wright  the Supreme Court ruled in its full decision that the President had supremacy in national security and foreign affairs  This case is required reading in Civil Procedure and Constitutional Law classes in U.S. Law Schools.    This doctrine of executive supremacy has also led to furious debates the past 80 years, and been used as a justification by FDR in WWII, LBJ in Vietnam, Bush's 1 and 2 in Iraq, etc.
  As this summary states

The Court, in an opinion written by Justice George Sutherland, ruled that the joint resolution was constitutional and that the charges against Curtiss-Wright would stand. The Court held that the Constitution's text constrains only the domestic activities of the federal government, but does not constrain the activities of the government abroad. The Court argued further that, like any other country, the United States has "external sovereignty" by which it may liberally assert or defend itself on the world stage as a free and independent nation. As Sutherland put it, "as a member of the family of nations, the right and power of the United States [in foreign affairs] are equal to the right and power of the other members of the international family. Otherwise, the United States is not completely sovereign." The federal government thus has unlimited power to conduct foreign affairs on the nation's behalf.

The Court also ruled that this unlimited power lies exclusively with the president. Quoting former Chief Justice John Marshall (in his role as a member of the House of Representatives, before his appointment to the Court), the Court maintained that "The President is the sole organ of the nation in its external relations, and its sole representative with foreign nations." The president's exclusive power to negotiate treaties and conduct warfare proves that the Constitution's drafters intended the document to give the executive significant powers to conduct foreign affairs. In sum, even though the Constitution is silent as to the president's power to impose embargos, such a power is implied within the executive's constitutional authority to manage foreign affairs. The government's charges against the Curtiss-Wright company would stand.  

Bolivia Wrights and Standard

Going back to Bolivia, the Chaco War,and in particular back to the original Resolution and Executive order, it has also had long term effects.

While Curtis-Wright fought F.D.R.'s executive order in order to continue its war-profiteering, other American companies were not so eager to challenge an assertive Roosevelt Administration. Standard Oil Company found itself in a situation where selling aviation fuel to Bolivia's Air Force (as in to fill-up said Curtis-Wright warplanes), could be construed as violatiing the arms and ammunition embargo. Rather than face potential administration sanction (money and potential jail time), the New Jersey company refused to sell aviation fuel to Bolivia's Military.

This failure to sell fuel has been used to justify the Bolivian governments decision to nationalize all Standard Oil  holdings after the War.  Diplomatic cables from that time show the many excuses the Bolivian government used to justify this decision.   And from the tone of the communications, it also appears that it was not a priority of the Roosevelt administration from Secretary of State Cordell Hull down to punish Bolivia for expropriating the assets of the company.  

However none of this has done anything to dissuade Bolivians from the national myth that Standard Oil was sabotaging Bolivia's war efforts and that Bolivia rightfully expropriated this companies holdings facing huge opposition from U.S. Imperialism..  For all its many misdeeds worldwide - as befitting a Rockefeller monopoly-  there is little real evidence of Standard Oil misbehaving in Bolivia in the latter part of the Chaco War years..  It must be remembered that any spoils in the Chaco were: merely "potential." in the 1920's and 30's.  Standard Oil in the 1930's was focused on an intense fight for the very lucrative Argentine oil fields and market.  

In the end, feuding over some Bolivian airplanes contributed to expanded Presidential powers in the United States and fueled (no pun intended) Bolivian resource nationalism.   

Friday, September 24, 2010

Mono Jojoy Meets His Maker

Top FARC military commander and member of the directorate whose nom de guerre was Mono Jojoy a/k/a Jorge Brice~o, was killed in Colombia by the military after a concerted effort of several years to contain and isolate his command.

He literally grew up with the FARC. He was raised among the backwoods Stalinist bands that split from the Liberal Party rural guerillas of the Violencia period. Jacobo Arenas, the FARC's top ideologue and strategist, knew him from childhood, and became a life-long mentor and booster. Besides Communist indoctrination, a teenaged Mono Jojoy received plenty of on-the-job training as a guerilla fighter. By the 80's he had risen through the ranks to commmand large formations. Eventually he led the powerful East Front (Bloque Oriental) for years, Mono Jojoy was known as a top battlefield commander who in the 90's delivered strong blows to Colombia's military.

During the Zona De Despeje/Cease Fire period, he was all over the press and television, roaming around in a 4x4 with a posse that included many female guerillas.

In a country that has produced legendary (and telegenic) sociopaths like Pablo Escobar and Carlos Castano, Jojoy is right up there. He was a ruthless killer who ordered terror killings and kidnappings of thousands of Colombians. He was up to his neck in the drug racket the FARC ran, as well as their policy of keeping military and civilian hostages. Basically, he bears a lot of blame in the FARC's crimes of the past 30 years that have extended the conflict and ungovernability in Colombia

His death is a blow to the FARC. Directorate members - once considered invulnerable- have died like flies since 2007. Jojoy's reputation of a top commander leading the strongest guerilla columns will be extremely demoralizing to rank and file guerillas as well as middle and top leaders.

The noose also tightens on Cano, and the other directorate members. They have nothing to bargain with.

Friday, August 20, 2010

Daniel Ortega Places Himself All Over the Sandinista Revolution

via Two Weeks Notice: A Latin American Politics Blog
: Quote of the day: Nicaragua this story from the LA TIMES

At museum, Nicaragua president's favorite masterpiece is himself

Go to the Museum of the Sandinista Victory, and Nicaraguan President Daniel Ortega is everywhere. There he is on the northern front of the revolutionary war — and the southern front, and the western front.

Ortega has Forrest Gumped himself onto all the major battle lines of the struggle that dethroned dictator Anastasio Somoza in 1979, carried the Sandinista movement to power and radically changed Nicaraguan history.

As for all the other comandantes and major figures who shared in those events with similar or even more important roles?

"We have been erased," said Sergio Ramirez, the renowned writer and a member of the Sandinista government who served as vice president during Ortega's first term as president, from 1985 to 1990.

Ortega lost in 1990 — the first post-revolution democratic election — and lost three more times before finally returning to power by winning the presidential election in 2006.

The museum, a government-run project about a year old, is an open-air display that purports to illustrate the historic fight of the Nicaraguan people to rid their nation of decades of "gringo invasions" and other onerous shackles (as the young tour guide put it).

It is also but one example more of what many here see as the cult of personality surrounding Ortega.

In the age-old tradition of dictators including Kim Jong Il and Saddam Hussein (not to mention Somoza, whom Ortega did help depose), the Nicaraguan president has built a national homage to himself. Billboards dot this sprawling, haphazard capital with a larger-than-life picture of him alongside national heroes Ruben Dario and Augusto Sandino. Nicaraguans speak less of Sandinismo and more of Danielismo.

This reminds me of Stalin's image appearing in official pictures denoting October Revolution moments, where he had never been, or closer to Lenin.

Fact is, Daniel was the Sandinista's main polical tactician, his brother Humberto one of the main military tactician.

But, he was hardly a top battlefield commander during the main phases of the war which were the insurrection in 78 and the final offensive in 79, in any of the main fronts - Frente Norte, Frente Sur or Frente Interno.

And as a matter of policy after the triumph of the revolution the 9 commanders of the Sandinista National Directorate including Humberto and Daniel were co-equal in directing the affairs of the party, the army and the state. That was the result of a power sharing agreement, brokered by Fidel Castro, where the 3 main factions or "tendencias" within the FSLN would be represented at the top and theoretically co-govern equally. Even as president later in the mid-80's Daniel was still in theory accountable to the other 9 commanders.

Having spent years watching and seeing Sandinista propaganda on a daily basis, I can say that their message always focused on the party directorate and less on indviduals.

One of the main slogans of the FSLN, chanted by its cadres at rally's and propaganda was:
"Direcion Nacional Ordene!"

The only individuals they propped up in propaganda were dead - "martyrs".

The bottom line is that there was in the FSLN a tendency to not elevate individual commanders or politicians. Some of that due to them wanting to keep the peace internally, after the sectarian conflicts in the FSLN in the 70's. The other political one, was to avoid creation of a cult of personality that would bring back terrible memories by the Nicaraguan people. After all they had just risen up against Somoza 3.0 who ruled Nicaragua like the family farm for decades, continuing the dynasty started by 1.0 in the 30's.

Daniel Ortega placing himself everywhere in official memory is on the one hand misleading if not untrue. He was not in the main battle fronts when the fighting was going on -annoying former comrades who were there. Also annoying some other former Sandinistas because it is against their policy of subordinating individual personalities, and a dislike of personalism inherited from Somocismo.

Saturday, July 31, 2010

Brazil's Bolsa Familia - The Economist Article

Brazil's Bolsa Familia has been a great success in reducing poverty in Brazil thru payments to poor families, based on whether their children stay in school. The Economist finds that it is a rousing success in rural areas, and succesful though slightly problematic in urban areas

Great Ayrton Senna Tribute From Top Gear

The excellent BBC Car Program Top Gear has a great tribute to Ayrton Senna.  What makes it stand out is how it focuses on Senna's technical abilities and talents as a driver, which sometimes gets overlooked in the mythology.   The Brazilian is presented warts and all. 


Friday, July 30, 2010

Evo's Witch Doctor Gets Busted!!!

The so-called Aymara "Priest" who presided over Evo Morales' Presidential Inauguration  in Bolivia was found red handed with many kilos of some sort of cocaine derivative at his house.  Allegedly he was wearing his ceremonial robes.  The sorcerer apparently was casting an ancient Chapare spell of purification over about 500 pounds of cocaine base, when the police rudely interrupted the Amauta..

Valentín Mejillones, 55 años, fue quien entregó el bastón de mando a Morales cuando éste juró a su segundo mandado en enero en un rito andino celebrado en el mayor templo arqueológico del país.
Ostenta el título de amauta que en la religiosidad andina es el máximo líder espiritual. El martes en la noche, la policía allanó su domicilio en una barriada de la ciudad de El Alto, vecina a La Paz y lo sorprendió elaborando cocaína.
Llevaba su poncho ceremonial el momento de la detención. Fue detenido junto a su hijo y a una pareja de colombianos que no fueron identificados por la policía, según el informe del director de la fuerza antidroga, coronel Félix Molina.

Saturday, July 03, 2010

New York Times - Economies in Latin America Race Ahead

The New York Times, article discusses strong economic growth in several Latin American countries, despite the global recession. 

Strong demand in Asia for commodities like iron ore, tin and gold, combined with policies in several Latin American economies that help control deficits and keep inflation low, are encouraging investment and fueling much of the growth. The World Bank forecasts that the region’s economy will grow 4.5 percent this year.
Recent growth spurts around Latin America have surpassed the expectations of many governments themselves. Brazil, the region’s rising power, is leading the regional recovery from the downturn of 2009, growing 9 percent in the first quarter from the same period last year. Brazil’s central bank said Wednesday that growth for 2010 could reach 7.3 percent, the nation’s fastest expansion in 24 years.
After a sharp contraction last year, Mexico’s economy grew 4.3 percent in the first quarter and may reach 5 percent this year, the Mexican government has said, possibly outpacing the economy in the United States.
Smaller countries are also growing fast. Here in Peru, where memories are still raw of an economy in tatters from hyperinflation and a brutal, two-decade war against Maoist rebels that left almost 70,000 people dead, gross domestic product surged 9.3 percent in April from the same month of last year. 

And, then there is the obvious failure -
In Venezuela, electricity shortages and fears of expropriations caused gross domestic product to shrink 5.8 percent in the first quarter. But Venezuela, and to a lesser extent Ecuador, another oil-dependent country that lags behind its neighbors in growth, seem to be exceptions to a broader trend.

Sunday, June 27, 2010

Bolivia- Indigenous Challenges to Evo Morales

Miguel Centellas at Pronto has a post Bolivia: the indigenous/environmentalist challenge to Evo’s government

 Centellas is referring to the new controversies in Bolivia that have arosen from both indigenous and environmental groups using the language in the new constitution to challenge certain development projects (mostly hydrocarbons) that the Morales government wants.    


The bottom line is that the government is losing its grip on the indigenous movement. Attacking its leaders as agents of USAID (or US imperialism more broadly) and/or acting in line w/ the “extreme right” seems odd. During the 2005 campaign—and for several months later—Evo & MAS clearly raised the banner of indigenous political autonomy. By doing so, it raised expectations that indigenous groups have patiently waited for & now expect fulfilled. Similarly, the People’s Conference on Climate Change raised the banner of a pro-environmental policy agenda. Indigenous peoples & environmental activists took this as a green light to begin pressing their demands to protect Bolivia’s fragile ecosystems (which happen to be in oil-rich areas).
These last weeks may have irrevocably changed perceptions of Evo’s government. The country has a long experience w/ populist figures who use symbolic rhetoric, but never really “mean it” beyond as a way to strengthen their grip on power.

Saturday, June 19, 2010

Of Tickets And US Soccer Fans At The World Cup

People have commented that the US is the single largest source of ticket buyers for the World Cup.

You don’t see many foreign fans here in Johannesburg, but the largest single group of them are Americans. People in the US bought more tickets for this World Cup than any other visiting country. “In the public sale, it’s more than the next two countries combined,” notes a proud Sunil Gulati, president of the US Soccer Federation.

The figure is more or less 164,000 tickets.

This article, and other commentary on the web sees this as evidence that U.S. soccer is gaining popularity. The New Republic blog even  proclaims that the Soccer Wars are over  And I do not dispute that as the numbers from the U.S. England match on ABC/Univision show - a total viewing audience of 17 million, several times bigger than the Indy 500 to use an example..

Now what I am curious about is finding out how many of those 164,000 tickets were from from U.S residents of .Mexican,  Argentinian, Chilean, Brazilian,  Honduran, South Korean, Nigerian, et. al. birth or origin, who travelled to South Africa to cheer on a specific national team.   Or for that matter European expats.  Univision seems to have no problem finding them in the crowds at many matches. 

The FT blogger himself talks about the constituency that soccer has in the United States

Since then, the US has globalised fast. Significantly, it’s the two most globalised groups of Americans who follow soccer most keenly. The first group consists of immigrants: about 45m Hispanics now live in the US, mostly from soccer-mad Mexico. The second group is the educated elite. David Downs, executive director of the US bid committee to host the World Cup in 2018 or (more likely) 2022, says of America’s soccer hotbeds: “It’s not necessarily the dusty farms of the heartland, as it is the suburbs of Washington DC or San Francisco.”
And no doubt many of those ticket-buyers from the U.S. fall into either categories (or even both).  But it is many immigrants in the U.S. who have the means to spend the high dollar amounts needed to get to South Africa and watch Argentina, Mexico,. or Nigeria play.    They might go root for the U.S. with their children - again something you see in Univision.

In the end the U.S. ticket buyers and U.S. viewing public on TV is important to the World Cup whoever they are rooting for. It is the sheer numbers of people watching, in what the New Republic correctly notes is a fragmented media market of different "niches".  And that weight already shows worldwide.
All these folks will be watching the World Cup. American TV companies shelled out $425m for the rights to the 2010 and 2014 tournaments, then the biggest such deal done in any country. The US was only the 13th biggest TV market for the tournament in 2002, in absolute numbers of viewers. By 2006, it had jumped to eighth, notes Kevin Alavy of futures sport + entertainment, the agency that monitors these things. This year the US should rank higher still.

Monday, June 14, 2010

Afghanistan Might Have Massive Lithium Reserves - Potential Mineral Riches

While Bolivia is known to have a significant part of the lithium reserves in the world, this might change drastically.  The Afghan government recently announced that American geologists found "huge lithium deposits amounts" in Afghanistan's Ghazni province.  These new discoveries are part of a survey that has found large deposits of key exportable minerals including zinc, gold, and copper in the country.  Large parts of it are in conflicted areas.     Apparently decades of conflict prevented this kind of wide-ranging survey, though many Afghan geologists have known of mineral riches and kept it quiet due to the political situation.

The New York Times reported the $1 trillion figure in Monday's edition and quoted senior American officials as saying untapped mineral deposits in Afghanistan are far beyond any previously known reserves and were enough to fundamentally alter the Afghan economy and perhaps the Afghan war itself.
Americans discovered nearly $1 trillion in untapped mineral deposits in Afghanistan, including iron, copper, cobalt, gold and critical industrial metals like lithium, according to the report. The Times quoted a Pentagon memo as saying Afghanistan could become the "Saudi Arabia of lithium," a key raw material in the manufacture of batteries for laptops and cell phones.

 Then there is this quote from the New York Times article specifically talking about the Lithium
Just this month, American geologists working with the Pentagon team have been conducting ground surveys on dry salt lakes in western Afghanistan where they believe there are large deposits of lithium. Pentagon officials said that their initial analysis at one location in Ghazni Province showed the potential for lithium deposits as large of those of Bolivia, which now has the world’s largest known lithium reserves.

The Lithium part should wake up not only Bolivia, but also Chile and Argentina, because a sizeable deposit of Lithium in Afghanistan, could mean rapid exploitation and export of an alternative to South American lithium.   The weight of the U.S. and the Afghan desire for revenue and development, can mean that even in a conflicted area, resources could be brought to bear in developing the industry.  


Bolivia's government has said its plans for lithium development are "not affected" by news of the Afghan lithium.   The Presidency's official spokesman said, "Afghanistan is a country practically at war" - actually an understatement.   With atypical restraint the official continued that he was not sure how easy it would be to "resolve" the conflict issue in Afghanistan, implying it is not a problem for Bolivia.  

EH VUVUZELA! Vuvuzela Might Get Banned!!!

The loud,  sometimes obnoxious sometimes awesome Vuvuzela's might get banned from matches.. 

Could vuvuzelas fall silent? Ban possible

By Liz Clarke
Acknowledging a rising tide of complaints about the deafening din of vuvuzelas during World Cup matches, Danny Jordaan, chief executive of the tournament's local organizing committee, warned Sunday that the plastic horns could be banned if fans don't show more respect in their bugling.
In an interview with the BBC, Jordaan reiterated calls for fans not to blow vuvuzelas during the playing of a country's national anthem or during announcements over the soccer venues' public-address system. Asked if the horns could be banned, Jordaan said: "If there are grounds to do so, yes."
A ban on vuvuzelas was considered in the months leading up to the 2010 World Cup, but officials chose to allow them, with FIFA President Sepp Blatter arguing against efforts "to Europeanize" the first World Cup contested on African soil.

Get Your Own Vuvuzela on Ebay...

Saturday, June 12, 2010

Flashback 1988.....Gipsy Kings - Djobi Djoba

talk about a blast from the past....hard not to like the French-based group of Gitanos

Friday, June 11, 2010

Mexican Fans In South Africa

LOL count the national and cultural iconic symbols these five fans have crammed in.

its all there - Virgen De Guadalupe, Wrestler Mask, Charro Sombrero, Aztec Costume, Serape,Chapulin Colorado.   Outside of a Straw Sombrero a la Zapata or a Cantinflas costume, they seem to have done a comprehensive job.

from Univision -
El sueño mexicano se vivió así - Univision Futbol

Peru Inagurates Huge Natural Gas Export Plant, Bolivia Has Its Dignity

Peru's massive Liquid Natural Gas plant I talked aboout in an earlier post,  was just inagurated.  The project cost close to 4 billion dollars;  it is South America's first Natural Gas Liquification facility.  As Peruvian President Alan Garcia noted it is the "largest" "single project" ever made in Peru, as well as the largest foreign investment ever in the country.    The facility will receive gas from the Camisea gas fields, process and store it as LNG and ship in special tankers to customers overseas.    Though, there are doubts there is enough gas in Peru to sustain exports and meet national gas demands in the country, there is an increase in production and planned investments in the hydrocarbons sector to increase gas production.

video of Alan Garcia talking about how important this is.

Bolivia next door, actually has no issues with the size of its gas reserves.  But, it does not have investments necessary to raise production, much less the capacity in anyway shape or form to export LNG.  Its best chance to do that was through the Pacific LNG project that led to the infamous "gas wars".   But, the problem is that while Bolivia became the "Bermuda Triangle" of hydrocarbons in South America, both its neighbors and the industry as a whole have evolved.   Peru, Venezuela, and Brazil are seriously investing in producing LNG for export.  At the same time  Argentina, Brazil, Chile, and Uruguay are investing in regasification facilities to receive LNG shipments.   In other words countries with large markets for gas are looking at buying it off ships, instead of through pipelines - which was Bolivia's theoretical strength. 

Thursday, June 10, 2010

"Bolivia and Argentinas Gas Crisis Shakes South American Region"

Bolivia and Argentina's Gas Crisis Shakes Region,  according to Ana Zarzuela energy analyst at Spain-based  Intelligence and Capital News Report.

Basically, the idea of Bolivia as the "Gas Hub" first under the neoliberal governments, then with a more "statist" focus, called for Bolivian gas to be piped out to neighboring countries through pipelines.

But under Evo Morales, Bolivia has become an unreliable supplier.  The state-owned oil and gas company, can barely supply existing obligations, and production levels are stuck.  Most experts agree that the industry needs investments and know-how  from private and foreign companies.    Owing mostly to the governments attacks on private industry and judicial insecurity, this looks unlikely to happen.
While Bolivia has become an unreliable supplier of energy needs, neighboring countries have found other alternatives, including buying Liquid Natural Gas abroad and importing it via sea.   

The latest blow to Bolivian aspirations has to be Venezuela's PDVSA setting up regasification facilities in Argentina, that in coming years will process natural gas coming from....Chavez' Venezuela.    By, by, Bolivian gas.

Esta situación pone a Bolivia, que exporta sólo a través de ductos, en una posición muy distinta de hace cinco años, cuando se proyectaba como el centro de distribución regional. Se lo acaba de describir a Morales su propia Cámara de Hidrocarburos (CBH): detectan “un fuerte contraste entre el crecimiento del GNL en barcos metaneros a los centros de demanda de Sudamérica y el estancamiento de exportación de gas natural boliviano en gasoductos”. De la gran red que Hugo Chávez y Morales prometían tejer en toda Sudamérica con Argentina como punta de lanza, hoy no queda ni la intención diplomática. Las zozobras de La Paz y Buenos Aires, el pragmatismo de Caracas y los recelos de Brasilia, Santiago y Montevideo han podido más. “La apuesta por un proceso de integración por gasoductos, que tuvo un crecimiento explosivo en la capacidad de transporte internacional incorporada entre 1998 y 2002, de los 19,1 MMmcd a 105,8 MMmcd -advierte la CBH- ha llegado al estancamiento”. “El incumplimiento de contratos por parte de Argentina y Bolivia, el estancamiento de la inversión y la poca confiabilidad mostrada parecen haber postergado el apetito de los importadores regionales, para nuevos proyectos de integración intrarregional” por gasoductos, apunta la CBH.

Monday, May 24, 2010

Evo Opens A Gas Station!! *UPDATED 05/26/10

YPFB inauguró estación de servicio en Sucre
Lunes, 24 Mayo 2010
Sucre 24 mayo (AN-YPFB).- Con la presencia del Vicepresidente del Estado Plurinacional de Bolivia, Álvaro García Linera, Yacimientos Petrolíferos Fiscales Bolivianos (YPFB Corporación), inauguró...
 While Bolivia's Oil Company, YPFB can  barely drill a well anywhere in the territory, it celebrates the opening of a Gas Station in Sucre as a big deal, with the Vice President Alvaro Garcia Linera on hand.  That is funny-pathetic, from a company that last year spent more than $4 million USD in 2009 on marketing and advertising - as in publicizing its "successes" as pretty much campaign ads for Evo prior to the December elections.  On the other hand, its 2009 budget for job training for its 1400+ employees (only 26% of whom are oil and gas professionals) was a paltry $260,000. Instead it spends money on silly things like gas stations.

Mind you, building and running gas stations is expensive and not that profitable.   Gas stations that handle thousands of gallons of fuel, and are poorly run can be easy pickings for theft.     YPFB started getting out of that business about 18 years ago, due to the corruption and drain of resources itf was for the State.   Ask most Bolivians about the quantum leap in quality and service provided by private gas stations - from the ones the State ran, or for that matter from the ones it is running now.

EDIT -   Bolivian oil expert Carlos Miranda, has a good piece on what a disaster it is that YPFB is opening gas stations.   It can be seen as a new "nationalization" of the sector, since private stations will now have to compete with the state monopoly with sole control of fuel production and distribution.   Making matters worse is that Evo's government destroyed the regulatory agency, repsonsible for regulating the sector.

Estimado lector tengo dos noticias, una mala y la otra peor.    La mala. YPFB está retornado a la venta de combustibles al por menor. Para operar ha reparado estaciones de servicio y está construyendo nuevas.  Continuará con esta política hasta llegar al control de esa actividad. Así cerraría el círculo petrolero estatizante desde la exploración hasta la venta en surtidores.

La venta al detalle es una actividad totalmente boliviana. Pequeños empresarios que han invertido cerca de $us 200 millones y son dueños de más de cuatrocientas estaciones. Por eso el gobierno y YPFB han tenido un poco de pudor y no se animan a decir que las van a nacionalizar. 

YPFB no tiene memoria, no aprenden de sus dificultades y/o errores pasados.  Ventas al por menor, cuando no hacen ni dos meses ha tenido una estafa en la venta de carburantes en Santa Cruz, que ha provocado retiros de personal incluyendo nada menos que a un gerente comercial!

Cuando se creó YPFB el país se abastecía de refinados peruanos,  transportado por llamas y expendidos en ferreterías. Rápidamente YPFB substituyó las llamas con camiones cisternas plateados con el logo de YPFB e instaló los primeros surtidores. A partir de 1954 sólo vendían producción nacional que abastecía plenamente la demanda en calidad y cantidad. Por eso YPFB está en el alma de los bolivianos.

Para reducir costos y personal después, decidió alquilar sus instalaciones. Sindicatos y partidos políticos se abalanzaron vorazmente a las concesiones de surtidores.  Como YPFB era la única instancia para autorizar la construcción de estaciones de servicio, se convirtió en el centro del tráfico de influencias. La implantación del Sistema Regulatorio puso fin al festín de corrupción. La Superintendencia de Hidrocarburos se hizo cargo de la autorización y control de las estaciones de servicios. En esa forma ha logrado más de 400 estaciones de servicio en el país, muchas de ellas en al área rural,  todas prestando servicio las 24 horas del día.

Ahora YPFB quiere volver casi un siglo atrás poniendo y administrando instalaciones propias para competir con las estaciones privadas. Con el sistema regulatorio, casi inexistente que pueda impedirlo,  se viene una competencia desleal dirigida a que los propietarios vendan a YPFB sus instalaciones a precio de “gallina muerta” y así evitar “nacionalizar” inversiones bolivianas. Ejemplo,  lo que esta sucediendo con AeroSur y BoA.

Pobres nosotros los usuarios, lo que nos espera: mala atención, horarios irregulares, adulteración de productos, etc, etc.

Sunday, May 16, 2010

BOLIVIA - - Evo Morales' Industrialization Schemes FAIL, while Peru laughs all the way to the bank

Remember the Gas War? October, 2003, many Bolivians had a meltdown over a proposed 1.5 billion dollar project to export Liquid National Gas; a pipeline would send Bolivian gas to a new liquification plant and port complex to be built in Chile.   The outcry, in the context of a full mobilization by angry Cocaleros and disafection over economic recession (among many factors), ended with dead protestors and the forced ouster of the Constitutionally elected President.    Evo Morales a vociferous opponent of the project and guiding force behind many of the mobilizations that had paralyzed the country since 2000, was elected President in 05 to recover Bolivia's national resources from ugly multinationals, and to industrialize the mineral wealth of the country instead of exporting only raw materials.  

Build It And They Will....Nationalize It....

Evo, to the acclaim of some and the hope of many, signs a contract with Jindal Steel, a very large Indian Steel Company to mine an enormous iron ore deposit near the Brazilian border.      Jindal in a joint venture with the Bolivian State, agreed to invest over 2 billion dollars to not only mine the ore, but to build production facilities for steel and iron production.    Regardless of whether you like Evo or not,  it actually seemed at the time to be a win for Bolivia,.   The mineral rich Mutun, had been eyed for decades by past Bolivian governments for its potential, but nothing had gone through, now seemed as good a time as any.

Three years after the signing and approval of the whole deal.     The project is paralyzed, with Jindal ready to bail out.  Some of it seems to be due to Evo's dubious choices to run the Bolivian side of the deal, who were political appointees - labor leaders to be more precise.   Bolivia did not provide all the land (arguably it did provide most), but failed to build the roads needed and other infraestructure.   The company was supposed to invest at least 600 million, instead it spend about 20 million to build some offices, and to mine the ore for export as raw materials.   Morales' record of further "nationalizations" of foreign companies, constant rants against capitalism and the private sector, and the rather confusing Constitution might also have made the Indian conglomerate nervous, to the point where they would forfeit a 20 million dollar bond to get out of the deal.   Some common sense and direction, and the thing can probably be restarted, as of now its in limbo.

Where The Air Is Rarerified

While this entire process went from courtship to failure, in next-door Peru, a consortium to build a large LNG plant connected via a pipeline to Peru's largest gas fields, was taking shape.    It was started around the same time that Bolivia was having its massive meltdown over gas in 2003, the original concept was to be an alternative to Chilean ports for transporting Bolivian gas. But then it evolved more into exporting Peruvian production.    The project was approved and financed and the decision to go ahead was made in late 2006 - more or less while Evo was finalizing gthe deal with Jindal.

Well, as of April 2010, the full project - the largest single foreign investment in Peruvian history at close to $4 billion dollars - is almost ready.  The pipeline that runs through the Andes and desert is done, the docking facilities for the tankers and the processing plants and storage facilities are almost finished.    That is the speed with which private and public projects with backing, know-how, and leadership advance.    

Evo Cumplido

   Bolivians should take a look at what is being finished in Peru - they could have had something similar.  Arguably the Chile LNG plant would have been finished and exporting gas by now.   Ironically, the proposed project facilities in Chile - partly-owned by the Bolivian government - included a petrochemical facility.  It would have meant  Industrialization.  Bolivian natural gas used as raw material for Industrial goods.  Instead they have Evo whose four years in power have consisted of dramatic media spectacles like nationalization, constant political campaigning and propaganda, while living off the bounty produced by record world prices for things like hyrdrocarbons, in industries whose very existence is mostly due to the sectoral policies of  previous governments.

The Morales' governments socialist ideology and mania for centralization gives increasingly larger responsibilities for the State in the economy.   However, the only "nationalized"sector it runs well seems to be  mass media,  as it keeps on buying newspapers and other media to proselitize further.   What that media won't be reporting are things like the fact that in four  years of Evo's nationalized State Oil Company, YPFB, not one new discovery has been made,  only three wells were drilled last year (versus 64 in 2000, and more than 100 in Peru), and the country has to import gasoline for the first time in decades.   Blame a MAS government whose strident rhetoric and erratic behavior have chased away foreign investors.   A government that follows discredited economic policies,  places party-line over competence, values ideology more than technical or managerial know-how,  whose regulations have made its administration less transparent and accountable,  is prone to corruption, and is just plain inept.   To put it bluntly, it can't run a damn thing even with money in the bank. 

Evo's government takes it further; the MAS administration is incapable of even delegating and overseeing projects, where friendly investors do most of the actual work and spend most of the investment money.   Mutun is an example of four years of doing, absolutely nothing, except speeches about how great it is,   During that same time period the Peruvian government happily enabled a mega-consortium to build a huge export facility, port facility, and not to mention a large pipleine that crossed over mountains and deserts.  And that the project has spurred billions of dollars in investments in natural gas production, raising Peru's proven reserves - still nowhere near Bolivia's.   Considering the fact that at least one of the investors was involved in the Bolivia LNG project it is not farfetched to say that Peru LNG money originally was destined to be invested in  Bolivia, but ended up next-door, as have billions in exploration and production investments.   End score - Bolivia does not have a pipeline to the Pacific and a LNG processing plant and port on the Pacific, and neither does it have an operational steel plant making steel for domestic industry or export using Mutun iron ore.  Thats a lose-lose situation.

What could have been.?..


This is very, very good.   Glenn Beck as of 2008, complaining about healthcare - as in care he received while sick- in his usual crybaby fashion,. Then as of 2010, of course Obamacare is evil Jon Stewart on the Daily Show demolishes him.

thanks to My Favorite Jon Stewart PWNS

See Beck-tard get all personal in that piece... there is a method to his loony weepiness.
The crying conservative how Glenn Beck Taught His Feminine Side to Turn Tricks

Friday, May 14, 2010

Wrecking Venezuela - More From The Economist on Chavez

The unraveling of the Caracas Consensus continues unabated,

[President Hugo Chavez] threats against Colombia—which include a total trade embargo if Juan Manuel Santos, a former defence minister, wins this month’s presidential election—and the evidence of his veiled support for the FARC are troubling. They are a constant, if so far manageable, source of regional tension. And his efforts to build a block based on self-proclaimed “revolutions”, anti-Americanism and managed trade in the heart of democratic Latin America have served to undermine the very cause of regional integration that he claims to champion. But rhetoric aside, his influence in the region peaked a couple of years ago. He lost one ally, albeit in regrettable circumstances, when Honduras’s president, Manuel Zelaya, was overthrown last year. Several others are on the defensive.

Much more important is the damage Mr Chávez is doing to his own country. His “21st-century socialism” is a precarious construction. The brief fall in the oil price of 2008-09 was enough to sink Venezuela’s economy into stagflation—even as the rest of Latin America is enjoying vigorous economic recovery. Venezuelans are suffering declining real wages, persistent shortages of staple goods (meat is the latest to become scarce) and daily power cuts.

The blackouts are in part the result of drought. But they are also the most dramatic sign that the bill for a decade of mismanagement of the economy and of public services is now falling due (see article). There are plenty of other ugly portents. In one of the world’s biggest oil exporters hard currency is running short: to buy a dollar in the tolerated parallel market now requires almost twice as much local currency as the official exchange rate (and three times more than the privileged rate for “essential imports”). Investors rate the country’s debt as the riskiest of anywhere. Crime and corruption are flourishing.

Time to pay the piper Hugo

Thursday, May 13, 2010

The Economist - "Hugo Chávez's Venezuela Feeling the heat" Caracas Consensus Crashes

But for the time being the Bolivarian revolution (named after Simón Bolívar, South America’s independence hero) faces unprecedented difficulties. Everyday life is getting harder for Venezuelans. While the rest of Latin America is recovering strongly from the world recession, Venezuela is slumped in stagflation. The boom came to an abrupt end when the oil price plunged in the later months of 2008. Although it has since risen again strongly, Venezuela’s economy has not (see chart). Mr Chávez last month accepted that it “could” shrink again this year, confounding earlier official forecasts of growth. The IMF projects a contraction of Venezuela’s GDP of 2.6% this year, after a fall of 3.3% last year. By March, average wages (allowing for inflation) were 15% below their peak of 2007.

What’s in a BRIC? - Project Syndicate

Joseph Nye, argues that the BRIC acronym, "makes ilitte sense for long-term assessments of global power relations"  particularly when it comes to the R - as in Russia.

While a BRICs meeting may be convenient for coordinating some short-term diplomatic tactics, the term lumps together disparate countries that have deep divisions. It makes little sense to include Russia, a former superpower, with three developing economies. Of the four members, Russia has the smallest and most literate population and a much higher per capita income, but, more importantly, many observers believe that Russia is declining while the other three are rising in power resources.
Brazil in Nye's view does come across pretty well - 
Since curbing inflation and instituting market reforms in the 1990’s, Brazil has shown an impressive rate of economic growth in the range of 5%. With a territory nearly three times the size of India’s, 90% of its 200 million people literate, a $2 trillion GDP equivalent to Russia’s and per capita income of $10,000 (three times India’s and nearly twice China’s), Brazil has impressive power resources. In 2007, the discovery of massive offshore oil reserves promised to make Brazil a significant power in the energy arena as well.

Ultimately,  it will not become a "serious political organization"  of like-minded states" more like a group of countries that do well economically.

So, how seriously should analysts take the term BRIC? As an indicator of economic opportunity, they should welcome it, though it would make more sense if Indonesia replaced Russia. In political terms, China, India, and Russia are competitors for power in Asia, and Brazil and India have been hurt by China’s undervalued currency. Thus, BRIC is not likely to become a serious political organization of like-minded states.
What’s in a BRIC? - Project SyndicatePosted using ShareThis

Tuesday, May 11, 2010

Why Naomi Klein is Really Stupid - Bolivia version

Among the most inane and just plain absurd deifications of Evo, is this gem by hard-left idiot extraordinaire Naomi Klein,  Klein's nonsensical worldview and silly ramblings were perfectly skewered by Jon Chait in a classic article. in The New Republic.   Now she goes to Cochabamba, for Bolivia's People Summit on Climate Change enlightening us on how Evo Morales can literally save the world, or something close to that.  No, I am not kidding, you can tell where this is going just from the title of her article: Bolivia's fight for survival can help save democracy too.

It was 11am and Evo Morales had turned a football stadium into a giant classroom, marshalling an array of props: paper plates, plastic cups, disposable raincoats, handcrafted gourds, wooden plates and multicoloured ponchos. All came into play to make his main point: to fight climate change "we need to recover the values of the indigenous people".
Naomi seems to think this pearl of deep thinking,  just sums up how great Evo is.  Evo's indigeneous values?  They owe more to the Cuzco Emperor's -whose scorched-earth tactics finally brought what then was known as Kollasuyu into the Inca' Empire-,  than with the worship of a benign Gaia-like Pachamana, imagined by New Agers and Environmentalists. 

Not content with that, she says that Bolivia's rhetoriticians can offer us real solutions to the crisis of "failed democracies" and "global warming". 

With the Cochabamba summit, Bolivia is trying to take what it has accomplished at the national level and globalise it, inviting the world to participate in drafting a joint climate agenda ahead of the next UN climate gathering in Cancun. In the words of Bolivia's ambassador to the United Nations, Pablo Solón: "The only thing that can save mankind from a tragedy is the exercise of global democracy."
If he is right, the Bolivian process might save not just our warming planet, but our failing democracies as well. Not a bad deal at all.
So how can Bolivia be an example for the World?   Is Klein thinking of Evo's version of State-Capitalism? His "neo-extractivism" comes with the usual environmental oversight and transparency common to the old Eastern block countries. Environmentally sound?  Evo's Cocalero allies are chopping down trees in national forests to grow coca, run-off from the increased coca processing plants is polluting even Lake Titicaca.   Democracy?  His version of democracy seems to have more to do with centralist dirigismo  and "smashing oligarchs" than it does with "grass roots" ground-up democracy.  

Forget the world, Bolivia's neighbors Peru, Chile, and Brazil  pointedly avoid most of the Evo-agenda.  They all seem to do rather well economically with their forms of social-democratic capitalism, while avoiding the messy authoritarianism and cult of personality around Morales.   For all Klein's rants against the Washington Consensus, countries that have followed the "Caracas Consensus" policies advocated by Chavez and Morales have done pretty bad, a fact that she would never concede.  Anyways.

Ironically, many affected indigineous people were shut out of the conference. Seems they might have issues with some of the State's development ideas. And Evo sure made Naomi prouder, by going on about gays, chickens, and bald people to everyone's amusement. Except for proud neo-Stalinist Naomi, who is too stupid to get it.

Evo Nationalizes Energy Companies - Part 2

As reported before, Evo Nationalized several electrical companies.  Now Britiain's The Economist weighs in-

Since taking office in 2006 Mr Morales, Bolivia’s first elected president of indigenous descent, has taken over oil and gas, mining and telecoms businesses. Partly as a result, he is popular. When campaigning for a second term in an election last year, he promised that power companies would be next. The targeted firms thought they had avoided this fate by negotiating a deal in which the government would take a bare majority stake. No such luck.
But the May Day nationalisation seems to be bringing Mr Morales diminishing returns. To his bemusement, workers at one of the nationalised companies, a co-operative in Cochabamba, staged a protest sit-in. Although Bolivia’s gas revenues have risen sharply, that has as much to do with higher prices and contracts signed before Mr Morales took office as with rolling back privatisation, according to Carlos Alberto López, an energy official in a previous government. Most of the newly state-run firms have performed poorly.

South America - State Oil Companies While Colombia has record production, Bolivia and Venezuela are a Mess

Colombia's State Oil Company Ecopetrol is exporting record amounts of crude this year.

Bolivia's State Oil Company, YPFB after 4 years of Evo has turned Bolivia from being self-sufficient in most fuels and natural gas products, into a country that imports gasoline (even from Chile!) and liquefied petroleum gas (from Peru).   Gas production is static, despite the record prices and South American demand.    In 1999 there were 65 wells drilled in Bolivia, in 2009 there were 3 (three.)    Four years of government has meant six different CEO's for Bolivia's National Oil Company.  One of the exes is in jail, result of the worst scandal in YPFB company history last year.

Venezuela's PDVSA - once the flagship State Oil Company in the region, is producing a million less barrels of oil per day than it did in the 90's, it is a mismanaged mess, that is deeply in debt. 

Reason:  Colombia has a sensible hydrocarbons policy, in which the State plays an active role, while also allowing foreign participation and investment.   Bolivia and Venezuela do not - in many cases directly due to conscious policies in the last four years that reversed the modernization reforms of the 90's. 

Colombia, laws and regulations, modified in 2004, provide a comprehensive framework for the hydrocarbons sector.  Centuries of obsessiveness with the language finally pay off  in areas other than Magical Realist novels, as the carefully drafted legislation seems pretty clear and comprehensive.  Starting with the Constitution and the relevant legislation, the Country's laws set out clearly delimited areas of responsibility and accountability for all actors in the energy sector. The Ministry of Mines is responsible overall for the extractive industries, the Unit for Mining and Energy Planning (UPME) is responsible for research and planning future energy needs,  a unit of the Ministry of Mines, the ANH  administers the hydrocarbons sector - both private and state companies,  the regulatory agency  CREQ regulates the energy market of which natural gas is a part.  The National Oil Company, Ecopetrol, is the leading oil company in the country.

Ecopetrol unlike YPFB or PDVSA,  is not granted a monopoly on production, and is expected to be another competitor in the market..   To make sure it is competitive under this scheme, Colombian legislation ensures Ecopetrol has managerial autonomy, follow standard corporate rules and procedures, and pretty much operates as a modern international hydrocarbons company.    And to raise investment funds, it adopted a novel scheme.  it raised capital through stock offerings,  selling 20% of its shares in offerings in which Colombian citizens had first-right to buy, and there was a monetary and percentage cap as to how much any one individual could buy, to ensure national and "democratically" distributed ownership.   With this financing it has begun an ambitious cycle of investments that will boost Colombia;s coffers.

As part of its plan to increase investment and expand the industry, Colombian law allows private and foreign companies of all sizes to participate in the upstream and downstream part of the hydrocarbons business, either individually or as partner with Ecopetrol.   Colombia's current legal system, has laws that protect private investment.     As a result of this security foreign investment  in hyrdrocarbons has soared,  exceeding  3.5 Billion dollars a year for the past couple of years.

Drill Evo Drill

On the other hand, Bolivia's newly Nationalized Oil and Gas sector is arguably less transparent than it has been in the last 15 years.   Evo got rid of the somewhat competent independent regulatory agency that  "neoliberal" governments had set up, placing those responsibilities within the same ministerial bureaucracy.    Instead of openly soliciting bids for joint ventures or other projects, the government in past years has enacted decrees unilaterally picking partners and setting up ventures with foreign companies with little oversight.and questionable legality.  To make matter worse, the management of  the State Oil Company YPFB, starting right from the Morales governments inaguration has been politicized and de-professionalized, with corruption scandals of all sorts and incompetent decisionmaking and planning.  This sorry state of affairs has succeeded in stalled production.
While Venezuela at least on paper allows for foreign participation, Evo's Bolivia has policies described by one analyst as "tougher than Cuba's", limits all activities related to hydrocarbons exploration, production, and commercialization to YPFB, though it can sign limited contracts with outside companies.  But even these service contracts are in a sort of legal limbo due to the inconsistencies - and outright confusion- in the new Constitution.  As a practical matter,  the decrees, laws passed since 2005, and the new Constitution do not provide a comprehensive set of rules of the game, to put it simply.   It is hard for the players in the Bolivian hydrocarbons sector to know where they stand, and that is true even for the State!  Marcelo Quiroga Santa Cruz is probably spinning in his grave.    Small wonder that investment by foreign companies in Bolivia have dropped dramatically.    Forget harsh government rhetoric, having a Constitution that when it is not being stridently anti-capitalist  is confusing and vague when talking about  the extent of the States right to contract over resource rights, to private property rights and protection of investments,  does not seem like a good place to invest in.

Venezuela and Bolivia's have followed a failed statitst model,  For all the talk about Bolivia's "democracy from below" in the words of Evo apologist Jim Schultz, its so-called alternative to "neoliberalism" is bankrupt at its core.

The key here is that countries like Colombia that are doing well,  and are doing so outside of the stereotype of the neoliberal/washington consensus/imf bogeyman..   Ecopetrol is a nationally-owned State Company like Yacimientos or PDVSA.  But Colombia has built a framework that allows its State-owned company to thrive, while allowing foreign companies with their technology and know-how to actively participate in exploration and production of hyrdrocarbons.  This may not be the best system out there, but at least it ensures Colombias public coffers grow, and the industry longs well poised in the long-run.     Bolivia, sadly, seems to prefer to imitate the State Oil Company in Venezuela, instead of the one that works in Colombia.