Monthly Archives: August 2008

As Cuba moves towards capitalism, Venezuela moves in opposite direction

CARACAS – For nearly ten years, Cuba has served as an inspiration, if not a template, for Venezuela’s “Bolivarian Revolution.”  Venezuelan President Hugo Chávez has made no secret of his admiration for Cuba or his close friendship with the island nation’s former leader, Fidel Castro.  Swapping everything from doctors to farming equipment, the two countries have developed a close partnership based on a shared commitment to socialist ideals.

A recent change in Cuban leadership has, however, sent the two countries’ economies moving in opposite directions.  Raúl Castro, Cuba’s current president and younger brother of Fidel, has made small but significant moves towards opening-up the country’s staunchly socialist economy.  Earlier this summer his administration announced that it was abolishing salary caps, a long-standing measure guaranteeing that all Cubans make roughly the same amount of money.

Carlos Mateu, Deputy Labor and Social Security Minister, told the Communist Party daily Granma that, under the new system, “the socialist principle of distribution will be achieved wherein everyone earns in accordance with his contribution, in other words, pay in accordance with quality and quantity.”

“Generally, there has been a tendency for people to earn the same, and that egalitarianism is not helpful,”  the paper quoted Mateu as saying.  “That is something that we have to fix … because if it is harmful to pay workers less than they deserve, it also is harmful to pay them what they have not earned.”

Cuba’s overtures to capitalism stand in sharp contrast to recent developments in Venezuela.  A little over a week ago, President Hugo Chávez used the last day of his congressionally-awarded decree powers to pass 26 new laws.  These laws, affecting everything from the military to housing and social security, are almost identical to legislation that narrowly failed a public vote last December.

Coupled with a move to nationalize The Bank of Venezuela, several of the new laws reflect an attempt to gain greater control over a national economy bolstered by the high price of petroleum.  While chances are slim that Chávez will further nationalize the banking industry, public debate rages over inflation, which is widely suspected to be much higher than reported by the government.  While the government claims that inflation remains slightly below its year-end goal of 19.5 percent, critics claim that it hovers somewhere over 30 percent.

One of the laws passed by decree, “The Law for the Growth and Development of the Popular Economy,” recognizes barter as a valid means of economic transaction.  The law also recognizes community organizations and initiatives as the “tools that will propel the complete development of the nation” of Venezuela.

Another of the laws makes it illegal for food chains, distributors and suppliers to ignore government price controls or withhold “items of basic necessity” from Venezuelans.  Last year, the Chávez administration argued that speculators were hoarding milk and other goods, leading to a nation-wide shortage.

Both the administration and its critics agree that the laws are an attempt to increase government control of the volatile, oil-rich Venezuelan economy.

Jorge Botti, an economist who heads a Fedecamaras committee studying the impact of government policy on the private sector, described the laws as an attempt to create a “state-run economic system” that will not work for Venezuelan businessmen and businesswomen. 

Chávez, meanwhile, has argued that the laws are necessary and in the interest of the people.

“To all Venezuelans, revolutionaries or not, I tell them that we are with them and that we are working for them.  All of these laws are discussed for the benefit of the country,” he said.

“Do they know who used to make the laws here?  Lawyers paid by the oligarchs,” Chávez continued.  “The banking laws were made by private bankers.  They paid some lawyers to write-up the laws, and the gurus from AD and Copei (the two dominate political parties prior to Chávez) sent them over to the Senate.  That’s over with.  As long as Chávez is here, the people are in charge.”


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Chávez’s Midnight Decrees

Caracas – Less than 24 hours after announcing plans to nationalize one of Venezuela’s largest banks, President Hugo Chávez used the last day of his congressionally-granted decree powers to pass 26 new laws on Friday.  One of the laws is thought to pertain to banking reform, likely facilitating Chávez’s intended purchase of the Banco de Venezuela.  A cloud of secrecy hangs over the laws, however, until at least next week when their content will be revealed.

“All they did was publish the titles of the laws,” said Miguel Octavio, whose blog “The Devil’s Excrement” is one of the oldest and most frequently visited of opposition blogs in Venezuela.  “It looks like we will have to wait until next Wednesday to find out what, exactly, Chávez has done.”

Venezuela’s National Assembly granted Chávez the power to pass legislation by decree exactly 18 months ago.  That legislation, entitled “The Enabling Law,” came about largely because the opposition boycotted the fall 2006 election, leaving them out of the Assembly.  Prior to Friday, Chávez had passed 35 laws by decree, most of them administrative.  His most controversial law by decree was a recent reform of the Venezuelan intelligence agencies, which he promptly revoked due to widespread public opposition.

“The idea was that he should legislate by decree, but discuss things with the Assembly and the people,” Octavio said.  “There’s only one person who really governs in Venezuela, and that’s Hugo Chávez.”

The Venezuelan President’s latest move is bound to cause worries, even for some of his longtime supporters.  Not only does it come on the heels of his announcement to nationalize Banco de Venezuela, but it also arrives just as the country awaits an important decision by the Tribunal Supremo de Justicia, Venezuela’s highest court.  The Tribunal is expected to decide early next week whether or not the government was right to ban nearly 300 candidates from the upcoming elections.  Government ministers argue that the ban only punishes candidates that have yet to penalized for abuses committed while in office, and that it affects all parties–even that of the President–equally.  The opposition claims that the ban is nothing more than a thinly-veiled attempt to keep several of its popular gubernatorial candidates out of the election.

Details remain murky on both Chávez’s nationalization plan and the 26 last-minute laws.  While it is unclear whether or not Banco de Venezuela’s Spanish owners will sell, it is certain, at least, that by the end of next week, Venezuelans will find out just what, exactly, their president has cooked up for them this time.

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For Chávez, time runs out on decree powers

Caracas – All controversies eventually come to an end.  Tomorrow, Venezuelan President Hugo Chávez’s power to pass laws by decree will expire, 18 months after the country’s National Assembly first awarded him that authority.

Over that period, Chávez has passed 35 laws under the “Enabling Law,” itself a source of fierce dispute among Venezuelans.  The Venezuelan National Assembly passed the law in February of 2007.  The Assembly was then, and remains today, almost entirely pro-Chávez thanks to a boycott of the 2006 election by the major opposition party.

The most controversial law passed under the “Enabling Law” was the recent “Law of Intelligence and Counter-Intelligence,” which included a requirement for citizens to inform on one another to the Venezuelan intelligence services.  Chávez scrapped the law shortly after signing it, responding to strong opposition by human rights groups and widespread popular discontent.  He has since called the law a “disaster” and a “mistake.”

In a country bitterly divided by politics, the end of Chávez’s decree powers comes as a relief to many.  Chávez narrowly lost a December election that would have made sweeping changes to the Venezuelan Constitution, among them a provision to do away with presidential term limits and a number of measures to “accelerate the Bolivarian Revolution.”  

Although a controversial figure hated by many middle- and upper-class Venezuelans, Chávez remains popular among a majority of his countrymen.  A recent poll conducted by the Iberian-American Consortium of Market Investigation and Advice Enterprises (CIMA) found that Chávez maintains a 54 percent approval rating.  

This popularity will again be put to the test this fall, when the President’s political party, United Socialist Party of Venezuela (PSUV), faces gubernatorial and citywide elections.  Recent weeks have seen Chávez embroiled in a debate over leadership and loyalty with the dozens of small parties that comprise PSUV.  The disarray within Chávez’s own party may provide an opening for the opposition.  Yet that title, “the opposition,” is perhaps too generous.  Chávez’s many detractors have yet to unify or develop a concerted campaign promise.

Whatever the result of the November elections, tomorrow will mark the end to a bizarre chapter in the tenure of the Venezuelan president.  When the “Enabling Law” was first passed, many feared the worst, given that the pro-Chávez National Assembly was already unlikely to veto any proposed legislation.  Yet Chávez has largely used his decree powers to revise outdated laws and merge government offices, leaving the controversy to his fiery speeches and frequent overseas trips.

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