Published by Minyanville
Switch on the television in Venezuela and more often than not it will be President Hugo Chávez staring back at you. This endearing regularity of omnipresence has, however, been broken as the socialist leader has failed to appear on television, radio or even update his much-loved—and thankfully brief -- Twitter account for more than 10 days. The leader is languishing in a Cuban hospital bed following a pelvic abscess operation.
This situation has prompted critics in Venezuela, of which there are many, to voice concerns as to Chávez’s ability to govern from Havana and also generally, given his poor health, which some see as harking back to Cuban revolutionary Fidel Castro’s problems five years ago. And there are many problems at home which require at least the public relations skills that only Chávez has.
More than 5,000 National Guard troops are currently battling to regain control of El Rodeo prison, just east of Caracas. Families are left distraught outside a kilometer-wide cordon around the prison, not able to find out if their loved ones are dead or alive. The prisoners inside are known to be armed with hand grenades, machine guns and rifles.
“[The prison situation] highlights the country's spreading chaos, sheer incompetence, and disastrous governance,” said Michael Shifter, president of the Inter-American Dialogue. However, Chávez has a knack of riding out these storms, he says. “Previous crises in Venezuela scarcely made a dent in Chávez's political standing and popularity. Venezuelans are unhappy, but to date Chávez has managed to escape much blame. After more than 12 years in office that is quite a testament to his political skills.”
As is typical in Venezuela’s fraught political scene, the desperate situation is being kicked about as a political football. The government has suggested that gang leaders within the prison are in league with the opposition. The opposition have been more moderate and claimed that the problems demonstrate the government’s incompetence.
Meanwhile, electricity outages plague the country, with the future not looking bright. Demand is likely to hit 20,000 megawatts by next year, about 3,000 megawatts more than in 2011. News of that and the prison riots will do nothing for the president’s re-election hopes next year, but he'll be glad that the opposition is failing to unite behind one candidate and cause him any serious worries as campaigning kicks off in earnest over the next year.
The president’s brother Aden told state television that he expects his brother to leave Cuba within 10 to 12 days.
Meanwhile, back home, Venezuela’s overnight bank lending rate fell to its lowest figure since 2008 earlier this week. The rate has fallen on consecutive days for more than a week, from 10.5% on June 9 to 0.09% today. “There’s an excess of liquidity in the system so there aren’t any banks looking to borrow in the market,” Jose Grasso, president of Softline Consultores, a Caracas-based banking research and consulting firm, told Bloomberg. “Banks are more focused on lending than borrowing right now.”
Chávez has been keen to push bank lending. In April he ordered the central bank to reduce reserve requirements to free up money to build homes, a vote-winning act in preparation perhaps for elections next year.
Tight currency controls remain in place in Venezuela. Cadivi, the country’s foreign currency commission, has authorized just under $11 billion in dollar requests for imports and similar transactions this year through to May. In the first three months of 2011, the commission released just over $7 billion, beating the figure for the same period the previous year of $6.3 billion.
Meanwhile, state oil firm Petróleos de Venezuela (PDVSA) is to reopen its 2022 bond in a $1.5 billion private operation with the country’s central bank. Reuters quotes a “well placed source” suggesting that the reopening should take place within a month, adding that the central bank is buying back to fuel Sitme, the government’s foreign exchange mechanism.
The oil company has overtaken the government itself as the country’s biggest dollar-denominated bond issuer, totaling more than $6.15 billion so far this year. Japan is to lend the company $1.5 billion in return for 3 million barrels of crude every year over the next five.