Fernando Egana

Interview with Roy Carson on Venezuelan Economy and Politics

delivered 13 September 2010

Audio mp3 of Address

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[AUTHENTICITY CERTIFIED: Text version below transcribed directly from audio]

Egana: Well, it's…a very special kind of democracy to say the least, because under Venezuelan law and -- and particularly under Venezuelan Constitution, 20 percent of all fiscal revenues or 20 percent of the national budget has to be distributed proportionally among the different Governorships and the different Mayorships.

We have 24 provincial states with 24 Governors and we have six of them representing opposition parties. So they have the right to receive that part of the, that piece that part of the budget under the Constitution and nonetheless the President is saying that because they represent political interests, different from his, he's not going to authorize the distribution of -- of proper resources.

And of course that's unconstitutional. That's completely arbitrary, but that's the way things are done nowadays in Venezuela.

Carson: Well, okay the situation in Venezuela seems to have deteriorated over the last ten years or eleven years that President Chavez has been in power. You were a central figure in the government of President Caldera. I remember that well and you were head of OCI at that time. How…do you compare the two systems?

Egana: Well they're very different in -- in many realms. First, politically speaking, Venezuela had a democracy with a lot, I -- I would say like an unsatisfactory democracy. There were a lot of problems but -- but basically a democracy in terms of separation of powers, in terms of respect of the rule of law, and in terms of pluralism.

Now we don't have a democracy any more. The system has been in a path of evolution towards an autocracy. We don't have separation of powers in… real terms in Venezuela, though constitutionally we do. We don't have subordination of the military to civil power but exactly the contrary. In -- in many -- many senses this is a military regime, the one that it's in power in Venezuela right now.

Civil liberties are under a situation of -- of conditionality. I mean if -- if the government seeks your property or seeks to violate whatever civil rights it wants to, it has, it doesn't have any kind of -- of balance or checks with the other powers in the state.

Now, that's in… basic terms, the difference politically speaking, but economically speaking there's also a big difference because we had a…mixed economy during the last part of the 20th century with basic economic rights for the private sector, though with the -- the important intervention from the government.

But now it's exactly the opposite. We have a -- a highly collectivized economy. Now the government has very strong power in almost all sectors of economic development and the private sector is shrinking. And there's a lot of mistrust and lack of confidence because property rights are not secured in Venezuela so there's a lot of…insecurity in legal terms.

And that's… explain something terrible that has happened in this first decade of the 21st century, which is that the -- that the Venezuelan economy has enjoyed one of the longest economic booms in all its history. It has received an amount that…is almost one, I don't know how to say, mil veces, mil billones de dolares [a thousand times a thousand billion dollars] of dollars.

Carson: Millions upon millions.

Egana: Right of --of dollars, but --but now the economy is in a very deep recession. We have one of the highest inflation rates in the world. Foreign investment is practically -- is practically nonexistent. Domestic production has fallen both in industrial activities and in… farming and we are now having something that we are, we didn't have -- we didn't have never in our history which is a -- a massive immigration of -- of young people, particularly professionals, engineering, medical -- medical personnel, which is of course something very, very bad for a precedent particularly for our future.

So both in political and economic terms, Venezuela has deteriorated very sharply during these years and that in spite of the -- the windfall of oil resources, of petrol dollars that we have received due to the international boom, international bonanza of oil prices.

Carson: Well, I have to draw you up on one point here Fernando, and that is at the end of the Caldera administration inflation was already up in three figures and the price of oil was quite low at that time. I think it was around about ten dollars a barrel but shall we say Chavez claims that he inherited a mass of troubles from the Caldera and previous regimes. How do you -- How do you see that?

Egana: Well I think that we have…two -- two different things to say, one particular and one general. One particular commentary with respect to inflation and a general commentary with respect to the economic situation.

With respect to inflation, it's right that, it's true that in 1996 Venezuelan inflation rate was 100 percent. It was the highest inflation rate in -- in Venezuelan history. The previous highest was under President Perez administration which amounted I think, remember 80 -- 88 or 89 percent.

Now the trend of the inflation started to go down sharply. In 1997 inflation was like 36, 37 percent and in 1998 inflation was ended in 28 percent. So the trend of inflation that the Chavez government received was a -- a positive trend in the sense that it was going down and he in -- in, and because of that I think of, among other factors, he reappointed the Minister of Finance that had the Caldera government which was a -- a very well-known professional in Venezuela, Maritza Izaguirre. And that -- that was -- como lo digo [How do I say it?] ...but I think that an important thing is, was -- was the trend, the tendency that was a positive one.

And the second commentary in regard with the general situation is this. Venezuela is, has been a -- a oil-based economy since the 1930s and of course they, there is a very close relationship between the prices of oil in international markets and the general situation of the Venezuelan domestic economy. When the prices rise, the Venezuela economy tends to…grow and tends to better. On the contrary, when the prices go down then the Venezuelan economy in general goes in -- in turmoil.

Now since the late '80s and throughout the '90s the prices in the -- the oil prices in the international markets were very, were… quite low. The general average of the Venezuelan oil prices during the 1990s was 14 dollars per barrel and in 1998 because as an outcome of the Asian financial crisis, prices went down up to, down to 8 and 9 dollars per barrel.

Now it -- it was a very difficult situation due primarily to this, to the… crisis in the oil, in  international oil system. Now, since 1998-99 oil prices start to pickup. In 1999 for instance at the end of the first years of Chavez government, the average of the Venezuelan oil prices was 17 which was almost 70 percent up to what was at the beginning of the year.

Now it -- it started to -- to increase, for instance in 19 in 2001 it was almost 25. Then it went to 30, to 40. We have a -- a peak in our oil prices value in June of 200 -- of 2008 when the, when it went up to 140 dollars and right -- and right now the average price of the Venezuelan barrel is around 70 dollars which is a very good price in perspective in… comparative economics.

But nonetheless, now the economic situation is not as it should be a booming one, but on the very contrary is say, it's even worse than speculation, we have something worse, because that speculation is when you have no growth and high inflation and now we have recession and a… very high inflation rate.

Carson: The situation with Venezuela's industry has got into dire circumstances at the moment with most of the heavy industries closing down or already closed. How do you envisage that as survival if at all?

Egana: Well, you know formally speaking the -- the name of the economic model that has -- has been implemented in Venezuela during these years is desarrollo endogeno [endogenous development] which means domestic development or development from within. That's formally speaking because in practice it has happened exactly the opposite. We are -- we are destroying our domestic development, our development from within because production both in industrial terms and in land or agricultural terms is falling down sharply and we have become even more dependent on oil production and on imports.

In, two years ago Venezuelan imports mounted almost 45 billion dollars, which in Venezuelan terms is a huge, huge amount and right now we are importing almost 70 or 75 percent of the food we consume, which makes us very, which -- which makes us incredibly dependent upon foreign imports in such a sensitive aspect as food alimentacion [feeding] in general. So I don't see any -- any intention, any trend, any, that might lead to a different situation.

On the contrary, the socialistic or socialist rhetoric, it's a -- it's a increasing in volume and in… its propaganda and there has been a lot of -- of new expropriations which actually aren't really expropriations because expropriations in our, in Venezuelan law is when there's a transfer of property from private to the public sector but then it's also a transfer of money from the public sector to the private that is no longer the owner of… the good. But here we have expropriations in terms of transfer of property but not in terms of transfer of money. So it's -- it's more like a confiscation of property and -- and all these announcements and -- and all these measures towards confiscation of property produces a terrible effect among and in the private sectors both nationally and also internationally.

Carson: I remember way back in the later stages of 1996, '97, '98 ,I was constantly trying to get you to make some comment on the situation with the gold mining industry and the gold mine Las Cristinas in particular. That situation seems to continue.

Egana: Well that doesn't surprise me because that has happened also in other aspects of…potential sectors for foreign investment like in the oil industry. Well, yes the -- the problem is that when the government accumulates such amount of power. No, what -- what I… think is that international contracts of that importance such as the oil contracts must be given within a previous framework both legal and administrative framework to guarantee transparency and to guarantee equal opportunity and that -- that is not happening right now because the government has the power to give unilaterally almost without any kind of parliamentary control or to…show control any kind of contracts to any kind of company. That shouldn't be the case. International contracts should be adjudicated with elicitation system that -- that meets all international standards. But I am afraid that that's not the case in Venezuela in the moment.

Carson: With regard to the Las Cristinas gold mine, Crystallex International of Toronto say that they signed a contract with the CVG and the Venezuelan government way back in 2004 for the exploitation of the mine. They are now saying that they cannot proceed any further and in fact they have given up a third of the company or two-thirds of the company to the Chinese government in the hope that the Chinese government will be able to force Chavez to give the final permits for them to begin to mine gold at Las Cristinas.

Egana: Well even though I -- I as I told you, I don't know the details of the, of this particular situation but -- but it doesn't surprise me that that kind of things are happening now because the government is not -- is not functioning under the rule of law but under a different kind of rule which is the personal rule, the volatilism of the government and well that's something that it's… not good both for the Venezuelan image abroad but it's also very bad in terms of our...need to become a...democracy that -- that is respectful of the constitution and of the legal framework.

Carson: In just under -- well, this time two weeks from now -- you'll know the results of the election. How do you predict the election will tally out?

Egana: Well let me tell you. If we had in Venezuela free and fair elections within international standards of what free and fair means, I think that the opposition parties or the opposition coalition might have a… very strong outcome and may -- may, might have also the majority votes. However, because the electoral system in Venezuela it's -- it's under control of -- of the government, it's not autonomous from the government but it's subordinated to the government and the government means the political party, the incumbent political party which is PSUV.

It's very difficult to make a -- a responsible prediction in this sense because the process to try to -- to condition results is very, very strong. But what, but it -- it can be said is that those massive majorities of the popular votes that Chavez enjoyed during the first years of his governments, it's already gone. It's part of the past. And now the, there is a very strong polarization of Venezuelan political intentions and political preferences and I think that the part of the sector of the country that -- that doesn't feel represented by Chavez government, Chavez policies, it's -- it's growing strongly year after year.

Carson: Well okay come the -- the 27th of September if the elections do prove to be corrupt and not representative, what option is left?

Egana: Well the -- the problems with elections in Venezuela are not that the election as such that the -- the act of election as such is… corrupt but that the system as such and -- and the process as such is.. controlled. The system is controlled by -- by the government and it's controlled by the main political party the PSUV. And I, maybe you can run an analogy in between what that means in Venezuela right now as to what it meant in Mexico when the electoral system was in hands, was controlled by the PRI. It's...something, it's very much alike.

That doesn't mean of course that you don't have, that you -- that you have, that you shouldn't participate, on the contrary you should participate and you...should take into account all the political opportunities and all the electoral opportunities that -- that you can which is what's happening in Venezuela right now. But you go to the elections and you -- you have your candidates and you fight for the votes and… all that. You do everything you have to do to win the elections but that doesn't mean that you are not aware of the kind of… imperfections that the system has and of -- of the need to reform deeply that system, the system to make -- to make it genuinely democratic.

Well let me tell you something. In the last decade Chavez has denounced both nationally and internationally as I recall like 20 or 25 attempts of -- of magnicidio [assassination]. And still we are waiting for the proofs, still we are waiting for the parliamentary commissions that were enacted to investigate those -- those claims. We're waiting for the final results or for their -- their evidence and it's - it's very suspicious that every time there's an election or every time there's a political confrontation, the campaign starts with another announcement of the intentions from the oligarchy or the imperialism or...whatever, another intention of -- of magnicidio [assassination].

Carson: Regrettable as it may be from a humanistic point of view, if President Chavez was removed one way or another, okay and became part of history, how do you see Venezuela proceeding from there?

Egana: Well in -- in first, I will like President Chavez be removed democratically by the votes of the people. And I think that the year 2012 can be, presents an opportunity for a democratic removal of… the Presidency. I know it's difficult because this is not an independent, usual government. And it's not even a democratic government. It's - it's different kind of...political governance but -- but I think that the ideal way to -- to transform the current political situation is through votes. And I think that if Chavez leaves power by democratic means in 2012, I think that there is a...enormous opportunity for political, economic, and social reconstruction of Venezuela.

It's -- I'm sure it's going to be also a very difficult task but I trust that the lessons of -- of this long decade will be finally assimilated.


Book/CDs by Michael E. Eidenmuller, Published by McGraw-Hill (2008)

Research Note: Transcription by Diane Wiegand. Special thanks to Ximena Saenz Gonzales for her work on the Spanish/English portions of the transcript.

Audio Source: VHeadline.com

Copyright Status: Text and Audio = Used with permission.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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