Latin American strongmen disdain the press as much as they do financial markets.
On Nov. 2, The Washington Post ran an editorial on Venezuela’s President Hugo Chavez, entitled “The Next Fidel Castro.” It urged the next U.S. president “to limit Mr. Chavez’s opportunities to export his ideology.” The Post argues “it would be foolish to assume he won’t make trouble where he can; one nightmare scenario has him recognizing the legitimacy of a secessionist state declared by the Colombian rebels.”
On Sunday Nov. 5, speaking for more than five and a half hours in his weekly broadcast to Venezuela, President Chavez declared that the Post editorial deserves the condemnation of all Venezuela “for its lack of respect, for lying, falsehoods, manipulation, and for taking undue advantage.”
Chavez then directly blamed El Universal’s publisher “and his friends” for the editorial. This came even though, Andres Mata, the publisher of the Venezuelan newspaper, penned a mystifying letter to the Post denouncing the editorial and expounding on Chavez’s love for the U.S.
Chavez declared to his Sunday audience his intention to spark a moral rebellion among Venezuelan journalists against the anti‐government values of media owners. He insisted that Venezuelan journalists are suffering greatly under information mismanagement by politically motivated owners and editorial managers who distort everything the government is seeking to achieve.
The previous president of Venezuela called me a “traitor to the fatherland” on national TV. But Chavez’s speech seems like a declaration of war against the whole Venezuelan media.
The local stock market is another institution the Latin caudillos regard as inimical to their personal power. If entrepreneurs can raise capital privately, they won’t apply for loans to government banks and development corporations, which undermines the caudillos’ concept of crony capitalism.
The Chavez administration has managed to make a ghost town of the Caracas Stock Exchange. A debit tax hit no less than four times each transaction, and then the government openly favored a foreign firm’s takeover of a company that, with 68,000 shareholders, represented nearly half the volume of the local exchange.
In June, AES, a Virginia‐based power company, bought 87% of Electricidad de Caracas or EDC, Venezuela’s top publicly traded company, and the country’s symbol of efficient capitalism. EDC was established in 1895, when most cities around the world had only gaslights. EDC traditionally served the electricity needs of half the Venezuelan population, and thus was a painful thorn in the side of bungling state‐owned utilities.
For more than two years, EDC had been trying to get a futures natural gas price commitment from Petroleos de Venezuela SA, or PDVSA, the state oil monopoly, in order to invest heavily in new gas‐power generating plants. It never got an answer.
Foreigners buying such a company for $1.66 billion — half its book value — would usually send an alarm signal to a nationalist head of state. But Chavez seems pleased with the disappearance of the Venezuelan business class, which will be replaced by foreigners who know better than to become involved in politics.
Meanwhile, he is appointing his old army chums to top administration positions and to the heads of such huge state enterprises as PDVSA and Citgo, a U.S. affiliate of PDVSA.
Until last month, when Chavez traveled to Texas to swear in Gen. Oswaldo Contreras as new Citgo CEO, an American expert had always filled that position, in the highly complex and competitive business of gasoline distribution in the U.S.
Contreras’s last job was chief of the presidential guard, and his only experience in the oil business was organizing the recent OPEC summit in Caracas.
The new AES managers in Venezuela will soon learn that government agencies dislike paying their electricity bills. But it is not very likely that after the open contempt publicly shown by Chavez to dissenters, AES will cut off the presidential palace’s electric service.