And That's That

 We’ll get started with this week’s Venezuela : Down The Rabbit Hole segment, “Scatter Shot” in just a bit but first…WOLA reports that 93 Venezuelan and regional organizations signed an open letter to President, Gustavo Petro (Colombia), pertaining to the NGO regulatory bill currently under discussion in Venezuela’s (Nicolas Maduro’s) National Assembly called the “Law for the Control, Regularization, Performance, and Financing of Non-Governmental and Related Organizations.

 Seeking the dismissal of the bill, the letter to Petro says …”Given the influence that your government has over the Venezuelan authorities, we appreciate any efforts on your part to ensure that…” The letter expressed concerns we’ve previously reported based on the stigmatizing and criminalizing of NGOs during parliamentary discussions by Diosdado Cabello (Venezuela’s 2nd-most powerful man, some say most powerful, and head of the National Assembly)

 The existence of a preliminary list of 62 NGOs was mentioned pointing them out as “party fronts”, “enemies”, and “traitors to the homeland”, specifically naming a few organizations, among them the Venezuelan Program for Human Rights Education Action (Provea), an organization with 34 years of work in the country.

 The draft, which has already passed the 1st stage to becoming law, is not available on official websites but a version was obtained for review. It contains many provisions with vague and imprecise terms which may be interpreted at the discretion of authorities (Just like the “Anti-Hate Law”, another tool of repression/oppression by the Chavistas and a good example of the reality of Chavismo, “The law is what we say it is.”)

 It establishes a regime of disproportionate sanctions that include suspension or dissolution and confiscatory fines, in addition to civil and criminal liability (When combined with the total lack of judicial independence it furthers the Chavista ‘SOP’ of “We can do whatever we want and we’ll be legitimized by TSJ, Venezuela’s Supreme Court”. Don’t forget that other than a few recent cosmetic court rulings to highlight ‘judicial reform’,the TSJ’s record is : Pro-Chavista – over 40,000… Anti-Chavista – ZERO)

 Our take on the letter is that it’s well intentioned but will have no effect. No matter what Gustavo Petro (Maduro’s Marxist ‘brother in arms’) thinks or says, Nicolas Maduro will do what he wants and he wants this law. His rubber-stamp National Assembly will deliver and TSJ will back up the Maduro regime’s use of it for repression against NGOs…and that’s that.

 Now, let’s head Down The Rabbit Hole…

 Chapter 17/ Scatter Shot…

 So far we’ve covered major categories, each deserving an in-depth look, but the extent of the destruction, corruption, and outright lunacy of Chavismo has hit and is hitting every aspect of life and society in Venezuela. There is a host of subjects that may not require an entire chapter to themselves but nevertheless deserve to be mentioned. Be warned, this will be all over the place and will seem a bit (or a lot) disjointed. Kinda’ like life in Venezuela.

 Let’s begin with one of my personal favorites.I call it the magic number and it’s $4 billion. That seems to be the number that each major industry had to hit before they finally “cried Uncle!” Allow me to explain…

 As I’m sure you know, each industry has a group or association which is useful to track issues and trends whether it’s the airline industry, the pharmaceutical industry, the auto industry, etc. Let’s use the airlines as an example but remember, the other industries follow the same pattern.

 International companies doing business in Venezuela have traditionally (at least until recently) had to sell their products and/or services denominated in the local currency, the bolivar (worthless outside Venezuela), deposit it in a Venezuelan bank, and wait for the government to allow them to convert their bolivares to dollars so they could transfer the money outside Venezuela. Aside from the four year stint of hyperinflation, Venezuela has always had high inflation, typically in the mid-twenties. It’s not hard to see where this is going huh?

 The longer companies were (are) forced to hold bolivares the less they are worth. As the money piled up in the banks so did the currency exchange backlog. It was common to wait a year, two years, or longer to convert the bolivares. If you had to wait two years your bolivares bought you half as many dollars (based on mid-twenties inflation). That’s quite a financial hit. I won’t get into the accounting but doing business in Venezuela was lucrative enough and the tax advantages of writing off these losses substantial enough that the airlines would hang in there as long as the numbers were manageable. That’s the big question. At what point do the numbers become unmanageable? I can’t speak to individual airlines but I have a pretty good idea what the number is for the group as a whole. When their association announced that their group as a whole was owed $4 billion by the Venezuelan government things began to fall apart.

 In an attempt to play catch-up most carriers began to reduce exposure by reducing flights in and out of Venezuela. Airlines that had three or four flights a day to Caracas cut back to one. Those with daily flights cut back to one or two a week and so on. The idea was if the could maintain the pace of bolivar to dollar conversions they could reduce the balance owed. Well, the Chavistas simply reduced the pace and maintained the $4 billion balance in Venezuelan banks. What made the situation even worse was that the airlines were required to pay for refueling in Caracas in dollars. The Venezuelan government wouldn’t accept their own money.

 More tomorrow….

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