Vol. 41 No. 6 · 21 March 2019

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Crisis in Venezuela

I agree with Malcolm Deas about the problems in Venezuela (Letters, 7 March). Certainly armed intervention would be disastrous, but it should also be said that the rot started long before Maduro took over. What is constantly overlooked is that Chávez comprehensively trashed Petróleos de Venezuela (PdVSA). This process started on 7 April 2002, when Chávez contemptuously fired the entire board of PdVSA on TV, blowing a whistle like a football referee, and replacing them with political appointees. Unrest then started in Zulia province, the heart of the industry, and the Confederación de Trabajadores called for a general strike. This led directly to the ‘coup’ attempt on 11 April, when around a million people marched from PdVSA headquarters in Caracas to Miraflores in protest. This ended in a shootout with 19 dead; the military stepped in.

Neither the military nor the opposition had much idea what to do next. When Chávez returned to power, PdVSA paid a high price. Around 19,000 workers were summarily fired, including many of the engineering staff and the trade unionists. Those who had passports fled abroad to Mexico and Canada, where their expertise was highly valued. Those without passports drove taxis.

Having lost a good proportion of PdVSA’s expertise, the government began to pack the company with more and more employees. By 2013, the number ostensibly employed by the oil giant had almost tripled to around 150,000. Naturally, this did not mean that activity in the oil patch had almost tripled – far from it. Many of these people were employed on a variety of social programmes, paid for directly by the company, though they had little to do with its operations. By 2012, these schemes had cost PdVSA an estimated $44 billion.

Chávez also devised a generous scheme of cheap oil exports. He created ‘Petrocaribe’, which allowed Jamaica, Guyana, Nicaragua, Haiti and others to pay between 5 per cent and 50 per cent of the market rate. The remaining part of the market price would be paid over the course of between 17 and 25 years through a financing scheme funded by Venezuela. By 2013 this is estimated to have cost Venezuela around $45 billion. The scheme has now been run down because the country can no longer supply its more important contracts with China and Russia.

Meanwhile the loss of expertise was soon felt. The refineries started to suffer from a lack of routine maintenance. There were major fires in 2003, 2005, 2011 and 2012; in 2012, 48 people were killed. In December 2018, Reuters reported that its massive refining complex at Paraguana was running at only 19 per cent of capacity. As a result Venezuela is increasingly unable to supply its own demand.

Apart from higher oil prices globally, what saved PdVSA was its ownership of Citgo, the Houston-based company which specialised in refining Venezuela’s heavy, high-sulphur oil. Citgo, which owns the sixth-largest refinery in the US and provides a substantial amount of US gasoline and diesel, was part of a chain of refinery assets in Aruba, Finland, the UK, Sweden and Belgium that the old PdVSA had gathered over the years. The new regime systematically sold them off, culminating in a failed attempt to flog off Citgo for $10 billion in 2010. If the US had really intended to collapse the Venezuelan economy, shutting down Citgo would have been the easiest way to do it.

Environmental standards also started to collapse. Lake Maracaibo has become an embarrassment. There are more than 25,000 km of ancient pipelines leaking underneath the lake. In 2009 the government sacked the companies charged with renewing them. It is estimated that some three thousand barrels of oil are now leaking into the lake every year. Environmental protection and the avoidance of accidents requires money, and if low oil prices are combined with using the oil industry as a cash cow, the result is likely to be disastrous, not least if oil is responsible for 95 per cent of hard currency export earnings.

Since 2005, Venezuelan crude production has more than halved from over 3.3 million barrels a day to the current level of 1.5 million. It has ceased to be self-sufficient in oil products and lost a great deal of its considerable expertise. And please don’t fall for the idea that US involvement in Venezuela is ‘all about oil’. The US is currently the world’s largest producer thanks to fracking. It is exporting more than it ever has in its history and its consumption is falling.

Chris Cragg
Calamba, Philippines

Greg Grandin quotes the Wall Street Journal to the effect that Washington’s actions in Venezuela are part of ‘a larger strategy to transform the hemisphere’ (LRB, 8 February 2019). Malcolm Deas describes this claim as ‘implausible’ (Letters, 7 March). If this were so, presumably any US intervention would either be confined to Venezuela or else determined by motives other than political change, such as humanitarian need. Yet Grandin summarises the history of US intervention in Latin America, showing that it has very much been motivated by regime change, even when it is nominally ‘humanitarian’. If the US’s real motives were to tackle suffering and confront the violation of human rights, it wouldn’t prop up unpopular and repressive regimes in Honduras or Haiti, both of which are even closer to its ‘backyard’ than Venezuela.

Perhaps Deas believes that the US will not make what he acknowledges would be the ‘mistake’ of military intervention. But how can he be so sure? Trump said last month: ‘We seek a peaceful transition of power but all options are open.’ His national security adviser, John Bolton, and special envoy Elliot Abrams have a track record of promoting armed intervention, especially in Latin America. Abrams has already rejected offers of mediation from Pope Francis as well as the neutral governments of Mexico and Uruguay, saying the time for talks ‘has long passed’.

That any intervention would be part of a ‘larger strategy’ is hardly in doubt, given that Bolton has labelled Venezuela, Cuba and Nicaragua as a ‘troika of terror’ and made it clear that once Maduro has been ousted from office, the other two governments will be the next targets. Of course, it is perfectly arguable that while the US has an interventionist agenda, in practice it may not succeed or Trump may back away from sending in US troups if it’s clear that they will be opposed. However, Bolton at least seems convinced that the US can ‘transform the hemisphere’, even if he has not yet used those words.

John Perry
Masaya, Nicaragua

Back the Baker

Stephen Sedley refers to a ‘Christian bakers in Belfast who refused to put “Support gay marriage" on a gay couple’s wedding cake’ (LRB, 7 February). Actually it wasn’t a wedding cake. It was to be enjoyed in celebration of the campaign to legalise same-sex marriage in Northern Ireland. The UK Supreme Court reversed a decision of the Northern Ireland Appeal Court, which had lent on the doctrine of ‘associative discrimination’ to find that, by declining to provide services for this political campaign, Ashers bakery was discriminating against all those ‘associated’ with the benefits of changing the existing law. Potentially this argument would compel any business to provide services in support of any political project which successfully claimed to benefit a protected group, such as followers of ‘any religious or philosophical belief’. I am critical of the religious right’s manipulation of cases of alleged anti-Christian discrimination to attack the liberal state, but this case was different: the Supreme Court’s decision is a vindication of political liberty.

Paul Lusk
Whitstable, Kent

Frink’s Heads

Anne Wagner notes the untypical finish Elisabeth Frink gave to her Goggle Heads series (LRB, 21 February). The smooth, inert and expressionless faces of the violent thugs portrayed have their eyes completely obscured by motorcycle goggles. Four of these monumental bronze hitmen’s heads were included in an open-air exhibition held in Winchester during the summer of 1981. Frink, who was closely involved in the selection of pieces for the exhibition and in deciding where they would be sited, proposed that the heads be placed in pairs on either side of the main entrance to Winchester Crown Court.

About a week after the show opened, the organisers (Hampshire County Council) received a complaint from a judge, who objected to the placing of the Goggle Heads, wanting them to be rapidly redeployed elsewhere. Blind justice, it seemed, was unable to deal with the heads’ stares, however inscrutable behind their goggles. We declined the request, citing the artist’s personal choice of location. Frink herself, when we told her about the complaint, was highly amused.

Happily, Frink’s bronze Horse and Rider, also included in the 1981 show, has remained on the site that Frink approved in Winchester High Street, and is now listed by Historic England.

Christopher Gordon
Winchester, Hampshire

Brexit Blues

David Runciman describes Brexit as ‘the choice of the people’ (LRB, 3 January). Just under 34 per cent of Britons of voting age voted Leave in 2016: that’s 27 per cent of all Britons at that time. Living in Australia, where voting in referendums is compulsory, I find it hard to accept the constant use of verbal readymades to hide the shocking disparity between stating without qualification that ‘the people’ of Britain voted for Brexit (which, taken at face value, implies we all so voted), and stating the truth: that little more than a quarter of the people of Britain voted for Brexit, and just over a third of the British electorate. Surely it is this part of the UK political system that is most in need of amendment if politicos are to treat referendums as their gospel.

Ben Bradley
Bathurst, New South Wales

The Vice President’s Men

Edward Luttwak seems certain that Ronald Reagan would never have ‘pressed the button’ (Letters, 21 February). My personal experience suggests otherwise. I was raised and educated in California, and after graduating from Berkeley in 1977 was at a loose end for some years before somebody suggested, in 1982, that I take the Foreign Service exam to become a diplomat. I passed the written section and was then invited to participate in the oral exam, which took place on an upper storey of the Federal Building in San Francisco. This had several different sections: a personal(ity) interview; being grilled by a Central European specialist on the situation in Poland (where regurgitating accounts in Time and Newsweek of the activities of Solidarność provoked disdain in the examiner, and certainly ensured that I failed the exam); and participating in simulated group decision-making in a hypothetical overseas embassy. The gentleman co-ordinating this exercise was a veteran Latin American specialist for the State Department.

Afterwards, he invited the six of us to fire questions at him, anything we liked: he would respond candidly, but we were never to attribute the answers to him – if we did he would deny the episode ever took place. The first question was, why was such a capable and senior Foreign Service officer testing the likes of us? He was home, he said, after a long tour of duty and had initially been assigned two desk tasks which he could not agree to carry out. And these were? The first, he said, was to draw up a feasibility study for restaging the Bay of Pigs invasion. This had clearly been tailored to his expertise, but was ethically inimical to him. The second proposed project was even more repugnant: to draw up a feasibility study for a nuclear first strike against the Soviet Union.

Marc Dubin
Westcliff-on-Sea, Essex

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