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 Venezuela, Politics, News, International, Opinion, Analysis, Other Sources, Contributors

The water level of Venezuela’s Guri dam is at the lowest since the electricity crisis began, and the country’s thermoelectric sector is in no shape to handle the extra load, resulting in blackouts in the western states. The country is scrambling to fix its infrastructure, but corruption and money woes are obstructing these crucial repairs.
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* Venezuela’s Electricity Crisis

According to May 6 data published by Venezuelan state power agency Operation of Interconnected Systems (OPSIS), the water level of Venezuela’s Guri dam has dropped to its lowest point — 248.22 meters above sea level — since the onset of the country’s electricity crisis. This figure is dangerously close to 240 meters (308.64 yards) above sea level, the point at which the bulk of the dam’s turbines would have to be shut down, depriving Venezuela of its primary electricity source and raising the political stakes for President Hugo Chavez.

Venezuelan officials were breathing sighs of relief in mid-April when rainfall in the countryside showed signs of easing the crisis by keeping the Guri dam at a manageable water level. However, since April 21, the water level of the dam resumed its descent, dropping roughly 76 centimeters in the past two weeks. May is the traditional start to the rainy season in Venezuela, but the effects of El Nino could prolong the current drought. Forecasts for the week ahead in Bolivar state, where the Guri dam is located, show sporadic rainfall, but nothing yet that would indicate Venezuela will receive the heavy showers it needs to contain this crisis in the near term.

As the water level of the Guri reservoir continues to drop, the water pressure of the dam decreases and the turbines have to work harder to spin and generate electricity. The combination of these factors can produce a water vortex, in which water bubbles get sucked in and move up to the turbine blades, where they eat away at the metal of the blades. This process, called cavitation, can then produce massive vibrations that can be felt throughout the plant. If the turbine is not shut down quickly enough, an explosion could occur, risking a complete shutdown of the dam.

Signs of this cavitation effect already appear to be surfacing. According to Venezuelan Electricity Minister Ali Rodriguez Araque, Unit 8 of the Guri dam, located in the first powerhouse of the dam, has been paralyzed after experiencing “strong vibrations,” taking 400 megawatts out of commission. The strong vibrations indicate likely damage to the metal turbine blades caused by water bubbles.

Venezuela in 2006 hired a Brazilian-German-Venezuelan consortium called Eurobras to upgrade the Guri dam with larger, more hydrodynamic turbines that are more efficient and more resistant to cavitation. Most of these upgrades have been made to units in the second powerhouse of the dam. Unit 8, now out of commission, had not yet been upgraded, but Brazilian engineers have been working on upgrading two other critical units — 9 and 12 — to raise the dam’s output.

Rumors are circulating, however, that the Brazilian contract workers are not being paid and have threatened to abandon their work by next week unless they receive their paychecks from state-owned power company EDELCA. Their departure would put Venezuela in a serious bind because the technical modifications being made to units 9 and 12 are believed to be too advanced for Venezuelan engineers to either complete themselves or replace the units with the older, less efficient turbines. In other words, leaving the job halfway done would have a crippling effect on the dam’s output. Eurobras workers also are reportedly threatening to leave their work at the Fabricio Ojeda dam in western Merida state over similar salary complaints. This issue likely came up during Chavez’s April 28 meeting with Brazilian President Luiz Inacio Lula da Silva in Brasilia, but it appears the payment dispute has not yet been resolved.

Corruption in the Venezuelan electricity sector runs high, and many within the industry have expressed concern over how the corruption factor has impacted engineers’ ability to repair the electricity infrastructure in time to avoid a crisis. Many of the invoices for electricity equipment are believed to be highly inflated, which allows the government officials placing the orders to keep a substantial portion of the payments off the books and in their pockets. This corruption-cycle not only exacerbates inflation but also results in a mismatch between the equipment ordered and the specifications of the power plants. Sources in the electricity sector claim the officials placing the orders failed to consult the appropriate engineers. As a result, much of the purchased electricity equipment is believed to be unusable and collecting dust in warehouses.

But cavitation and corruption may not be the only issues plaguing the electricity sector. The military presence at Venezuela’s critical power plants has reportedly increased in the past several days as the situation has turned more critical. STRATFOR sources report engineers at these plants are also under heavy surveillance. As a result, some engineers are reportedly anonymously using the social media network Twitter to disseminate information on what is happening at the power plants. One unconfirmed Twitter report claims Cuban engineers working on Unit 8 of the Guri dam left a hatch open that produced a flood in the powerhouse. Water damage also could result in electrical damage that could impact the other units of the powerhouse. Though information is beginning to leak out on the status of the dam units through social media like Twitter, the reliability of this information remains debatable given the array of opposition forces in Venezuela that have an interest in exaggerating the crisis.

While the Guri dam continues to struggle, greater pressure is being put on Venezuela’s fragile thermoelectric sector, which also is badly in need of repair. As of May 6, Planta Centro, the country’s main thermoelectric plant, still had only one out of four units operational, with an output of 287 megawatts. On May 6, an explosion at a transformer was reported at Planta Centro, which engineers claim will take a minimum of 10 days to fix. Nearby thermoelectric plants also are struggling to make up for the Planta Centro shortfalls, resulting in extended blackouts in Carabobo, Merida, Tachira, Apure and Zulia states in western Venezuela.

 Venezuela, Politics, Economics, Analysis, Other Sources

THE ORGANIZATION of American States has failed to respond to the steady deterioration of Latin American democracy during the past few years, even though the defense of democracy is supposed to be one of its primary missions. Now the OAS – and governments throughout the region – have been shamed by one of its own branch organizations. Last week, the Inter-American Commission on Human Rights issued a searing and authoritative report on the destruction of Venezuela’s political institutions and the erosion of freedom under President Hugo Chávez. It’s a powerful and sometimes chilling account of what OAS Secretary General José Miguel Insulza and the organization’s permanent council have been ignoring.
In meticulous detail, the 300-page report documents how Mr. Chávez’s regime has done away with judicial independence, intimidated or eliminated opposition media, stripped elected opposition leaders of their powers, and used bogus criminal charges to silence human rights groups. Much of this has been reported. But the commission, made up of seven jurists and rights activists from Antigua, Argentina, Brazil, Chile and the United States, offers a level of detail and a stance of impartiality that ought to discredit those defenders of Mr. Chávez who paint his critics as Yanqui imperialists or coup-plotters.
Particularly shocking is the commission’s account of the role that violence and murder have played in Mr. Chávez’s concentration of power. The report documents killings of journalists, opposition protesters and farmers; it says that 173 trade union leaders and members were slain between 1997 and 2009 “in the context of trade union violence, with contract killings being the most common method for attacking union leaders.” The report says that in 2008 Venezuela’s human rights ombudsman recorded 134 complaints of arbitrary killings by security forces, 87 allegations of torture and 33 cases of forced disappearance. It also asserts that radical groups allied with Mr. Chávez “are perpetrating acts of violence with the involvement or acquiescence of state agents.”
There has been no accountability for these acts. “Impunity,” says the report, “is a common characteristic that equally affects cases of reprisal against dissent, attacks on human rights defenders and on journalists, excessive use of force in response to peaceful protests, abuses of state force, common and organized crime, violence in prisons, violence against women, and other serious human rights violations.”
To read the report is to be dismayed anew by the silence of Venezuela’s neighbors and of the principal OAS organs. Mr. Insulza, characteristically, responded to the report with an arms-length statement that underlined the commission’s autonomy and suggested “dialogue” between it and Mr. Chávez’s government “to clear up doubts and differences.” Mr. Insulza is running for reelection as secretary general, so far without opposition; the United States supplies 60 percent of his budget. If his reaction to the report is any indication, Congress will be expected to fund OAS tolerance of Mr. Chávez’s repression for five more years.

 Venezuela, Politics, News, International, Opinion, Analysis, Other Sources

In his 11-year rule, Venezuelan strong-man Hugo Chávez has outlasted all manner of angry foes, conspirators, and mounting chaos. Until now. As he loses control of a shrinking economy, his Teflon is wearing thin. Chronic blackouts and water shortages are darkening industries and forcing homes to ration electricity and baths. Inflation is 30 percent a month, the worst rate in Latin America, and despite an official price freeze, economists say it could double this year. Crime is soaring, with the murder rate tripling under Chávez. Discontent is rising, too.

Once hailed as a redeemer by the poor, Chávez has seen his approval ratings plunge below 50 percent. A year ago, two thirds of Venezuelans were upbeat about their country. Now the same number see the country in decline, says pollster Luis Vicente León. That may not be enough to topple Chávez, whose mandate ends in 2012. Like Zimbabwe’s Robert Mugabe or Afghanistan’s Hamid Karzai, he has twisted the rules of democracy–and controls enough cash, media, guns, and institutional clout to cling to power and crush any perceived threat, no matter how absurd. (Chávez recently banned Sony PlayStations and Barbie dolls as imperialist tools, and denounced Twitter as a vehicle for terrorists.) But the gathering turmoil in this nation of 45 million is like nothing the Bolivarian Republic has ever seen. Chávez’s controversial project to build and spread 21st-century socialism may already be over.

The end is unlikely to be pretty. After independent channel RCTV declined to air a presidential speech late last month, Chávez ordered cable operators to drop the popular station’s programming. Immediately, protests erupted nationwide, killing two and injuring dozens. Tear gas choked downtown Caracas. Undaunted protestors vowed to keep marching. “Keep this up and you will force me to take radical measures,” warned Chávez in a nationwide broadcast.

This was not how the Bolivarian revolution was to play out. When Chávez launched it in 1999, he promised to wrest Venezuela’s vast oil wealth from gringos and the rapacious elite to fuel 21st-century socialism, which would turn power over to indigenous people and the forgotten poor. And Venezuela would be just the beginning. With mythic Latin American liberator Simón Bolívar as his patron saint, Chávez set out to export the “Bolivarian alternative"–rejecting neoliberalism and the long shadow of the United States–throughout the hemisphere, and perhaps beyond. For a time, the new bolívarianismo stirred hearts across the Andes and in Central America. Ecuador, Bolivia, and Nicaragua formally signed on to the Chávez pact. Cuba and a few more islands in the Caribbean followed.

Now the ballyhooed Bolivarian Alternative for Latin America and the Caribbean has stalled. The first blow was the world economic crisis, which gutted oil prices and depleted the Chávista war chest that proved so useful in showering money on the slums, keeping cronies happy, and buying sympathy abroad. Then Chávez allies began angling to extend their terms in power, as he had. A turning point came in Honduras, where efforts by a Chávez ally, Honduran President Manuel Zelaya, to hold an illegal referendum in the hope of extending his mandate ran afoul of the Supreme Court, the Congress, and finally the armed forces, which ousted him at gunpoint. At first the world diplomatic community joined Chávez in decrying what looked like an old-fashioned coup d’atat–but most Hondurans wanted no part of Chávismo. Last November they elected a new anti-Chávez president, Porfirio Lobo.

Now a handful of nations, including the U.S. and Costa Rica, have recognized the new government in Honduras, while Zelaya has quietly departed for voluntary exile in the Dominican Republic. Chávez is increasingly isolated in the hemisphere. Even card-carrying lefties like Luiz Inácio Lula da Silva of Brazil and Peru’s Alan García have snubbed Chávez’s vision and embraced what Chilean President-elect Sebastián Piñera, a conservative, has called “democracy, rule of law, freedom of expression, alternation of power without caudillismo.”

Don’t count Chávez out yet. Oil prices are rising, and his opposition is in disarray. But 21st-century socialism has lost its allure. WHOEVER WORKS FOR A REVOLUTION IS PLOWING THE SEA, reads Bolívar’s gravestone, reflecting the liberator’s despair over his ultimately failed mission. It’s a lesson Chávez might keep in mind.

 Venezuela, Politics

In consequence, the Obama administration and its allies ran the risk of betting the store on restoring Zelaya to power, through negotiations, before a vote took place. This, how-ever, led them into a conceptual trap: arguing that an illegitimate government–and the new Honduran regime clearly was one–could not hold legitimate elections. But of course it could, and did, and this is hardly surprising. How else can an illegitimate government give way to a legitimate one except by holding elections? Most of Latin America’s current governments, including those of Mexico, Brazil, Chile, Argentina, Peru, Uruguay, El Salvador, Guatemala, and Bolivia, are ruled by democratic, legitimate governments elected at some point–earlier in the cases of Argentina and Uruguay, much later in the cases of Mexico and Bolivia–under the auspices of authoritarian regimes. This is also true, needless to say, of countless states in Eastern and Western Europe and in Asia and Africa.

The elections in Honduras were held under far from perfect circumstances: a de facto government, repression of Zelaya supporters, restrictions on the press, Zelaya himself under virtual house arrest in the Brazilian Embassy in Tegucigalpa. But two fundamental conditions of legitimacy were met. The defeated candidates all accepted the winner’s victory, and the turn-out (more than 61 percent) was higher than on previous occasions, meaning that the electorate did not follow Zelaya’s recommendation to abstain.

Under these conditions, it is very difficult to claim that the elections themselves were flawed. Yet Cuba, Venezuela, Bolivia, Nicaragua, Brazil, and Chile refused to recognize the results. Panama, Peru, Colombia, and Costa Rica accepted them. And the Obama administration decided that the elections were a necessary starting point for a new chapter in Honduras but weren’t sufficient, insisting once again on some sort of at least pro forma Zelaya restitution. As of this writing, the United States has not been able to extricate itself from this conceptual trap, especially now that the Honduran Congress voted 111 to 14 against restoration.

The United States had in fact two real choices, and opted for neither. It could have, from the outset, when Zelaya was defenestrated, sent a high-level emissary–perhaps accompanied by Mexican and Brazilian envoys–to deliver an ultimatum to the coup perpetrators: reinstall Zelaya or face devastating consequences. Conversely, it could have chosen to insist on the electoral exit, more or less forgetting about Zelaya, and finding other ways (for example, revamping the Inter-American Democratic Charter in order to prevent future coups) to defend democracy and constitutional rule in the region. Now it finds itself somewhat isolated, unwilling to fully accept or reject the results.

There is a moral to the story. The idea that Latin America is marching steadily toward a new democratic consensus is simply silly. Latin America today is more polarized than ever. The progress made in the 1990s toward establishing democracy and human rights is in need of a second wind. And Barack Obama has to lead, not follow or impose. Washington must choose its friends and identify its adversaries. In Honduras, Obama wanted to be friends with everybody: with Luiz Inácio Lula da Silva in Brazil, but also with Ã"scar Arias in Costa Rica, Republicans in the U.S. Congress, and the entire anti-Chávez group in the region. The result is a deep muddle.

Castañeda is a former foreign minister of Mexico, Global Distinguished Professor at New York University, and a fellow at the New America Foundation.

 Opinion, Analysis, Other Sources

CARACAS, Venezuela – President Hugo Chávez scrambled to distance his government from a brewing banking and corruption scandal that claimed one of his closest collaborators on Sunday and could claim other top officials.
Speaking on his weekly television show, Mr. Chávez announced the resignation of Jesse Chacón, one of the government’s most powerful officials, who was serving as science and technology minister. The announcement came a day after the arrest of Mr. Chacón’s brother, Arné Chacón, president of Banco Real and Baninvest, two of seven small banks taken over by the Venezuelan government last week.
“I respect and love Jesse very much, and I know he understands,” said Mr. Chávez. He said Mr. Chacón’s resignation freed the official from suspicion in the banking scandal.
Mr. Chávez said he had spoken directly to the government’s top prosecutor, Luisa Ortega, and requested that she move quickly to punish the people responsible for the failed banks. Mr. Chávez also said he told the Venezuelan secret police to swiftly imprison Arné Chacón.
“I’m very sorry that he is the brother of a minister, but we’re showing that no one here is untouchable,” Mr. Chávez said.
The scandal, which broke last week when the government took over the banks and Mr. Chávez threatened to nationalize all of Venezuela’s private banks, has sparked fears of a financial meltdown. The moves provoked a wide selloff of the Venezuelan currency, the bolivar, on Thursday, and slammed the value of Venezuelan government bonds. The bolivar, officially pegged at 2.15 to the dollar, sells at about six to the dollar in the country’s black market.
Many analysts say the bank takeovers aren’t a reflection of a larger banking crisis, since most of the financial system’s assets are held by a handful of big banks that are seen as sound. Pointing to Friday’s recovery in Venezuela’s dollar-denominated bonds and the bolivar, these analysts say investors appear to believe Mr. Chávez is targeting a limited group of banks.
Mr. Chávez took control of between 8% and 12% of the banking system last week, according to Royal Bank of Scotland economist Boris Segura. Analysts say Mr. Chávez could likely target as many as a dozen banks that together represent around 20% of the banking system.
Many Venezuelans are jittery about the state of their financial system. Last week, Mr. Chávez said he would closely examine brokerage houses as well as insurance companies. Reacting to the uncertainty, Moody’s downgraded the ratings of two big Venezuelan banks, privately owned Banco Mercantil CA, and state-owned Banco de Venezuela, which the Venezuelan government acquired for $1.05 billion earlier this year from Spain’s Banco Santander. The two banks are among Venezuela’s top five by size of deposits, and are considered to be among the most solid financial institutions in the country.
The brewing scandal has been a political blow to Mr. Chávez. Critics say the scandal has laid bare the emergence of a new class of businessmen who in some cases have made billions of dollars from their contacts with the government.
The crisis was sparked by last Monday’s takeover of four banks owned by Ricardo Fernández, a billionaire businessman whose companies are the major suppliers to Mercal, a government-owned chain of markets that provide subsidized food to most poor Venezuelans. Mr. Fernández has been detained by Venezuela’s military intelligence agency.
On Friday, the government took over three more banks owned by Pedro Torres, another well-connected businessman who people close to him say is in Miami.
Government officials have accused the banks of irregularities, including making enormous loans to companies belonging to the owners. Antonio Guerrero, a lawyer representing Mr. Fernández, says his client is innocent and that his legal problems stem from a faulty audit of his three banks. It wasn’t possible to reach Arné Chacón or Jesse Chacón.
The attorney general’s office said Sunday it had ordered the arrest of 27 people linked to the failure of the banks. Many of them are bank directors who are believed to have fled the country. Venezuela has asked Interpol to issue arrest warrants for nine bank officials.
For many in Caracas, the rapid rise of Arné Chacón is an example of the new class of Venezuelan capitalists. A former navy lieutenant, Mr. Chacón took part, along with his brother Jesse, in Mr. Chávez’s unsuccessful 1992 coup attempt, for which Mr. Chacón was jailed until 1994.
In a 2002 interview in the Caracas newspaper La Razón, Arné Chacón said that although he knew little about banking, Mr. Torres gave him 49% of the shares of the bank and named him president because he was too busy to take care of the bank himself.
“I had no money to pay him,” Mr. Chacón said. At the time Mr. Chacón’s brother, Jesse, was interior minister, the third-ranking post in Venezuela’s government.
In the interview, Mr. Chacón said he was brought up in a cardboard-and-tin shack in a Caracas slum where his mother worked as a maid and his father as a policeman.
By the time of the interview, Mr. Chacón was the owner of several racehorses. “It’s my passion,” he told La Razón.

Write to Darcy Crowe at darcy.crowe@dowjones.com

 Venezuela, Politics, News, International, Opinion, Economics, Analysis, Other Sources