Whenever I visit a conference about blockchain, there is always someone who uses Venezuela as a use case for crypto currency adoption. I get that. Without enough fact finding, this use case has all the ingredients to prove a cryptocurrency is a solution for the problems that Venezuela has. But as always, reality is very different. Because of disinformation campaigns, fact finding has become a problem of immense proportions .
The reason for writing this piece is that the country’s hardships are felt right on my doorstep. My wife is Venezuelan and my family has been ripped apart because of a regime. A large part of the family is living abroad and is scattered around the globe. Family members that are still in the country are only surviving because they get help from friends and family living abroad. And they are in luck, because a lot of people we know need to survive without help from abroad and they are really suffering.
What makes it even more though is seeing how the media is reporting on what is happening. Let’s just say, there are a lot of opinions and agenda’s that need to be thrown out of the window. This piece is about fact finding and setting the record straight on what is actually happening in Venezuela and how a country, that has worlds largest oil reserves, has become something which could be the subject of a novel from George Orwell. It will explain how big the problem of having centralized state-controlled media is. And it will explain why I literally cried about what happened this weekend.
The real problem
The real problem that Venezuela has, is it’s abundance of what some refer to as “The devils excrement”. Venezuela is a country which has the largest oil reserves in the world (Wikipedia). It also has huge gold deposits and an abundance of other natural resources. Furthermore, it is one of the most beautiful countries in the world. Its richness in everything should make it one of the most prosperous countries in the world. But, unfortunately, it is all but that.
Sometimes you hear Venezuelans say: “God wanted to create paradise on earth, so he created Venezuela. But he did not want the whole world living in Venezuela, so he created the Venezuelan”. This is quite unfair, because the Venezuelan problem is not caused by the Venezuelans. It is the problem of having a very tasty and big pie and the world wanting a piece of it. It does not help having large oil reserves. It resulted in a way of thinking which Venezuelans describe as “El facilismo”. Knowing that you just have to open a valve to get easy money have resulted in decades political mismanagement.
Due to geopolitics, corruption and mismanagement, the benefits of oil booms were always short lived if not even lived at all. The result is that the majority of the population is living below the poverty line. During the prosperity boom at the end of to 70’s and the beginning of the 80’s, the sentence: “¡Ta barato, Dame dos!”, was heard on every street corner in Miami. The reason for this boom was the nationalization of the oil industry and the heavy spending that resulted from it. But due to mismanagement, the country was left with a heavy burden when the oil prices plummeted. Furthermore a large part of the population did not benefit from the boom at all. It became the breeding ground for what Venezuela is today.
The political problem
If you want answers for a current problem, one should always look at history to find its origins. In January 1, 1976, President Carlos Andres Perez signed the law that reserved the government the industry and the commerce of hydrocarbons in Venezuela. The same day “Petroleos de Venezuela S.A. (PDVSA)” was born as the company in charge of planning, coordinating and supervising the oil industry. It was the beginning of the prosperity boom of Venezuela mentioned above. Instead of managing the extra income wisely, the administration started to lend heavily. Causing an extreme case of “la enfermedad holandesa”.
In the meantime the current administrations were rattled with corruption and to make matters even worse, the regular working class did not benefit from the boom at all. When oil prices fell, the country became a keg of gunpowder looking for a fuse.
In 1982, MBR-200 was founded by lieutenant colonel Hugo Chávez Frías. MBR-200 was secretive cell within the military and their main complaint was the corruption of Carlos Andrés Pérez as well as Venezuela’s ongoing economic difficulties and social turmoil. In their view, the entire political system had to be changed in order for social change to occur.
The group was also linked to Fidel Castro. Castro was looking towards Venezuela as an ally because it was experiencing economic difficulties as a result of the Soviet Union’s Perestroika. He saw in Venezuela a piggy bank that eventually could provide the funds he desperately was searching for. Meanwhile, the discontent of the people grew.
In 1989 bloody street riots took place known as the “Caracazo”. The weeklong clashes resulted in the deaths of hundreds of people, thousands by some accounts, mostly at the hands of security forces and the military. And after the failed coup in 1992 by the hand of Hugo Chavez, the country was left in crisis. These circumstances in which the 1992 coupe took place are important as they lay the foundation of rise of Hugo Chavez.
Chávez gave himself up to the government and appeared on television, in uniform, to call on the remaining coup members to lay down their arms and spoke the famous words: “Por Ahora”. There is always the question how it is possible that someone who organized a coupe d’etat, was released from prison in no-time and, not long after, became the president of Venezuela.
In comes Rafael Caldera, a brilliant intellectual and former president of Venezuela. A key distinction between Caldera’s first government and those of his predecessors lay in the area of foreign policy. President Caldera restored bilateral relations with the Soviet Union and the socialist nations of Eastern Europe, as well as with a number of South American nations that had fallen under military dictatorships, including Argentina, Panama, and Peru. Furthermore, although he was one of the founders of the political and economical system, he was one of the first to see its weakness. So much oil had led not just to dependence but widespread corruption and growing resentment from the popular sectors left off the gravy train.
Caldera’s second administration faced enormous challenges. He needed to defuse the powder keg. To overcome the discontent of the popular sectors, he released the military officers responsible for the failed coups of 4 February and 27 November 1992. As a result of this policy, aimed at pacifying the insurgent military force, there were no uprisings, attempted military coups, or deaths for political demonstrations during the five years of Caldera’s second term. A win for him, but in doing so, he unleashed the Kraken.
Rise of a Dictatorship
Venezuela has a history of corruption and foreign interference . A funny example is the Cisneros group, one of the oldest of Pepsi’s independent franchise operations. For five decades they were able, with government support of course, to flood the Venezuelan market with PepsiCo products. To this day Cola is referred to as Pepsi and you will get a strange face if you ask for a Coca Cola.
Although Caldera’s administration was characterized by tranquility, corruption was rampant. One of the reasons was that the oligarchy was still in power. When everything is easy, you get lazy. This is what happened in Venezuela during the election of 1998. Venezuela was a divided country and the upper class underestimated the popularity of Hugo Chávez. The candidate Hugo Chávez was up against was former beauty queen Irene Sáez. Solo en Venezuela.
Chávez won the election with support from the country’s poor and disenchanted middle class, whose standard of living had decreased rapidly over the previous decade. It’s no secret that Chávez was backed by Castro. Even Caldera had ties with Castro, but no one could imagine, at that time, what impact it would have on the country. Hugo Chávez was a very intelligent and charismatic person. Even I have a soft spot for him, though I strongly resent the majority of his policies. He was the kind of crook that was so charismatic, that you would let him get away with most of his crimes.
His first term was what you would call, “Chavismo Light”. It laid the foundation of the disaster Venezuela has become. From the get go his administration was marked by nepotism. Promoting his family, inner circle and former MBR-200 members with top positions. Cuban style politics with the goal to create a thrust-worthy inner circle.
To deliver on his promise to Castro, he launched the cuban doctors for oil program. The purpose of program was to make it seem legit to give Cuba a handout of USD 3 billion a year. This program continues to this day. This and other policies would result in the old ruling class to try and topple his administration. Chavez knew this and was just waiting for it to happen, because he knew he had popular and military support.
So in 2002 they committed a sorry excuse for a coupe d’erat. One of the biggest mistakes ever made. It failed and it gave Chávez cult status and thus it gave him the support to completely rewrite the rule book. The policies he launched afterwards were beyond belief. Stuff went batshit crazy so to say. Here is a short anthology of some o his policies.
Because the role of some privately owned broadcasters played during the failed coupe, he had an excuse to expropriate every independent news outlet, radio and tv station in the country. And so he did. Not all at once, but station after station and newspaper after newspaper. Right now, there is not one source of news in the country that is not government controlled.
He slowly but steadily wrecked every democratic institution in the country. Everything that could pose a threat to his cling on power, he changed. From being able to be elected forever to creating a state fund called “Fonden” which does not have any oversight and is handling all the state finances. With that he looted the state and he could now use state as he pleased.
He institutionalized corruption. Although the country has a history of corruption, during his administration it went into overdrive. Everyone in his administration become filthy rich. Also a lot of people of the opposition made quite some money. This is very smart as everyone, including opposition members, put on a show to make his administration seem legit.
And every “social” reform program he launched was just another scheme to make money for his inner circle. Schooling programs, housing programs, construction programs, everything was just another scheme to corrupt and to politicize a common good. I remember that years ago we were on a flight and right in front of us there were some officials from the schooling program he launched. They were enjoying their perks and getting drunk. They were starting to toast to the schooling program, shouting that there should be more schooling programs so they could have more champagne during flights... It took a lot of tooth grinding to stay calm…
He corrupted the Bolivar, and he corrupted it completely. There is no free access to foreign currency in Venezuela. Every Dollar, Euro or Swiss franc has to be applied for. Importing a good? Sorry, you need to ask the government nicely and give them some persuasion in the form of a kickback. He knew the result would be a thriving black market for foreign currency. And guess who are the driving forces of this market? Yes, the inner circle of the government. They are the only ones with access to the official exchange rate. The scheme is to buy dollars at the official rate and selling them at black market rate. And in one transaction you will make x times your “investment”. How big is this? Well, if you think the Odebrecht case in Brazil is big, this will blow your mind.
The story continues. He introduced a fixed selling prices for imported goods. A list that grows bigger every day. You know what the result is? Yes, indeed another scheme to corrupt. Buy something for the state sponsored price and ship it across the border. Oh, and when there is a shortage of goods as a result of this policy? Well, you can always import toilet paper rolls and sell them to the government directly for USD 5 a roll. Kickbacks always seal the deal.. Even worse is gasoline. The state-sponsored price of gasoline is so low, that when you ship a truck full of it across the border to Colombia, you will make a more than shipping the same truck full of cocaine to Europe. Probably another billion dollar scheme.
And yes, this all had to do with increasing his grip on power. And he succeeded. Knowingly corrupting someone, means that you get control over that someone. They will help you stay legit and they will turn a blind eye if you pull another one of your stunts. And it does not matter if this someone is in the opposition or not. Hell, it does not even matter if it is another city or country. He bribed nations and in return he got their support to cling onto power. Here is a crazy example, the deal Chavez made with the city of London… The only thing that was left for his country were some breadcrumbs on the table. People forget that during his administration he had the windfall of an oil boom. But this time, the only people who benefited from it were his inner circle and other countries.
When Chávez died, it got even worse. Venezuela turned into a foreign controlled full-blown dictatorship and a country of horrors.
Living the horrors of a Dictatorship
The last days of Chávez were very strange. He died in Cuba.. The exact date is still unknown. The circumstances of his death can be read on Wikipedia. According to Nicolas Maduro he named a successor called Nicolas Maduro. Someone who is a way more than just a bus driver. His origins are a bit vague. He is trained in Cuba and when I say trained I mean heavily trained. He used to be the bodyguard of Chávez and what people forget is that he was one of the key people of MBR-200.
Nicolas Maduro does not move an inch without the go-ahead of Cuba or Russia. If you talk about foreign interference, then here is the best example you have. His election was utterly corrupt. Every trick in the book has been used to keep him in power. Buying votes with government funds? Check. Dead people voting? Check. Ballot stuffing? Check. Corrupting opposition members? Check. The regime already had lost popular support years ago and this was the only way to keep them in power and make them look legit. The world does not do a lot of fact finding unfortunately.
Finally, in 2015, the voting system of the regime hit a snag. parliamentary elections were won by the opposition. The reason? Probably there was already another plan in place as the regime knew they were losing it legitimacy to the outside world. Loosing an election would make them look legit again. And buy them time to push through some heavy reforms.
Every aspect of the then already pseudo-democracy needed to be destroyed. So they created Tribunal Supremo de Justicia. Basically a high court that consist only of regime supporters. A better word is a Nazi Court. And they created the Asamblea Nacional Constituyente which is basically a Nazi Parliamentary. Yes, this regime has more to do with Nazism than with Socialism. These moves turned Venezuela in a fully fledged dictatorship. Everything is now is state owned or state controlled. And this dictatorship is willing to throw the people under the bus to remain in power.
The breadcrumbs that used to be on the table are gone now. The majority of the people live on government handouts. The so called clap boxes. With these boxes the regime has politicized food... Furthermore it is another scam as some people are getting payed a lot to provide the boxes. Medical care is not to be found anywhere. Public hospitals are non functioning and forget about medicine or medical equipment. People are dying now. Dying because a regime is clinging to power. Dying of crime, malnutrition or lack of proper medical care.
The regime is playing the imperialist card. But they forget to mention that the problems were already there when no sanction whatsoever was imposed. People have short memories apparently. The people of Venezuela have lost hope. They do not have the power to change the system that is in place. People are getting tortured and murdered if they go against the system. The regime does not give a flying fuck about the Venezuelans.
As a result the country is experiencing a humanitarian crisis. Like I said, children are dying and the regime is acting like everything is just dandy. It is not and it has not been for a long time. The regime refuses humanitarian aid as it makes them look weak. They act like Castro did when Cuba was experiencing famine. Go on tv and ask a hungry man if he has thirst. Of course he says yes. And Castro says: “See, this man is thirsty not hungry. There is no famine in Cuba”.
Luckily there now is a glimpse of hope. The opposition is working together and is working with a plan. They have teamed up with the U.S. Finally. Yeah, people are arguing that there should not be any outside interference. People who make that argument probably never set foot inside the country. It is impossible for Venezuelans to stand up to the system that is now in place. It is the same thing as saying that there should not have been any outside interference in Germany in the time the Nazi’s took over. The argument just does not fly!
Delivering humanitarian aid to a country where people are dying because of lack of medicine and because of malnutrition can only be applauded. No matter who set it up. You just cannot criticize this. Even if there is a political motive. In the case of Venezuala there always is a political motive because if it were not for an illegal cuban backed regime, the country would not be in the situation it now is. And it sad to see Mana needing to defend their choice to preform during Venezuela Live Aid.
The start of the 23rd of February was a good one. We were following the live stream via VPI tv (based in Miami). Our feeling of hope was getting bigger as messages were coming in that the deliverance of aid could succeed. Then, what happened soon after made my heart sink. A truck with humanitarian aid was set on fire… on Venezuelan territory… A truck with supplies that could have saved the lives of children. Children, who were denied to live by a regime. To make matters even worse, one of our friends told us at that moment that a relative had just lost her 12 year old boy. This boy had appendicitis, something that is easily cured in any other country. But because this boy was born in Venezuela, he was denied life. Denied life by a regime. Just take a moment to think about what I just wrote.
You think that it could not get worse, but it did. The international press coverage on the situation in Venezuela is abysmal. It went in overdrive on the 23rd. The amount of disinformation that was spread is unbelievable. Foreign interference. Reports on the number of people who attended Venezuela Live Aid. Politicized humanitarian aid. The politburo of Cuba Russia and Venezula went in overdrive. And then there were people like Roger Waters..
It is just unjustifiable. Sources which are clearly state sponsored disinformation campaigns are being interpreted as being true. To all involved I can only say this, look in the mirror and be ashamed of yourself. The Venezuelan problem is not about ideology. It is about people dying and about people needing help.
The criticasters of Venezuela Live Aid clearly placed themselves on the wrong side of history. They defended a regime that kills and that destroys. Do your fact finding before you open your mouth. It only makes you look stupid. Your being used as a pion of the chess game the regime is playing. When they are done with you, they will flush you away
The threat and power of disinformation
Now let’s loop back, to where we started. The conference. As you can see the problems of Venezuela do not have to do with economics. And a crypto currency as a solution does not make any sense. What could help the country is fact finding and transparency. It is clear that this is one of the huge challenges the country is facing.
Disinformation has become one of the most powerful tools in the world. The reason is that all the channels we use for news and information gathering are centrally owned. Take Venezuela as an example, all channels are owned and controlled by the state. And see what happens when they unleash their campaigns. Even “thrustworthy” sources like twitter, youtube and google news are being used. And with success as they manage to change public opinion. Here is an example. The twitter feed of the minister of foreign affairs (who coincidentally is married to one of the daughters of Hugo Chavez).
Take a look at the picture above. He posted it on his feed with the argument that the truck was set on fire in Colombia. To prove that it was a U.S. ploy.. Disinformation at its finest. Let’s first stick with the facts, a truck with humanitarian aid was set on fire. During a live stream and without any doubt on who did what. It was the PNB firing tear gas. It were the Collectivos firing live rounds and were the Collectivos who set the truck on fire.
It is so crazy that you tend to forget what the real problem was. A regime blocking the border for humanitarian aid. So the regime succeeded in downplaying that part by making this up. Let’s dig a bit deeper and take a look at the picture again. Yes you see green men closing the border. But where are they standing? Is that the border crossing? No it is not. The border crossing is the river in the picture… Why do you think the trucks were set on fire just across the river? Right, it is Venezuelan territory and thus the Colombian military could not provide support. Of course you send in the Collectivos (government supported gangs) to do the dirty work. And if you spin the story you will cause division. He actually succeeded in doing so. Take a look at this article on Russia Today. But think about it, this guy is the minister of foreign affairs.. The guy who negotiates with the rest of the world. Think and know what this country is up against. No crypto currency is going to solve this…
Please share, tweet and re-tweet this story. You will be helping the people of Venezuela if you do. And, of course, you will receive my eternal gratitude