Category Archives: Chavez lagacy

Bolivarian Venezuela in crisis: An oil-rich nation collapses? Berlin, 10 October

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Bolivarian Venezuela in crisis: An oil-rich nation collapses? – Panel Discussion (bios follow):

  • Ms. Rita Bitar Deeb  PhD student in Political Science at the Otto-Suhr-Institut of Freie Universität Berlin
  • Dr. Ivo Hernandez  Lecturer in International Relations at the Political Science Institute of Universität Münster
  • Dr. Manuel Silva-Ferrer  John Boulton Foundation Fellow and Lecturer at the Latin-American Institute of Freie Universität Berlin
  • Dr. Thomas W. O’Donnell -Moderator  Guest Lecturer at Hertie School of Governance and the European Studies Program, FU/BEST at Freie Universität Berlin

WHEN: 10 October, 6-7:30 pm. LOCATION:  Hertie School of Governance,  Friedrichstrasse 180 – 10117 Berlin, Germany.  [To attend, please register online.] – Venezuela is currently unable to adequately feed its people, or to provide basic services such as medical care, education, and electricity. Polls indicate about 90% of the population would vote to remove its Chavista president, Nicolas Maduro, if his government allowed a recall referenda to take place this year, which is widely demanded. What will happen in Venezuela: Collapse? Chaos? Democratic renewal?  And, moreover, why is this occurring now?

Since the mid-20th Century, fueled by oil riches, Venezuela has veered from being the leading example of ‘democratic development’ within a continent rife with right-wing dictatorships, to a nation mired in its own economic and political crises. A ‘neo-liberal shock’ in the late-1980’s failed and was roundly rejected by citizens. At the end of the 1990‘s, Hugo Chavez broadly excited the hopes for development of not only Venezuelans but elicited significant sympathy worldwide with Chavismo’s ‘new resource nationalism’ and ’21st Century Bolivarian Socialism’. However, this leftward turn is also demonstrably failing, with the nation again on the brink of disaster. What comes next? Our panel of Venezuelan experts weighs in and will address attendees’ questions.


Rita Bitar Deeb is a PhD student in Political Science at the Otto-Suhr-Institut of the Freie Universität Berlin. She received her Master in Public Policy and Management from the University of Pittsburgh and Graduate Certificate in Latin American Studies. Her research interests are democratization process, social development and gender policy. She has worked for the Inter-American Development Bank (IADB), and several local NGOs as project coordinator in Venezuela (Atenea, Súmate, Red de Apoyo-HHRR). Bitar has taught at the University of Kassel in Germany, and at the Catholic University in Caracas.


Ivo Hernandez is lecturer in International Relations at the Political Science Institute of Universität Münster.  He studied at Universidad Central de Venezuela (UCV) in Caracas, the London School of Economics (LSE), the University of Heidelberg and University of Tübingen in Germany and The National Defense University in Washington D.C. His research interests include oil politics, national oil companies, the logics of terrorism, and Latin American politics and political economy.


Manuel Silva-Ferrer is John Boulton Foundation Fellow – exploring oil, society and culture in 20th-Century Latin America – as well as Lecturer at the Latin-American Institute of Freie Universität Berlin.  Born in Caracas, he is a graduate of the Institute of Communication Studies at Universidad Central de Venezuela (UCV) and earned his PhD from Freie Universität Berlin.  He was Director of the state film foundation Cinemateca Nacional de Venezuela and Head of Cinema and Media at the Ministry of Culture where his work included developing the National Academy of Film and Audiovisual.  Silva-Ferrer led ExtraCámara, a magazine for Latin-American photography, and was co-responsible for the creation of the Centro Nacional de la Fotografía, a public foundation for the promotion of photographic art. During his studies, Silva-Ferrer was Fellow of the Fundación Gran Mariscal de Ayacucho, and awarded a PhD full scholarship from the German Academic Exchange Service (DAAD).


Moderation & comments:

Thomas W. O’Donnell is Guest Lecturer at Hertie School of Governance and the European Studies Program (FU/BEST) at Freie Universität Berlin.  An academic, analyst and consultant in the global energy system and international relations, his work has encompassed especially the role of oil and gas in the EU, Russia, Latin America, Middle East, China and the USA.  His PhD is from the University of Michigan at Ann Arbor in experimental nuclear physics, and he previously studied Political Science and China Studies at the State University of New York and Canisius College.  In 2008-09, he was US Fulbright Scholar and Visiting Professor at the Center for the Study of Development (CENDES) at the Central University of Venezuela (UCV) and in 2015 AICGS (American Institute of Contemporary German Studies) & DAAD Fellow in Washington D.C. O’Donnell has taught post-graduate seminars on energy in international relations and development at The University of Michigan, The Ohio State University, The New School University’s JJ Studley Graduate Program in International Affairs (NYC),and Freie Universität, JFK Institute (Berlin). He is Senior Analyst at Wikistrat and consults with other geopolitical and business-intelligence firms. Before his PhD, O’Donnell gained broad tech experience in U.S. automobile-manufacturing, railway-operations and power-generation industries.  He is author of some 40 peer-reviewed scientific physics papers.


If you wish to attend, please register online.

What’s keeping foreign oil firms out of Iran? IRG? [CNNMoney quotes me]

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To put Iran’s recent production increases in perspective: On its own, for 37 years, Iran has struggled to produce two-thirds of its pre-revolutionary level of 6 million barrels/day. Now, domestic opposition is again limiting foreign oil companies’ participation to boost production.

Since the Obama-administration’s and Europe’s nuclear sanctions were lifted early this year (marked ‘e’ on the chart), Iran has been expanding its production and exports more rapidly than most experts had expected. Tehran has actually tripled exports since late-2015 (see point ‘f’).  But, here’s the big question: Can Iran sustain this years’ production gains?
If to, this could seriously undermine Saudi Arabia’s global oil-market share, and boost Iran’s sanctions-damaged economy to a long-awaited recovery.
The short answer: Now that foreign sanctions are finally lifted, the battle to boost Iran’s oil exports has shifted to a domestic clash over whether to allow foreign oil companies to have significant upstream involvement. This is a domestic Iranian issue with a long history.
Historical perspective
Let’s start with some historical perspective: The Iranian National Oil Company (NIOC) can only do so much on its own to boost production. After decades of sanctions, it lacks the needed technology and finance.  I told CNNMoney‘s Matt Egan, on Wednesday, that the faster Iran expands on its own, the faster production will plateau. (His CNNMoney article today quotes me .).
This was what happened after the 1980-1988 Iran-Iraq war.(‘b’ on the chart). By about 1992, production had plateaued at almost 4 million barrels/day, under 2/3 of the pre-revolutionary, late-1970’s level of roughly 6 million barrels per day. (‘a’ on chart).  The Iranian president at the time, Rafsanjani, argued to religious conservative and nationalist members of the Majilis that only foreign oil companies’ technology and investments could expand production further. However, he only won grudging approval for an offshore project due to fears that foreigners would bring their irreligious ways ashore and/or undermine the hard-won nationalization of Iran’s oil sector.
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My AQ piece: “Russia Is Beating China to Venezuela’s Oil Fields”

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Russian Production & Stakes in Venezuelan Oil Projects (40% stake is limit)

Last October & November I succeeded in interviewing several people in the Venezuelan private sector directly knowledgeable of Russian oil projects with PDVSA. Many Venezuelans wonder what all the Russians-known for their secrecy-are up to there.  Some of my key findings are in Americas Quarterly‘s Winter 2016 edition. Read on … 

Russia Is Beating China to Venezuela’s Oil Fields – By THOMAS W. O’DONNELL

The profits, politics and luck behind Russia’s growing footprint.

Russian companies produce more oil in joint projects with PDVSA than their Chinese counterparts This article is adapted from our 1st print issue of 2016. 

The late Venezuelan President Hugo Chávez, had long envisioned China becoming Venezuela’s biggest oil-sector production partner. So when Rafael Ramírez, then president of Petróleos de Venezuela, S.A. (PDVSA), announced in January 2013 that Russia would produce enough oil with PDVSA by 2021 to become “the biggest petroleum partner of our country,” very few people believed him. It sounded like empty hype.

Yet it turns out that Ramírez was serious. Three years later, Russian companies are already producing more oil in joint projects with PDVSA than their Chinese counterparts. Official figures are either unreliable or unavailable, but according to field data provided by Global Business Consultants (GBC), a Caracas-based energy consulting firm, Russia-Venezuela production as of late 2015 was 209,000 barrels per day (bpd), compared to China-Venezuela’s at a bit over 171,000 bpd.

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Paralyzed on Economic Reforms, Venezuela Will Mortgage Citgo [My Americas Quarterly analysis]

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Photo:: Listverse.com

[My post at Americas Quarterly, 5 Feb 2015]  Since before the death of Venezuelan President Hugo Chávez in March 2013, his successor, Nicolás Maduro, has remained paralyzed to enact reforms needed to escape the economic dysfunction Chávez left behind.

In his latest national address on the economy on January 21, Maduro finally acknowledged the recession and shortages faced by Venezuelan citizens. Yet, he failed again to clearly implement any of the pragmatic economic reforms[1] advocated by Rafael Ramírez, the former minister of energy and former president of Petróleos de Venezuela, S.A. (Petroleum of Venezuela—PDVSA)— such as a de facto bolívar-to-dollar devaluation via unification of Venezuela’s multi-tier foreign exchange (FX) system, measures to attract more foreign financing for oil production, and removing internal price controls, especially for gasoline.  Meanwhile, in September 2014, Ramírez was demoted to foreign minister, and then to UN ambassador several months later.

According to insiders, Maduro’s failure to implement pragmatic reforms stems principally from two sources.
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“Venezuela: Petroleum, Politics & Economics in the Post-Chavez Era”–My Columbia U. talk, with Luiz Pinto, 9 October

If you’re in New York:  Luiz Pinto and I speak at Columbia University’s Institute for Latin American Studies (ILAS) on post-Chavez Venezuela, 12-noon, Thursday, 9 October: ilas_venezuela_columbia_talk_09oct14

Aside

Last week, I was quoted in the Wall Street Journal on why Petróleos de Venezuela SA (PDVSA) is looking to sell its Citgo refining affiliate in the USA. The key motivation, in my estimation, is to finance projects critical to … Continue reading

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Venezuelan state’s economic response to protests: Rationing plus Chinese and Russian loans to float a liberal dollar market

The anti-government protest in eastern Caracas 13 March ended in clashes with Venezuelan police BBC
The anti-government protest in eastern Caracas 13 March ended in clashes with Venezuelan police. Three more died in widespread protests. BBC

As protests continue against Venezuela’s faltering “oil revolution,” the political strategy of the chavista administration is striking for its intransigence. President Maduro has refused to recognize any grievances by students or other protesters. He calls protesters “fascists” and blames them for all the ills of the economy.  Protests are attacked by the national guard and often by state-organized paramilitary gangs on motorcycles who are praised by the president.

The administration’s strategy so far appears to be that protests will burn themselves out if they can be delegitimized and contained within middle-class areas.  Accordingly, the president’s rhetoric aims at inciting poorer citizens against protesters.  All in all, this is a risky strategy.  Protests have constantly intensified, with perhaps 25 persons dead now.
After a month of protests, the administration has taken urgent economic measures it hopes will undermine the protests and prevent their spread to poor and working-class barrios.
1. Ramirez announces Chinese and Russian loans and the launch of a very liberal Sicad 2

Petrobras of Brazil v. Pdvsa of Venezuela – Reply to press interns in Sao Paulo

Lula and Petrobras

Lula and Petrobras

I had a pleasant exchange with an intern – in the end a class of interns – at the Brazilian newspaper “O Estado de São Paulo” a couple of weeks ago.  The questions were insightful. I tried to answer in an informative and direct manner.  Indeed, things are not going well at Petrobras lately, and looking at the politics of Pdvsa and Petrobras next to one another is a useful exercise. Here’s the interview.

1) Do you agree that PDVSA and Petrobras have both had political mishaps in their administrations? Why?

Yes. Hugo Chavez used Pdvsa as the “goose that lays the golden eggs.” However, he took so much from Pdvsa — especially to support his frequent election campaigns, before each of which he increased public spending to win votes — that the “goose” has been left to starve.

Chavez’ revolution was, in his own words, an “oil revolution” and “oil socialism.” However, he did not understand how to run the national oil company. While he distributed largess from the country’s oil wealth to the poor, he was incapable of introducing a new, higher productivity of labor in Venezuelan society, which is what any real social revolution requires for success. He left the country in a very dangerous situation with a shortage of foreign exchange. If the price of oil falls further due to a US & EU accord with Iran and/or an improvement in the oil production situation in Libya, and Iraq, then Venezuela will face a deep crisis.

Petrobras too, under Lula, began to be viewed as a cash cow after it discovered the pre-salt. As a president. Lula was much more competent organizationally and in economic matters than Hugo Chavez. However, Continue reading

China y América Latina: ¿Quién gana y quién pierde? – Petroguía 2014 (Spanish)

Inversiones energéticos de  China en Latino américa.  Nota que Venezuela está en tercer lugar, en contra de las intenciones iniciales de Beijing en 2007-08.

Inversiones energéticos de China en Latino américa. Nota que Venezuela está en cuatro lugar, en contra de las intenciones iniciales de Beijíng en 2007-08. HAZ CLICK para magnificar. (Grafico por T.O’D.)

[English readers: This post is an analysis I did in Spanish for Petroguía 2014 – the annual hard-copy guide for the LatAm petroleum sector – of China’s oil and gas investments in LatAm and the Carribean.  For Beijing’s other investments, or a presentation, etc. drop me a line. ]

NOTA: La siguiente es mi análisis publicado en Petroguía 2014, la guía anual para el sector petrolífero latinoamericano.  Soy agradecido a los directores del Petroguía por haberme permitido publicar el artículo aquí.  El artículo es una resumen de una investigación que hizo sobre todas las inversiones de China en Latino américa. Si tienen interés en una reportaje o presentación detallada, por favor contactarme.

China y América Latina: ¿Quién gana y quién pierde?

Sumario. El mercado de hidrocarburos ya no está en el norte de América sino hacia el este,  y la mejor estrategia de intercambio con esa plaza la lleva Brasil, mientras que Venezuela y Argentina están a la zaga.

Por Thomas W. O’Donnell

El petróleo y el gas que exportará América Latina en las décadas venideras irán mayormente a China y otras partes de Asia. Y eso es por el efecto combinado de menores necesidades de energía importada en Estados Unidos, gracias a la utilización de los nuevos métodos de fractura hidráulica (fracking) que produce cada vez más petróleo liviano, y por el tope que ha alcanzado su demanda doméstica. Continue reading

Beijing ups Venezuelan oil investments, but refuses Chavista leaders’ plea for a cash bailout

folha_header_08apr13folha_quote of the day_venez-and-china_08apr13Back in April, Brazil’s Folha de SaoPaulo ran an article entitled: The Future of Venezuela Depends on China and highlighted this quote:  Translation: “If Maduzo wins, he’ll have to regain the confidence of the Chinese.”  TOM O’DONNELL, petroleum consultant

Indeed, it is now clear that the short-term strategy of the post-Chavez Maduro-Cabello administration was to escape the country’s severe dollar crisis: convincing Beijing to extend it a $5 billion cash loan alleviating food-import shortages before 8 December elections.  In particular, the cash was to fund a new dollar exchange system (see El Nacional,25 Sept 2013). Continue reading