Chavez drives Venezuelan economy to brink of collapse

In a vain effort stop the exchange rate from collapsing, Venezuela's Marxist-Leninist President Hugo Chavez suspended dollar sales on 22 January, with predictable results.

A severe dollar shortage has emerged, making it nearly impossible to obtain, for example, essential medicines. This has created a critical situation for a country that imports nearly all of its medicines, 60 percent of its food and most of its capital goods and consumer goods

The effect on the export industries has been devastating. The overvalued bolivar is pricing their goods out of foreign markets. Although this policy has made foreign goods cheaper in terms of the bolivar they still have to be paid for in dollars.

Chavez is exploiting the dollar shortage by setting up a committee to decide who will be allowed to receive dollars. This is being done with the express purpose of denying perceived opponents of his regime access to foreign exchange.

Overvaluing the currency has created an unofficial foreign exchange market, despite Chavez's efforts to suppress it, where dollars are exchanging at up twice the unofficial rate.

The dollar shortage has prevented firms from maintaining inventories and has reduced sales forcing them to lay off workers, regardless of a state decree ordering that no one be fired.

The economic root of the problem is that Chavez is running the printing presses overtime. The flow of bolivars is driving down the exchange rate and causing prices to rocket. In response to the inflationary consequences of his monetary policy, Chavez has issued more decrees and imposed rigid price controls, the effect of which has been the disappearance of consumer goods, particularly food stuffs.

The result of these so-called anti-inflationary policies will be to bankrupt companies. Those who attempt to evade the controls will be dealt with harshly, including prison terms for the "incurred crimes of price speculation and withholding of merchandise." (Chavez's economic policies have already wrecked the PDVSA [Petroleos de Venezuela S.A], one of the world's biggest oil companies).

Chavez is being accused of using inflation to destroy the opposition and turn Venezuela into a South American Cuba with himself as Castro, a dictator whom he greatly admires along with Saddam Hussein. His talk of destroying "coup plotters", "vicious speculators" and of replacing judges with those "who would support" his Bolivian revolution has only lent greater weight to the accusations.

But using inflation as a revolutionary weapon to bring about an "economic coup" is not the smartest of things to do. Hyper inflations have always worked against those who started them. The infamous Weimar inflation fuelled the Nazi movement. The Tsarist government's highly inflationary funding of WW I helped subvert their rule. Allende's inflationary policy helped bring about his death.

Still, there is always a first time. Should Chavez succeed in making himself in the image of Castro, he will be ruling over a devastated economy and a people reduced to abject poverty by his socialist delusions and lust for power.

From Venezuela, A Counterplot*** As Washington prepares a high-stakes military venture in the Persian Gulf, a growing physical threat is being posed by Iraq, Libya and Iran to the soft underbelly of the United States. Hundreds and possibly thousands of agents from rogue Arab nations are working hard to help President Hugo Chavez of Venezuela take control of South America's largest oil industry and create al-Qaeda-friendly terrorist bases just two hours' flying time from Miami.

Arab advisers now are reinforcing a sizable contingent of Cubans in efforts to reorganize Venezuela's security services, assimilate its industries based on totalitarian models and repress a popular opposition movement. "What happens in Venezuela may affect how you fight a war in Iraq," Gen. James Hill of U.S. Southern Command is reported recently to have told his colleague at U.S. Central Command, Gen. Tommy Franks.

"Chavez is planning to coordinate an anti-American strategy with terrorist states," says Venezuela's former ambassador to Libya, Julio Cesar Pineda, who reveals correspondence between the Venezuelan president and Libyan dictator Muammar Qaddafi about the need to "solidify" ties between liberation movements in the Middle East and Latin America and use oil as an economic weapon.

Exhorting his countrymen to return to their "Arab roots," Chavez has paid state visits to Libya, Iraq and Iran and signed a series of mutual-cooperation treaties with the rogue governments whose operatives now are flooding into Venezuela. There they can blend into an ethnic Arab community estimated at half-a-million.

Last Jan. 10, 18 Libyan technicians flying in from Tripoli via Frankfurt, Germany, were received at the Caracas airport by Ali Ahmed, head of Libya's "Commission" in Venezuela. He was accompanied by the parliamentary whip of the ruling Venezuelan Revolutionary Movement (MVR), Cilia Flores. Nicolas Maduro and Juan Baruto, two other bosses of the MVR party militias (the Circulos Bolivarianos) who had paid an extended visit to Tripoli in 2000, also were on hand to smooth the way for the Libyans coming off Lufthansa Flight 534.

The Libyan agents were identified as: Alsudik Alghariy, Elmabruk Najjar, Koaled Adun, Zeguera Adel, Sherif Nagib, Abubaker Benelfgh, Nabiel Bentahir, Abdulfat Enbia, Waldi Majrab, Amhamed Elkum, Abdulgha Nashnush, Mohamed Romia, Abdurao Shwich, Abdulnass Elghanud, Ezzedin Barhmi, Abdulssa Seleni, Hassan Gwile and Mhemmed Besha.

The high level of security provided for the Libyans' arrival was intended to avoid the havoc of previous days when the entry of Iraqi and Iranian groups touched off a riot. As word of the landing of 20 Iranians had spread through Simón Bolívar International Airport on Jan. 8, crowds of infuriated travelers banged counters and cigarette urns and chanted "Get out! Get out!" to protest what many Venezuelans perceive as foreign interference in their country's affairs.

…………. Meanwhile, Iraqi VIPs, moving under the protection of Chavez's secret police -- the Department of Intelligence Security and Prevention (DISIP) -- came to the attention of Venezuela's regular military when government agents tried to use air-force planes to fly five of Saddam Hussein's agents into the interior of the country. Military pilots requested special clearances before allowing the Iraqis onto the C-130s.

Military sources also report that the recently arrived group of Libyans is billeted at the Macuto Sheraton Hotel in La Guaira, which they share with Cuban commandos who have been conducting strike-breaking operations around the nation's oil ports. Local units of the National Guard, the branch of the Venezuelan armed forces responsible for internal security, were reported to be refusing government orders to repress strikers.

According to Capt. Jose Ballabes of the merchant-marine union, the Cubans improvised floating concentration camps on board oil tankers, threatening officers and crews to get them to move the paralyzed vessels. When the Venezuelans still resisted, "such methods as sleep deprivation, often used against political dissidents in Cuba, are being systematically employed against our people," says Ballabes.

Sources in Venezuela's merchant navy name two of the Cuban agents on the tankers as Arturo Escobar and Carlos Valdez, who were presented as "presidential advisers" operating with DISIP. Venezuela's internal-security organization now is reported to be controlled by a command cell of undercover officers from Fidel Castro's military-intelligence service. Venezuelan sources say the Cuban operatives also run a computerized war room inside Chavez's presidential palace, Miraflores. It is in this war room that the repressive policies now afflicting the country have been planned, according to serving officers in the Venezuelan army, navy and national guard consulted by Insight.

The Libyans, like the Cubans, are specialists in military intelligence and security, but are described as computer specialists brought in to operate and reprogram crashed systems at the oil refineries, according to industry sources.

"The West must expect deepening relations between Venezuela and Islamic states," says professor Elie Habalian, a specialist in petroleum economics and a consultant to PDVSA President Ali Rodriguez Araque, who is identified by Venezuelan military sources as a one-time communist guerrilla chief. Aided by Cuban intelligence and Islamic workers, the government has managed to get oil production back up to 34 percent, a level sufficient to supply basic domestic needs. "It's a war between two models," continues Habalian, "one seeking total control over oil policy and the liberal international policy represented by PDVSA's previous management" effectively eliminated by the government, which has ordered the mass dismissal of 7,000 oil-company employees.

Interfacing of Venezuela's oil industry with the radical state systems also facilitates plans for a possible oil embargo against the United States in the event the military assault on Iraq is prolonged. While international oil experts consider such a scenario unlikely due to Venezuela's desperate need for export earnings, Venezuelan opposition leaders fear that Chavez could take advantage of a conflagration in the gulf to consolidate his dictatorship with the support of Cuban and Arab agents already in place.

"Chavez has violated the constitution on 34 counts and is moving to nationalize banking," says a leading member of Venezuela's business community. "He has packed the high courts with his judges, neutralized the army and turned the national assembly into a rubber-stamp parliament. All that's left to do is shut down the independent media and decapitate the opposition." According to this source, Chavez is most likely to move when world attention is fixed on Iraq.

……….. Undercover police officers report that the group has ties to a Hezbollah financial network operating from the Caribbean island of Margarita under Mohammed al Din, an important Chavez backer and a close friend of hard-line MVR deputy Adel el Zabayar Samara, a key link between Islam and Latin America's radical left.

The Caracas cell is involved in recruiting Venezuelan Arabs for terrorist indoctrination and military training at isolated camps in the country's interior and on islands off the coast, according to intelligence officers who claim that members of al-Qaeda are hiding out in Margarita. They say these members include Diab Fattah, who was deported from the United States for his possible connections with the Sept. 11 hijackers. Four Venezuelan officers investigating terrorist activities on the resort island were killed in 2001 when Chavez moved to dissolve DISIP Section 11, which had targeted radical Arabs. ***

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