Showing posts with label Rising China. Show all posts
Showing posts with label Rising China. Show all posts

Sunday, January 13, 2013

your window to the international issues: How Chavez Does Business


by: Javier Corralles

A mural depicting Venezuelan President Hugo Chavez in Caracas.(Carlos Garcia Rawlins / Courtesy Reuters)
These days, the Venezuelan government is busy preparing for the re-inauguration of the country's beloved president, Hugo Chávez, and also for his funeral. Chávez, who has been in office for 14 years, was re-elected for a third time in October 2012. He is scheduled to take the oath of office once more on January 10. But Chávez has been sick with an undisclosed form of cancer since at least 2011 and, after months of press releases that said he was getting better by the day, the government announced on December 30 that new complications had emerged during the leader's fourth surgery in Havana. Chávez, still in Cuba and presumably still alive, might not make it back for his swearing-in ceremony.
Venezuela's constitution offers some guidance on what to do. If the president dies, the vice president (in this case, Nicolás Maduro, an avowed communist) will take office. He will call a new election within 30 days. If Chávez survives but cannot attend the inauguration, most jurists agree that the president of the National Assembly (Diosdado Cabello, who will presumably be reelected to that post in a vote on January 5) will take power. If the government then rules that the president-elect is only "temporarily absent," Cabello will govern for 90 days, which will be renewable for 90 more. If it instead declares the president-elect to be "permanently absent," Cabello would be constitutionally obligated to call an early election.
The government seems to be at a loss. It is organizing church services, making somber announcements, and readying the country for the prospect of life without Chávez. But it has also announced that Chávez will certainly be re-inaugurated soon, come what may. Cabello has promised that the government will think of something -- maybe swear Chávez in some other day, or in absentia. It has even hinted at the possibility of flying the Supreme Court to Cuba to swear in the dying president there.
The result of these mixed messages is emotional and political confusion. The emotional confusion is easy to understand: Chavistas are being asked to harbor hope and sorrow, all at once. (The opposition, too, is full of hope and sorrow, but for the opposite reasons.)
The political confusion, meanwhile, is no small matter. The government's unwillingness to accept that Chávez most likely cannot be inaugurated has produced unnecessary uncertainty. The indecision is probably the result of a power struggle within Chávez's party, the United Socialist Party of Venezuela. The PSUV knows well that the timing of the announcement of the president's absence (whether it occurs before or on the inauguration date) and the type of absence (permanent or temporary) determines who gets to control the succession, Maduro or Cabello. And each man leads a different faction.
Chávez stated his preference for Maduro to succeed him in December, during a weekend visit to Caracas between cancer treatments. But the rest of the party does not seem to be fully on board. Maduro's opponents believe that he is too close to Cuba and too distant from Venezuela. As foreign minister since 2006, Maduro has spent much of his time away from home in recent years. Cabello, too, has detractors. Thanks to his history as a member of the armed forces, a state governor, and a minister of public works, he is seen as being allied with the least glorious element of Venezuela's revolution: corrupt businessmen and military officials who have profited from their dealings with the state.
Whoever takes the reins will be tasked with keeping Chavismo alive. What that means, of course, depends on where one falls on the political spectrum. Elías Jaua, a leading Chavista, recently wrote an op-ed defining the term as one who has an "amorous connection" with a leader who never betrayed Venezuelans and who taught them that "they have rights to all rights." Chávez has worked hard to cultivate that affection in the last few years. Love -- mutual love -- was part of his re-election campaign slogan and a heart-shaped Venezuelan flag was his logo. Even Maduro got in on the act and called the election results an "act of love" from Venezuelans to their "comandante presidente."
But in the eyes of the opposition, Chávez is an elected despot -- someone who uses his popularity to erode the rule of law. It is inconceivable to them that supposedly revolutionary Venezuelans are so smitten by a leader who actually exacerbated the ills of the system that his revolution was meant to replace. In other words, Chávez's main domestic legacy -- and something his successor will have to cope with -- will then be an intensely polarized nation.
Of course, lovers and haters of Chávez will have different memories of Chávez, but all will remember his spending: socialism had never had so much purchasing power. Chávez believed in throwing money at every problem. That attitude generated the most impressive consumption boom Venezuela has ever seen. Chávez's spending has benefitted many sectors, including the middle classes and many elites, but it is his outlays for social welfare that Venezuelans will remember the most. During his 14 years as president, Chávez has launched more than 27 missions, his government's name for social programs. The missions were sold as helping the poor, but no one in government ever worried much about whether the returns justified the investments, or whether the main beneficiaries really were the worst-off.
At any rate, the opposition maintains that social spending underwrote Chávez's electoral victories. Chavistas don't disagree. And yet, it is impossible to imagine any successor to Chávez having the same penchant for unrestrained largess that Chávez did. It is a question of both values and capacity. Even for a country as awash with cash as Venezuela has been since 2004, Chávez's spendthrift ways have left behind a worrisome level of debt, fiscal deficit, and dependence on imports. Whoever succeeds Chávez will thus need to make an economic adjustment, to borrow a phrase from the International Monetary Fund. And doing so will accentuate splits within Chavismo. One faction will want to protect the military. Another will want to protect the oil sector. Still others will want to protect the missions. Doing all that at once will be impossible, and that means only one thing: after the grand funeral, if there is one, there is trouble ahead.
The looming problems raise the question of where Chávez got the money for all his spending to begin with. The answer is the United States. Contrary to conventional wisdom, Chávez's spending habits have been matched only by his selling habits. Between 1999 and 2011, Venezuelan exports to the United States, mostly oil and oil products, totaled $341 billion. This is an extraordinarily large sum for an anti-imperialist bastion of only 29.2 million people. Indeed, Venezuela is almost as dependent on oil sales to the United States today as it was before Chávez.
And that points to a final piece of the Chávez legacy. He wants to be remembered as the most anti-American leader the world has seen since Fidel Castro. In reality, Chávez broke with Fidel's approach to the Yankee empire early on. To be sure, Chávez has enjoyed provoking the Americans, but only to a certain point, and never so much that the United States brought an embargo down on his head. So he has played his anti-Americanism conservatively: he has sided with the anti-imperialist FARC in Colombia, but  has also managed to stay on good terms with the Colombian government. He has cooperated with Iran, but has also maintained good relations with the pro-American Saudis. He avoided nuclear weapons.
For a man who has spent so much of his time lambasting the United States, Chávez has done remarkably little to actually punish it. Going by his public chastisements of the United States, he has had plenty of opportunities to cut off oil and force the United States' hand: to discourage the U.S. invasions of Afghanistan and Iraq, which he opposed; to end the arms embargo on Venezuela; to keep the United States out of regional fight for the leadership of the Organization of American States; to stop the United States from siding with Colombia during its incursion into Ecuador in 2008; or to punish the United States for its passive approach to the 2009 coup in Honduras that ousted a pro-Venezuelan president. Yes, Chávez has talked a big game, but he has never followed that up with action other than expelling U.S. ambassadors and increasing oil sales to China in return for loans. All the while, oil never stopped flowing north to the United States.
Chávez came to understand that his expensive revolution needed the U.S. oil market and that he couldn't put his access to that market at risk. If he dies soon, he should be remembered as the United States' reliable oil partner -- the ultimate seller. True, radicals from around the world love Chávez for his anti-Americanism. And Chávez no doubt loved his radical followers -- but probably not as much as he loved getting oil dollars from America. Eager to emulate him, the revolution's caretakers will follow his lead. Since there are limits to the Chinese market for Venezuelan oil, preserving access to the U.S. oil market will thus remain the unstated goal of the Chavista revolution. Anti-imperialism will live long in Venezuela, but only if it stays true to the conservative variety that Chávez invented.

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Wednesday, December 26, 2012

Reuters.com - Japan Abe taps allies for cabinet, pledges deflation fight


TOKYO | Wed Dec 26, 2012 9:58am EST
Japan's new Prime Minister Shinzo Abe attends a news conference at his official residence in Tokyo December 26, 2012. REUTERS-Toru Hanai(Reuters) - New Japanese Prime Minister Shinzo Abe vowed on Wednesday to battle deflation and a strong yen, and bolster ties with the United States as he kicked off a second administration committed to reviving the economy while coping with a rising China.
A hawk on security matters, Abe, 58, has promised aggressive monetary easing by the Bank of Japan and big fiscal spending by the debt-laden government to slay deflation and weaken the yen to make Japanese exports more competitive.
Critics worry, however, that he will pay too little heed to reforms needed to generate growth despite an ageing, shrinking population and reform a creaking social welfare system.
The grandson of a former prime minister, Abe has staged a stunning comeback five years after abruptly resigning as premier in the wake of a one-year term troubled partly by scandals in his cabinet and public outrage over lost pension records.
"With the strength of my entire cabinet, I will implement bold monetary policy, flexible fiscal policy and a growth strategy that encourages private investment, and with these three policy pillars, achieve results," Abe told a news conference after parliament voted him in as Japan's seventh prime minister in six years.
Abe's long-dominant Liberal Democratic Party (LDP) surged back to power in this month's election, three years after a crushing defeat at the hands of the novice Democratic Party of Japan.
CLOSE ALLIES, PARTY RIVALS
Abe appointed a cabinet of close allies who share his conservative views in key posts, but leavened the line-up with LDP rivals to provide ballast and fend off criticism of cronyism that dogged his first administration.
Former prime minister Taro Aso, 72, was named finance minister and also received the financial services portfolio.
Ex-trade and industry minister Akira Amari becomes minister for economic revival, heading a new panel tasked with coming up with growth strategies such as deregulation.
Policy veteran Toshimitsu Motegi, as trade minister, will be tasked with formulating energy policy in the aftermath of the Fukushima nuclear disaster last year.
Loyal Abe backer Yoshihide Suga was appointed chief cabinet secretary, a key post combining the job of top government spokesman with responsibility for coordinating among ministries.
Others who share Abe's agenda to revise the pacifist constitution and rewrite Japan's wartime history with a less apologetic tone were also given posts, including conservative lawmaker Hakubun Shimomura as education minister.
"These are really LDP right-wingers and close friends of Abe," said Sophia University professor Koichi Nakano. "It really doesn't look very fresh at all."
Fiscal hawk Sadakazu Tanigaki, whom Abe replaced as LDP leader in September, becomes justice minister while two rivals who ran unsuccessfully in that party race - Yoshimasa Hayashi and Nobuteru Ishihara - got the agriculture and environment/nuclear crisis portfolios respectively.
CENTRAL BANK THREATENED
Business leaders welcomed the new cabinet, but the biggest corporate lobby, Keidanren, urged the government to take part in the U.S.-led Trans-Pacific Partnership (TPP) trade pact, Kyodo news agency said. The LDP has been wary of the pact given the political clout of the heavily protected farm sector.
The yen has weakened about 9.8 percent against the dollar since Abe was elected LDP leader in September. On Wednesday, it hit a 20-month low of 85.38 yen against the greenback on expectations of aggressive monetary policy easing.
Abe has threatened to revise a law guaranteeing the Bank of Japan's (BOJ) independence if it refuses to set a 2 percent inflation target.
BOJ minutes released on Wednesday showed the central bank was already pondering policy options in November, concerned about looming risks to the economy. The BOJ stood pat at its November rate review meeting, but eased this month in response to intensifying pressure from Abe.
Abe also promised during the election campaign to take a tough stance in territorial rows with China and South Korea over separate chains of tiny islands, while placing priority on strengthening Japan's alliance with the United States.
On Wednesday, he repeated his resolve to firm up ties with Washington and his intention to protect "the people's lives, Japanese territory and its beautiful oceans".
China expressed hope that Abe's cabinet would work with Beijing to improve ties, but reiterated that the disputed isles were its territory. "We hope Japan works with China with sincerity and makes real efforts to solve relevant problems through dialogue and negotiations," Chinese Foreign Ministry spokesman Hua Chunying told a news conference in Beijing.
Abe named low-profile lawmakers to the foreign and defense portfolios. Itsunori Onodera, 52, who was senior vice foreign minister in Abe's first cabinet, becomes defense minister while Fumio Kishida, 55, a former state minister for issues related to Okinawa island - host to the bulk of U.S. forces in Japan - was appointed to the top diplomatic post. Unlike many others in the cabinet, Kishida has an image as something of a diplomatic dove.
Abe, who hails from a wealthy political family, made his first overseas visit to China to repair chilly ties when he took office in 2006, but has said his first trip this time will be to the United States.
He may, however, put contentious issues that could upset key trade partner China and fellow-U.S. ally South Korea on the backburner to concentrate on boosting the economy, now in its fourth recession since 2000, ahead of an election for parliament's upper house in July.
The LDP and its small ally, the New Komeito party, won a two-thirds majority in the 480-seat lower house in the December 16 election. That allows the lower house to enact bills rejected by the upper house, where the LDP-led block lacks a majority.
But the process is cumbersome, so the LDP is keen to win a majority in the upper house to end the parliamentary deadlock that has plagued successive governments since 2007.
"Trust in our party has not yet been fully restored and I feel we are still viewed with critically by the people, so I want to get results as soon as possible to restore trust," Abe told the news conference.
($1 = 84.7950 Japanese yen)
(Additional reporting by Stanley White, Kiyoshi Takenaka, Tetsushi Kajimoto, Kaori Kaneko and Chris Meyers and by Terril Yue Jones in Beijing; Editing by Dean Yates)

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