Category Archives: Venezuela

The End of Globalization–Can You Smell it Yet?

A few years ago I was sitting in the pub at Simon Fraser University with the usual suspects…a gang of mostly political science graduate and undergraduate students for our weekly 4-hour lunch consisting of political debate and movie reviews.

I can’t remember the details but I had just been learning about peak oil. Petrochemicals have a large role in the fertilizers that enable the population of the industrialized [OECD, minority] world to eat food to the degree that supports our massive population. Apparently there was something in Harpers about that some time ago. I’m still scared to read it.

And since most of us at the lunch were generally political economists, we often discussed how to derail the global trade regime: IMF/WB/WTO. Since Hugo Chavez has spayed and neutered the IMF by paying off most of Latin America’s loans to it and since the WTO Doha “Development” (sic) round of negotiations has stalled leading to neoliberal defections toward regional trade initiatives, the regime may be collapsing on its own, thank you very much.

But one thing came up that day at lunch when I was trying to address how to cripple neoliberal globalization, and that was how peak oil will make prohibitive the costs of transporting materials around the world to be processed by workers in jobs outsourced from the industrialized world into products shipped to us in containers on those big boats. The economics of it all depends on a price of oil that is not quite so high as today’s $135/barrel. Or not even so high as the $70 barrel 2 years ago [yes, the cost of a barrel of oil has doubled in the last 24 months].

When peak oil grabs us by the throat and prices rise, the global supply chain will become less cost effective. Our runners and bananas will begin to have costs that assert them as the luxuries they really are. Economics will become more local, both in food from bioregions, but also products and services.

One friend at lunch that day said they’d just find another way to power the big boats. Nuclear power perhaps. Or maybe clean (sic) coal. Ok, he didn’t mention clean coal, but both it and atomic manipulation are somewhat impractical for varying reasons.

So we’re left with the end of globalization that comes not from policy decisions based on educating the populace to demand our representatives (sic) alter the global trade regime. It comes from the end of cheap fossil fuels.

My friend’s nuclear answer sounded plausible, but I had a hard time being truly swayed by its possibility.

So yesterday I read at Report on Business [see below] that I was on the right track.

And while the piece mentions that NAFTA could encourage outsourcing to Mexico instead of Asia, and by implication that a fully mercantilist, protectionist Canada may not be imminent, our latest globalization prime minister did recently scuttle a deal to sell off MDA’s Radarsat to an American firm. In the end, realists are realists.

And while we may not all be ready to go out and buy our yurts and embrace a bioregional lifestyle outside of metropolitan centres, we are one step closer. And if oil hits $200/barrel this Christmas, we’ll have to re-assess the situation with a little more intensity.

Oil’s cargo cushion

The soaring cost of fuel is whittling away at the cheap-labour advantage enjoyed by Asian exporters, giving Canadian firms a welcome edge in their fight to win back business from Asian competitors.

Two bank economists argue in a report released Tuesday that because of higher fuel costs, shipping a standard 40-foot container from Shanghai to the east coast of North America now costs $8,000 (U.S.), up from $3,000 in 2000 when oil was just $20 a barrel.

That higher cost is passed on to North American consumers, making goods from China and other Asian places more costly compared to the offerings of domestic North American producers.

Some Canadian manufacturers are already noticing the effect.

“It’s helped us because it’s harder for the Asians and others to ship over here,” said Barry Zekelman, chief executive officer of Atlas Tube Inc. of Harrow, Ont.

He said that after taking 30 to 40 per cent of the North American market for some steel tubing products, the Chinese have now “virtually disappeared” – partly, though not exclusively, because of the costs of transporting a heavy product such as steel across the Pacific.

Jeffrey Rubin and Benjamin Tal of CIBC World Markets Inc. say higher oil prices are reversing the world-is-flat effect, in which lower trade barriers and new technologies like the Internet made it cheaper to move goods and services from developing Asia to the markets of the rich world.

“In a world of triple-digit oil prices, distance costs money,” they write. “And while trade liberalization and technology may have flattened the world, rising transport prices will once again make it rounder.”

Mr. Rubin and Mr. Tal say the steel sector is a prime example of the world-is-round effect.

Chinese steel exports to the United States are falling by more than 20 per cent year over year. China’s costs have risen because Chinese producers have to bring in their iron ore from faraway places such as Australia and Brazil, then ship the finished steel to the United States. As a result, U.S. steel producers actually have an advantage over Chinese rivals.

“Rising transport costs have already more than offset China’s otherwise slim cost advantage, giving U.S. steel a competitive advantage in its own market for the first time in over a decade,” the economists write.

They say higher transport costs are affecting other “freight-intensive” sectors such as furniture and industrial machinery, too. These goods now account for 42 per cent of total Chinese exports to the United States, down from 52 per cent in 2004.

In fact, if oil prices had not risen so quickly and transport costs had not soared so dramatically, growth in Chinese exports since 2004 would have been 30 per cent stronger than the actual figure.

Of course, the rising cost of goods from China is hardly happy news for many Canadian companies that source parts from Chinese factories, sell imported goods from China or have their products assembled by Chinese workers.

They suggest that “instead of finding cheap labour half way around the world, the key will be to find the cheapest labour force within reasonable shipping distance of your market.”

While Canadian companies could benefit, the bigger winner will be Mexico, they say. “Look for Mexico’s maquiladora plants to get another chance at bat when it comes to supplying the North American market,” they write.

Shipping costs to and from Asia have risen so much that they have eclipsed tariffs as a barrier to global trade, Mr. Rubin and Mr. Tal say, calling the cost of moving goods “the largest barrier to global trade today.”

“In fact,” they say, “in tariff-equivalent terms, the explosion in global transport costs has effectively offset all the trade liberalization efforts of the last three decades.”

When oil was $20 a barrel, transport costs were equivalent to a 3-per-cent tariff rate; now it’s above 9 per cent.

Aggravating the problem is the fact that modern new container ships travel faster than old bulk carriers and so use up more fuel, doubling fuel consumption per unit of freight over the past 15 years.

“This is an environment in which shipping from the Pacific Rim may not make sense any more,” Mr. Tal said in an interview.

“If you’re thinking, ‘maybe we should bring in a container from China,’ you should think again.”

Why Celebrities Should Be Political Reporters

Today I read an interesting commentary on the negative reaction people have against Oprah Winfrey endorsing Barack Obama. People seem to think she shouldn’t be all that partisan. I think that’s an interesting–and ignorant–point of view that undermines democracy.

These days in Alberta, teachers are not allowed to run for school board, even in districts where they don’t teach. Absurdly, the Supreme Court of Canada supports that decision because a democracy should ensure participation for all, but not necessarily all kinds of participation [like running for public office] for all. In Alberta, then, there are two classes of citizens.

Oprah Winfrey, despite her fame, should not be equally disenfranchised. We all know…actually we don’t really have a clue of the extent…that rich and often famous conservatives [unlike Oprah] support right wing politicians. We don’t express shock at that. No double standards should be allowed.

Then today, as I was preparing my other piece on Vancouver’s private thug corps, the Downtown Ambassadors, I found this poll on the 24 Hours website.

Luckily I was the first to answer the poll. Maybe I’ll set the sane trend. But, who do we think we are that we think it’s fine to stop celebrities from addressing political causes? Should they not be political reporters? Based on the often atrocious reporting in not just the free “newspapers” in town, many celebrities could do no worse than what the “professionals” are pumping out.

And the logical extension of this is that celebrities shouldn’t make political movies. George Clooney will be stuck in Oceans 14+ forever and Leonardo DiCaprio cannot discuss environmental policy ever again.

In the end, when schlock media like 24 Hours even entertains the notion that celebrities are not legitimate political reporters, their goal is to devalue whatever they may be able to contribute. Naomi Campbell may be awful at political reporting, as may other celebrities. But to negate their contribute based on their celebrity status is just foolish. It also serves the purpose of devaluing their critique if they happen to hit a nerve that the corporate media is not interested in being hit.

And when you take a google at what she’s up to, you can see why they’re after her, that Bush hating supermodel: “Campbell meets Chavez” in the Guardian. And now she’s off to meet Castro, which I suppose is what all the buzz is about.

In the end, when we pre-emptively limit people’s participation in political affairs of any sort, we do a disservice to the notion of democracy. Let her try. If she can make a difference, great. If she fails, she will still have succeeded at trying to participate in a democracy. And if she fails, she’ll do no worse than many who are already “professional” political reporters.

Why I’d Rather Cast a Ballot in Venezuela than Canada or the USA

With Canada’s 19th-century first past the post electoral system and the USA’s rampant electoral fraud and conflicts of interest, voting in Venezuela seems like a tonic.

And in Venezuela’s recent referendum on political change that failed by roughly the same infinitesimal vote as Quebec’s referendum failed a decade or so ago, the North American media cabal is decrying it a triumphant victory for freedom fighters.

Despite that hyperbole, Venezuela’s democracy receives most of my envy. Why?

Here’s why:

Venezuela is Not Florida

By Mark Weisbrot

December 5, 2007, McClatchy Tribune Information Services

Last Monday, with less than 90 percent of the vote counted and the opposition leading by just 50.7 percent to 49.3 percent, President Chavez congratulated his opponents on their victory. They had defeated his proposed constitutional reforms, including the abolition of term limits for the presidency.

No one should have been surprised by Chavez’s immediate concession: Venezuela is a constitutional democracy, and its government has stuck to the democratic rules of the game since he was first elected in 1998. Despite the non-renewal of the broadcast license for a major TV station in May – one that wouldn’t have gotten a license in any democratic country – Venezuela still has the most oppositional media in the hemisphere. But the U.S. media has managed to convey the impression to most Americans that Venezuela is some sort of dictatorship or near-dictatorship.

Some of this disinformation takes place through mere repetition and association (e.g. “communist Cuba” appearing in thousands of news reports) — just as 70 percent of Americans were convinced, prior to the Iraq war, that Saddam Hussein was responsible for the massacres of September 11. In that case, the major media didn’t even believe the message, but somehow it got across and provided justification for the war.

In the case of Venezuela, the media is more pro-active, with lots of grossly exaggerated editorials and op-eds, news articles that sometimes read like editorials, and a general lack of balance in sources and subject matter.

But Venezuela is not Pakistan. In fact, it’s not Florida or Ohio either. One reason that Chavez could be confident of the vote count is that Venezuela has a very secure voting system. This is very different from the United States, where millions of citizens cast electronic votes with no paper record. Venezuelan voters mark their choice on a touch-screen machine, which then records the vote and prints out a paper receipt for the voter. The voter then deposits the vote in a ballot box. An extremely large random sample – about 54 percent – of the paper ballots are counted and compared with the electronic tally.

If the two counts match, then that is a pretty solid guarantee against electronic fraud. Any such fraud would have to rig the machines and stuff the ballot boxes to match them – a trick that strains the imagination.

In 2007, Venezuelans once again came in second for all of Latin America in the percentage of citizens who are satisfied or very satisfied with their democracy, according to the prestigious Chilean polling firm Latinobarometro – 59 percent, far above the Latin American average of 37 percent.

It is not only the secure elections that are responsible for this result – it is also that the government has delivered on its promises to share the nation’s oil wealth with the poor and the majority. For most people – unlike the pundits here – voting for something and actually getting what you voted for are also an important part of democracy.

The Bush Administration has consistently sought regime change in Venezuela, even before Chavez began regularly denouncing “the Empire.” According to the U.S. State Department, Washington funded leaders and organizations involved in the coup which briefly overthrew Chavez’s democratically elected government in April 2002. The Washington Post reported this week that the Bush Administration has been funding unnamed student groups, presumably opposition, up to and including this year.

Venezuela must be seen as undemocratic, and Chavez as the aggressor against the United States, in order to justify the Bush Administration’s objective of regime change. As in the run-up to the Iraq war, most of the major media are advancing the Administration’s goals, regardless of the intentions of individual journalists.


Mark Weisbrot is co-director of the Center for Economic and Policy Research, in Washington, D.C. He received his Ph.D. in economics from the University of Michigan. He is co-author, with Dean Baker, of Social Security: The Phony Crisis (University of Chicago Press, 2000), and has written numerous research papers on economic policy. He is also president of Just Foreign Policy.

USA vs. Iran and Cubazuela

When w.Caesar should be gracefully entering his presidential lame duck status and thinking about who to pardon [whoops, he already got on that with Scooter Libby], he is instead feeding warm, bleeding horse meat to the dogs of war.

From today’s Washington Post:

In approving far-reaching, new unilateral sanctions against Iran, President Bush signaled yesterday that he intends to pursue a strategy of gradually escalating financial, diplomatic and political pressure on Tehran, aimed not at starting a new war in the Middle East, his advisers said, but at preventing one. …With yesterday’s actions, which included the long-awaited designations of Iran’s Revolutionary Guard Corps as a proliferator of weapons of mass destruction and of the elite Quds Force as a supporter of terrorism, Bush made clear that he is willing to seek such leverage even without the support of his European allies.

I seem to remember the rhetoric in late 2002. Iraq was developing weapons of mass destruction and that despite all the OCD midnight rifle barrel cleaning, w.Caesar only wanted peace, until the UN Security Council wouldn’t sanction the US invasion plans making him invade with his ethereal Coalition of the Willing instead of Old Europe.

Life is rarely this simple: listen to politicians so that we can believe the opposite of what they say. w.Caesar is good for that.

Moving on to our own hemisphere, w.Caesar can’t stand anti-neoliberal, democratically elected leftist governments in Latin America.

Responding to US Defense Secretary Robert Gates, who said that Hugo Chavez is a “threat to regional stability,” Venezuelan Vice-President Jorge Rodriguez affirmed that Hugo Chavez is indeed a “tremendous threat” to the “empires of the world,” and assured they would continue to be a “greater threat” as time goes on. “Of course he [Chavez] is a threat to the stability of the empires of the world, for those who consider themselves the world police, for those who think they have a right to invade countries and massively murder the population,” replied the Venezuelan vice-president to a recent statement made by Robert Gates during a visit to El Salvador. …

Gates then warned that Venezuelan President Hugo Chavez was mainly a “threat to the freedom and economic prosperity of the people of Venezuela.” According to Gates, Chavez “has been very generous in offering their resources to people around the world, when perhaps these resources could be better used to alleviate some of the economic problems facing the people of Venezuela.”

Gates should have said the word “rich” when he called Chavez a “threat to the freedom and economic prosperity of the rich people of Venezuela.” Conveniently, Gates ignored all domestic economic and social reform in Venezuela.

I’m not entirely comfortable with Hugo Chavez’s desire to have decree power. When he has such legislative support, I’m not sure it’s necessary. The USA criticizes Venezuela as being dictatorial, despite its electoral unambiguity compared with Florida 2000 and Ohio 2004 and hundreds of other jurisdictions with Republican electoral fraud this decade. Add to this a steaming pile of soft fascism in the USA and we get a sense of US hypocrisy: w.Caesar’s signing statements asserting which parts of legislation the executive branch will not obey, and this tasty list of Amnesty International’s worries about the land of the free and the home of the brave that sounds quite a bit like Chile after 9.11.1973:

  • Secret detention
  • Enforced disappearance
  • Torture and other cruel, inhuman or degrading treatment
  • Outrages upon personal dignity, including humiliating treatment
  • Denial and restriction of habeas corpus
  • Indefinite detention without charge or trial
  • Prolonged incommunicado detention
  • Arbitrary detention
  • Unfair trial procedures

So then yesterday when w.Caesar warned the world that there will be a transition coming in Cuba [presumably when Castro dies], but Cubazuela responded assertively:

“He spoke like an imperialist and a colonialist,” said Venezuelan parliamentarian Saul Ortega about Bush’s statements. Ortega assured that the reaction to these threats will be increased unity among the people of Latin America. “In response we have to close ranks in defense of the principles of sovereignty and self-determination,” he said.

Vice-foreign minister Rodolfo Sanz assured that the United States was making a mistake with their statements towards Cuba and maintained that the “times have changed.”

“We aren’t going to sit here with our arms crossed before some diabolic adventure,” he said. Sanz assured that the Cuban people can count on support from nations like Venezuela, Bolivia, and Nicaragua, among others, stating that “Cuba is not alone.”

The boldness of the Latin American political economic agenda in the last decade is a testament to the recovery of economic shock, terror and genocide visited upon them by Milton Friedman and his neoliberal storm troopers over the last 35 years. Naomi Klein’s Shock Doctrine‘s final chapter talks about how when people or cultures rebuild their communities and name their oppressors when they recover from shock. This is the spirit in which Cubazuela has responded to w.Caesar’s signaling of regime change in Cuba. Let’s be honest. The US corporate interests in Cuba are legion. Cuba will become the next Haiti as Canada and the US have squashed hope into desperation there.

Words like diabolic, imperialist, colonialist, sovereignty, self-determination and the simple phrase–times have changed–indicate that a Grenada-style hemispheric military excursion into Cuba will not easily guarantee the Republicans’ retention of the White House or a recovery of Congress.

Cuba is indeed not alone. The whole hemisphere is tilted against w.Caesar with the exception of business/media elites and the apolitical or ignorant, RRSP-hoarding, gadget-worshipping [dwindling numbers of the] middle class in NAFTAland and Latin American compradors.

And with the record oil profits that w.Caesar has facilitated as he helped oil pass $80 a barrel, he has ended up funding Venezuela’s upgrading of its military.

Back to Naomi Klein, however, to follow her thesis: war is good for corporate profitability and the GDP. Peace impairs economic growth. So it might not even matter to the disaster/conflict capitalists that a war with Iran or Cubazuela is just, desirable or winnable. It’s just another opportunity to bankrupt governments and shift public wealth to global corporations.

Luckily the other Naomi [Wolf] and thousands of others including sitdownfortheconstitution.org have started what will hopefully be a 54 week campaign for Americans to steal back their constitution.

The rest of our hemisphere better get on [not off!] our asses and support them in their attempt to stifle w.Caesar’s soft fascism before it grows horns and starts sending Blackwater mercenaries into US streets. Oh, I forgot. It is already be too
late for that since they’ve been in New Orleans.