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Venezuela's true hero...

By Alexandra Beech, www.veninvestor.com

Some people are born heroes, while others become heroes through accidental circumstance. In a nation where everyone is striving to be a star, there is one man in Venezuela who is quietly defying Chavez while remaining within the tight confines of his government. This unsung hero is Venezuelan Central Bank governor Domingo Maza Zavala.

Like a hungry giant, Chavez roars every time he is starving for cash. He looks at the juicy billions at the Central Bank, and thinks: why can’t I have that money for my use? I have a campaign to win. He kicks and screams, throwing a tantrum that toddlers can only hope to emulate.

Yet there are many reasons why he can’t have the billions. Not even “one little billion”, as he recently requested for agricultural programs.

Through draconian foreign exchange controls, the Venezuelan Central Bank has accumulated $21.5 billion in reserves, not counting the FEM (rainy day fund), which has another $701 million that belong to PDVSA.

Why does the bank need all that money? And why can’t it just fork it over to Chavez, if he’s president?

First and foremost is the pesky little document that Chavez used to carry in his front pocket: the Venezuelan Constitution. Article 320 explicitly states: “in the exercise of its functions, the Central Bank of Venezuela will not be subject to the orders of the Executive Power, and cannot validate or finance fiscal deficit policies.” In other words, the Central Bank enjoys complete autonomy from the President and any other branch, as outlined also in Article 318, which states that the Central Bank has “autonomy in the formulation and exercise of the policies related to its competence.”

In other words, no one, not even President Chavez, can bully the Central Bank into turning over its cash. And it’s not its cash, by the way. The reserves belong to all Venezuelans, including the state oil company, thousands of businesses and millions of individuals. This fact seems to be lost on Chavez.

Certainly, I can’t go there and demand the cash. I can buy it with Bolivars, but I can’t demand it, not even one little penny.

No one can go into the Central Bank and say, like an impetuous two year old: Mine. Give it to me.

Chavez could have the reserves in a more Dr. Evil kind of way, if he really wanted them. He could plunder PDVSA’s coffers and trade Bolivars in for dollars. But that wouldn’t be right either. Even a die-hard leftist like Maza Zavala knows that financing a government only spikes inflation when it is financed with Bolivars, and creates unemployment when inflation spikes because interest rates rise sharply, reducing investment and stagnating growth.

His tantrum began when the Central Bank informed Mr. Chavez that he would not have access to the “one little billion” that he had assumed in his budget from the Central Bank’s foreign exchange profits. Indeed, the Central Bank told Mr. Chavez that with a fixed exchange rate and almost 8 trillion Bolivars in expensive certificates of deposits, the Central Bank had no profits.

Needless to say, Chavez is making noise to win points among his followers, like a bully out to win admiration among town drunks. He doesn’t need “the one little billion”, or millardito for agricultural projects. He needs the millardito to hold on to power through the recall referendum and possibly through elections. In fact, Chavez has not an iota of interest in financing agricultural projects

How do we know that? The Central Bank has aptly offered solutions that would directly provide funding for agricultural projects, including loans, without violating its independence and the Venezuelan constitution.

What has Chavez said? No. Again, because he doesn’t care about agricultural loans. He needs the hard cash for his electoral goals!

If Chavez were to force the Central Bank to hand him even one penny, in any way, shape, or form, he would be directly and flagrantly violating the Constitutional rights of all Venezuelans.

By now, he has bullied just about everyone, including the US government, Chile, and the opposition itself, and there’s nothing more popular than promising one billion dollars worth of anything, whether that is tractors, horizontal chicken coops, or free flying lessons in Cuba.

However, Venezuelans should stand behind the man who is standing up to Chavez, Dr. Domingo Maza Zavala. The Venezuelan opposition should seize the opportunity to demonstrate its support for Dr. Maza Zavala, since Chavez has turned his stance into a political issue.

It would show that the opposition stands for independence, responsible government, and the Venezuelan constitution. Moreover, it would limit Chavez’s financing options ahead of an electoral campaign.

Meanwhile, in a country starving for heroes, it is nice to know that at least one man is protecting our cash.



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