November 1, 2014:   The peace talks with FARC and ELN continue as does the military and police campaign against these two rebel groups. The continued success of the military campaign is what keeps the leftist rebels serious about the peace talks. The prospect of eventual destruction has convinced even the most hard core rebels to at least consider a peace deal. The government now estimates that their cost for the peace agreement will be at least $44 billion over ten years. Economists agree that this is cheaper than continued fighting. FARC and the government expect to sign and implement the final deal in 2015.

The situation is not so optimistic next door. Venezuelan police are now doing what was long predicted; attacking pro-government militias that have turned anti-government in response to the corruption and increasing economic problems. The problem is simple. Since taking over in 1999 the leftist rulers have mismanaged the economy and squandered the shrinking oil income. In 1999 oil income was half the foreign income from exports. That is now 90 percent, mainly because government rules have destroyed most companies that exported goods (and most of those that produced for domestic consumption). But after years of oil at $100 a barrel or more, that price is plunging and has declined more than 20 percent in the last year. It is expected to be down 25-30 percent before stabilizing. The mismanagement has caused a decline in oil production from 3.5 million barrels a day in 1999 to 2.5 million today. The production decline is continuing, because the government has mismanaged the national oil company and that organization is a mess as are the oil production facilities. This collapse in oil income has created a cash shortage that the government has been dealing with by borrowing. That option is fading. For example China has been a major lender and has provided about $40 billion. Most of these loans are repaid with Venezuelan oil. China currently imports 500,000 barrels a day of Venezuelan oil and half of that is to pay for loans. China buys about a third of Venezuelan oil exports and is concerned with the falling production and growing unrest, as well as the prospects of getting all the loans repaid. In contrast Colombian oil production has grown from 816,000 barrels a day in 1999 to 990,000 barrels this year. This was done despite energetic FARC and ELN efforts to shut down oil production. By 2005 these attacks had reduced production to 525,000 barrels but after that the government efforts to weaken the leftist rebels turned that around and oil production has gone up nearly 90 percent is continues to increase so despite continued attacks by the leftists.

Venezuelan inflation is running at over 60 percent and while unemployment is under ten percent many people have low-paying government jobs that leave many with enough to eat (from government subsidized and rationed food) but not much else. The mismanagement of the economy has left the government unable to import enough food for everyone. The government claims that most of the economic problems are the result of smuggling. It is believed that over 40 percent of goods (especially the heavily subsidized petroleum products and staple foods) are illegally smuggled to neighboring countries (mainly Colombia) where they can be sold at a much higher price. This has made many Venezuelans rich and makes it possible for many poor Venezuelans to get by. Many Venezuelans believe that most of the smuggling is controlled by military and police commanders who share in the profits. All this sustains a black market that most Venezuelans, dependent on low-paid (in local currency) jobs cannot afford.

There is a growing black market where goods are available, but at market rate prices most Venezuelans cannot afford. Until early 2014 the government was deadlocked with pragmatists urging loosening of market controls to enable businesses to revive, survive and eliminate many of the shortages. But hardliners blocked reforms and insisted that only enforcing communist style economic controls could cure the problem.  This year the socialist government has been criticized by its own far-left zealots who have long been core supporters. The far-left faction won this debate and now the government will seek more control over the economy and how people live in order to avoid a rebellion. Meanwhile Venezuela also has the highest crime rate in the region since the leftists came to power.

There is a growing problem with government supporters, including far-left factions, criticizing the growing problem with corruption. Those who are in control are not willing to reduce the corruption because too many of the corrupt officials see that the socialist policies are not and cannot work and the money they are stealing will be a way out of this mess for themselves and their families. Unfortunately many of their less affluent followers are figuring this out as well and are becoming unruly about it. Some of the pro-government militias, armed and authorized by the government to “protect the revolution” are turning into armed gangsters while others are threatening another revolution to purge the government of its criminal elements. Losing the support of the armed militias means the ruling socialists are another corrupt dictatorship ripe for overthrow followed by a civil war. Unless there are some fundamental (and not very socialist, thus very unlikely) economic reforms the inflation, unemployment and shortages (especially of essentials) will get worse and when the popular discontent turns to violence. This will be a problem for all of Venezuela’s neighbors, but particularly Colombia which will see lots more refugees and more years of Venezuela serving as a sanctuary for gangsters and Colombian rebels. President Nicolas Maduro may be ignoring economic competition, but he has proof that in the political competition for popularity he has lost big time this year. The government has compounded all this by recently announcing a government budget for 2015 that is based on GDP growth of three percent and inflation reduced from over 60 percent to under 30 percent. This is fantasy and everyone in and outside the government knows it. Meanwhile in Colombia the economy is growing at a rate of over four percent. This is one of the best growth rates on the planet. More Venezuelans are noticing what is going on next door.

October 30, 2014: FARC leaders publically admitted, for the first time, that their revolutionary activities over the last half century have injured civilians in various ways. This is not news for most Colombians. The FARC inspired conflict has killed over 200,000 since the 1960s. FARC long maintained that they only killed “enemies of the people” and that all civilian deaths were the work of the government or pro-government militias. The admission of guilt is part of the peace deal, as FARC has to build some credibility before the peace treaty can get approval by the elected officials in the legislature. The peace talks are continuing in Cuba and the Colombian and Venezuelan government are cooperating is providing safe passage for FARC leaders to fly (from Venezuela) to Cuba to attend the negotiating sessions.

October 24, 2014: In the United States a court sentenced a former FARC commander to 27 years in prison for his role in the kidnapping of three Americans in Colombia in 2003. The three were rescued by Colombian commandos in 2008. By 2012 the accused was identified, captured in Colombia and extradited to the United States for prosecution. There is some concern in FARC that the amnesty deal will not protect some senior FARC leaders from American prosecutors.

October 20, 2014: The ELN, the smaller of the two major leftist rebel groups, admitted that it has been talking to FARC and the government about peace negotiations. Back in June there were reports of ELN starting peace negotiations with the government. ELN also admitted that it had, as many suspected, been holding preliminary talks with the government since January. The government was apparently offering ELN the same terms that FARC agreed to. As with FARC, ELN had factions opposed to making peace and willing to fight to the death. ELN is having more problems with this than FARC. ELN leaders sought to avoid an internal power struggle over the issue and that took more than a year of effort to get to the point where any peace talk activity at all could be started. FARC and ELN both sought peace for the same reason; the decade long government effort to destroy them has continued to be successful. For example, in 2013 FARC lost nearly 300 men killed and over 1,200 captured or surrendered. Since 2002 FARC and the smaller ELN have lost over 34,000 killed and over 14,000 captured or surrendered. Many more have deserted. Current FARC armed strength is about 7,000 while ELN has less than 2,000.  FARC is no longer optimistic about their future, which is why FARC leadership has stuck with the peace talks for over a year now. ELN has concurred, despite a burst of increased ELN violence in the last year. The preliminary peace talks with ELN have been slowed down as the leftist rebels from ELN and FARC waited to see how far the government would (or could, because of popular opinion) go in granting amnesty. Apparently ELN is now willing to follow FARC and take whatever terms FARC gets.

October 7, 2014: In Venezuela there was a bloody confrontation between police and one of the pro-government militias organized by the government to protect leftist rule in the event of a popular uprising. The confrontation today was officially all about a raid on the headquarters of a militia suspected of criminal behavior. The leader of the militia was killed but the police were driven off and a siege ensued. The things took a curious turn when the new leader of the group made statements on video that got past the state controlled media and onto the Internet. The new leader claimed that the raid and siege were all about a power struggle in the leftist government and that the raid was connected with the October 1 murder of a pro-government member of parliament and his girlfriend. The two were found shot to death in their apartment in the capital. The government blamed anti-government groups. But with one of the highest murder rates in the world, not to mention constant infighting among corrupt government officials, most Venezuelans were able to easily imagine many other suspects for the murder.  The government effort to blame political opponents for the murder is also seen as an effort to play down the high (and rising) murder rate. That did not work either. Now, a week later, a friend of the dead legislator was killed in a police raid and his deputy was saying it was all the doing of the government, not opponents of the government. In response to all this the government accused the five dead militiamen of being gangsters. The new militia leader, who made the video, was captured by police. One picture shows him being taken alive, but other pictures show him later, lying dead in a pool of blood.