Chávez in danger

Chávez has little more than four months - perhaps even less - to come up with a solution to a very d

On 5 July, Venezuelans celebrated the 197th anniversary of their Declaration of Independence from Spain.

On that day in 1811, a group of rebel criollos (those born in the Spanish colonies but of Iberian descent), gathered in the Santa Rosa Lima Chapel in Caracas to found a new Republic, the American Confederation of Venezuela.

It would take another decade of bloody warfare war before the republican rebels, famously led by Francisco Miranda and Simón Bolívar, could declare victory over their Royalist foes.

Almost two centuries on, another kind of rebel is in charge in Venezuela, a mestizo (a person of mixed race) this time round, inspired as much by his criollo ancestors’ determination to rid themselves of foreign domination, through another, more recent ideal, also partly of European “descent”: Socialism.

However, victory for Chávez’ Bolivarian Project is by no means guaranteed. If anything, it is in more danger of being derailed, both from internal rifts and external pressures, than at any other time in its ten year existence.

Later this year, on 23 November, Venezuela will hold regional and municipal elections to elect state governors in 22 of its 23 federal states, 219 members of regional parliaments, 332 mayors, 2 city mayors, and 13 city councillors. These elections will be the most decisive since Chávez came to power in 1999.

In Venezuela, regional elections always carry great weight reflecting the extensive powers of state governors. In fact, what here is called “the old geometry of power” – the territorial divisions of a decentralised system of public administration going back to colonial times – is a core axis of political and economic clientelism. This is preoccupied with the capture of shares of Venezuela’s huge oil rent for regionally and locally based family clans.

One of the central objectives of the constitutional reform project, defeated in a referendum on 2 December 2007, was precisely to lay the legal foundations for a gradual replacement of the “old” with a “new geometry of power”, designed to hand power to a parallel structure of new communal organisations.

More importantly perhaps, the November regional elections come at a time, at which the internal tensions and contradictions of the Bolivarian Project to transform Venezuela from a rentist oil state into a productive and participative developmental state are coming to a head: Chávez has little more than four months (and perhaps even less than this) to come up with a solution to a very difficult equation.

One central variable in this equation is the private business sector. On 11 June, Chávez announced a series of economic measures to revive private sector participation in long-term productive investment projects.

Stopping short of “pro-market” measures, such as a devaluation of the Bolivar and a wholesale lifting of capital controls, his olive branch included the abolition of a recently introduced tax on financial transactions, a government finance initiative for public-private investment projects and a significant flexibilisation of capital controls for imports worth up to US$50,000 by already registered companies. In addition, Chávez also announced a wide-ranging programme of subsidies for small agricultural producers.

The smirking faces of the leading members of Venezuela’s business community – mainly bankers - lined up in a neat row to face their president, said it all: They are not falling over themselves to take up the offer, and they don’t have to. Sky-high profit rates in the financial and service sectors make relatively lower and much more long-term returns from productive investment unattractive.

For more than 50 years, per capita value added in the private-dominated agricultural and manufacturing sectors has remained stagnant. Private investment in high value added activities in the country’s oil and mining sectors remains foreign controlled.

That the local business community can content itself with siphoning off quick returns from the ever increasing oil rent and with profits from the distribution of imported merchandise, is down to its multi-fold political alliances with a very large and growing middle class, itself a product of the rentist oil state and deeply embedded in the day-to-day running of the state apparatus.

These powerful alliances change political colours, ranging from the varying colours of the old oligarchic political parties to Chavista red and military olive-green, with great ease. Whichever their predominant colour, these alliances have the organisational power to threaten the government of the day with political and economic destabilization, and to demand their share of the oil rent in return for not mobilizing.

Not only do these clientelist demands fuel inflation, in a context of low productivity and large redistributive programmes to the poor classes. This behaviour is also likely to result in a serious banking crisis in the coming months. For many years now, state revenue from oil exports has been mainly deposited in private banks who, instead of channelling this into producer credits, have engaged in often unsound and, at any rate, obscure financial investment strategies. These now threaten to backfire, exposing the banking sector to serious refinancing risks.

In view of this state of affairs, another economic policy of recent Chávez governments looses much of its apparent radicalism: Many of the nationalisations carried out since early 2007 and announced with great pomp and scare in the international press, simply reversals of economically and/or socially disastrous privatizations of the 1990s. Not only did the private owners of telecommunication, electricity, cement, some strategically central foodstuff companies as well as most likely of Latin America’s largest steel plant – Ternium-Sidor – receive generous pay-offs for their troubles. More importantly, governments saddled with the kind of unproductive, yet powerful, alliances between the local business community and a large consumerist middle class, have little choice but to nationalise, if productivity performance and reasonable working conditions are a serious concern.

The second vital variable in the equation Chávez has to solve is “el bravo pueblo”. The Spanish word “bravo” means both “fierce” – as in courageous – as well as “angry”. This very aptly describes the situation: The poor and lower middle classes of Venezuela, Chávez’ traditional constituency, are both empowered by his decade-long rule as well as profoundly outraged by the inertia of the Bolivarian Project, blocked by those colourful private sector – cum – middle classes alliances, and in danger of falling prey to decades-old mechanisms of rentist corruption.

Perhaps ironically, their protest vote through abstention (rather than migration to the opposition) in the referendum on a socialist constitutional reform on 2 December 2007 was essential for its marginal defeat, and thus, for the current sense of empowerment of those very alliances.

This tension between, on the one hand, a strong determination not to give way, and a lack of orientation, organization and immediate purpose, on the other, in the rank-and-file of Chavista supporters finds its clearest expression in the travails of the foundation of a new political party in Venezuela, the United Socialist Party of Venezuela (PSUV).

Between April and May of last year, more than 5.7 million people – equivalent to 36 per cent of the national election registry and close to 80 per cent of the votes Chávez obtained in the 2006 presidential elections – inscribed themselves as “aspirants” to join the new socialist party.

This broad mass of Chavistas of very varying degrees of militancy were subsequently organised in more than 14,000 local organisations, called “battalions”, with up to 300 members. Between January and March 2008, the founding congress of the new party, constituted of close to 100,000 spokespeople and commissioners of the “battalions”, drew up the party’s constitution and elected its National Directorate.

The first signs of tension between radical grassroots groups and the “new Chavista elite” – one more of those private sector/middle class alliances mentioned above – surfaced during these elections for the National Directorate of the PSUV: Big names popularly associated with Chavista corruption did not make it.

Subsequently, these very names pushed their way into the party leadership, not by popular support, but by means of appointments “from above”. The wide-spread disaffection and outrage caused by these appointments amongst the Chavista base forced a truly democratic and bottom-up party-internal election of candidates for the regional elections scheduled for 23 November. This has produced a mix of truly popular candidates and some rather less popular candidates who were backed because of a lack of suitable rivals.

To date, the dinosaurs of the “new Chavista elite” can declare victory in terms of their control of the state apparatus, shared with other rentist alliances, and in terms of their control of government. They have not managed to take control of the newly founded socialist party.

Whether this party will manage to rebuilt popular confidence in the Bolivarian Project and a sufficient degree of determination of the “bravo pueblo” to carry it to victory in the November elections, remains to be seen.

The final variable in Chávez’ difficult equation concerns foreign relations. The recent liberation of Ingrid Betancourt, along with 15 other hostages of the FARC (Revolutionary Armed Forces of Colombia), has a profound effect on Venezuela’s negotiation powers in an international context.

The operation is the culmination of a long-standing process of infiltration of the FARC high command, carefully planned and prepared by French, Israeli and US secret services, working along-side Colombian military. Following on the assassination, death and defection of core members of the FARC high command over the past months, this operation signals the final decline of the FARC. Whatever one’s ethical views on the legitimacy of guerrilla warfare and kidnappings, the final dismantling of the FARC beyond a peasant resistance army does away with a guerrilla force that, for decades, engaged the US to the extent of limiting its immediate control of Latin American territories to the space ranging from the Northern Frontier of Mexico to the Southern Colombian boarders.

From 3 July, this is no longer the case, and Chávez’ Venezuela is very obviously on top of the list of US officials concerned with the defence of their country’s hegemony in the Southern Hemisphere. From June, after almost 60 years on standby, the Fourth US fleet has once again been reactivated and dispatched to the Caribbean Sea, sending a clear signal that has not been missed. The most persistent rumours are of plans to “do a Noriega” on Chávez, meaning a design to kidnap him to face trial in the US – for what exactly is not as yet clear.

Finally, with Ingrid Betancourt at last and thankfully escaping from capture, and only negligible Venezuelan oil exports to Europe, there is no hope for an “enlightened Europe” stepping in to offer a pragmatic helping hand.

It would be deeply unfair to blame Chávez for this state of affairs. His hero – Simón Bolívar – failed, certainly in terms of his ideal vision of a united and egalitarian Latin American continent but not because of any specific mistakes he made.

Two centuries on, Chávez has, and always had, limited options. So far, he has played his cards impressively well, if not always elegantly.

But, perhaps inevitably, by now the game is up and the cards are on the table: Today´s equivalent of the powers of reaction of the Vienna Congress of 1815 are calling in their debtors. The poor of Venezuela and their revolutionary leader are largely on their own, backed only by idealist internationalists, the poor of Latin America, and some of its lesser influential nations.

As with their ancestors, they might not make it, and today’s Simón Bolivar will find himself hauled up before the modern equivalent of the Spanish Inquisition. However long the list of mistakes committed and of confusions incurred, it is worth remembering that a failure of the Bolivarian Project will be to the detriment of ordinary people in Latin America and all around the world.

Dr Stephanie Blankenburg is Lecturer in International Political Economy in the Economics Department at the School of Oriental and Social Studies (SOAS), London. She is currently on secondment to Venezuela as an economic advisor and analyst. This article reflects her personal analysis and is unrelated to any government views or policies.

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Are smart toys spying on children?

If you thought stepping on a Lego was bad, consider the new ways in which toys can hurt and harm families.

In January 1999, the president of Tiger Electronics, Roger Shiffman, was forced to issue a statement clearing the name of the company’s hottest new toy. “Furby is not a spy,” he announced to the waiting world.

Shiffman was speaking out after America’s National Security Agency (NSA) banned the toy from its premises. The ban was its response to a playground rumour that Furbies could be taught to speak, and therefore could record and repeat human speech. “The NSA did not do their homework,” said Shiffman at the time.

But if America’s security agencies are still in the habit of banning toys that can record, spy, and store private information, then the list of contraband items must be getting exceptionally long. Nearly 18 years after TE were forced to deny Furby’s secret agent credentials, EU and US consumer watchdogs are filing complaints about a number of WiFi and Bluetooth connected interactive toys, also known as smart toys, which have hit the shelves. Equipped with microphones and an internet connection, many have the power to invade both children’s and adults’ private lives.

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“We wanted a smart toy that could learn and grow with a child,” says JP Benini, the co-founder of the CogniToys “Dino”, an interactive WiFi-enabled plastic dinosaur that can hold conversations with children and answer their questions. Benini and his team won the 2014 Watson Mobile Developer Challenge, allowing them to use the question-answering software IBM Watson to develop the Dino. As such, unlike the “interactive” toys of the Nineties and Noughties, Dino doesn’t simply reiterate a host of pre-recorded stock phrases, but has real, organic conversations. “We grew it from something that was like a Siri for kids to something that was more conversational in nature.”

In order for this to work, Dino has a speaker in one nostril and a microphone in the other, and once a child presses the button on his belly, everything they say is processed by the internet-connected toy. The audio files are turned into statistical data and transcripts, which are then anonymised and encrypted. Most of this data is, in Benini’s words, “tossed out”, but his company, Elemental Path, which owns CogniToys, do store statistical data about a child, which they call “Play Data”. “We keep pieces from the interaction, not the full interaction itself,” he tells me.

“Play Data” are things like a child’s favourite colour or sport, which are used to make a profile of the child. This data is then available for the company to view, use, and pass on to third parties, and for parents to see on a “Parental Panel”. For example, if a child tells Dino their favourite colour is “red”, their mother or father will be able to see this on their app, and Elemental Path will be able to use this information to, Benini says, “make a better toy”.

Currently, the company has no plans to use the data with any external marketers, though it is becoming more and more common for smart toys to store and sell data about how they are played with. “This isn’t meant to be just another monitoring device that's using the information that it gathers to sell it back to its user,” says Benini.

Sometimes, however, Elemental Path does save, store, and use the raw audio files of what a child has said to the toy. “If the Dino is asked a question that it doesn’t know, we take that question and separate it from the actual child that’s asking it and it goes into this giant bucket of unresolved questions and we can analyse that over time,” says Benini. It is worth noting, however, that Amazon reviews of the toy claim it is frequently unable to answer questions, meaning there is potentially an abundance of audio saved, rather than it being an occasional occurrence.

CogniToys have a relatively transparent Privacy Policy on their website, and it is clear that Benini has considered privacy at length. He admits that the company has been back and forth about how much data to store, originally offering parents the opportunity to see full transcripts of what their child had been saying, until many fed back that they found this “creepy”. Dino is not the first smart toy to be criticised in this way.

Hello Barbie is the world’s first interactive Barbie doll, and when it was released by Mattel in 2015, it was met with scorn by parents’ rights groups and privacy campaigners. Like Dino, the doll holds conversations with children and stores data about them which it passes back to the parents, and articles expressing concerns about the toy featured on CNN, the Guardian, and the New York Times. Despite Dino’s similarities, however, Benini’s toy received almost no negative attention, while Hello Barbie won the Campaign for a Commercial-Free Childhood’s prize for worst toy of the year 2015.

“We were lucky with that one,” he says, “Like the whole story of the early bird gets the worm but the second worm doesn’t get eaten. Coming second on all of this allowed us to be prepared to address the privacy concerns in greater depth.”

Nonetheless, Dino is in many ways essentially the same as Hello Barbie. Both toys allow companies and parents to spy on children’s private playtimes, and while the former might seem more troubling, the latter is not without its problems. A feature on the Parental Panel of the Dino also allows parents to see the exact wording of questions children have asked about certain difficult topics, such as sex or bullying. In many ways, this is the modern equivalent of a parent reading their child's diary. 

“Giving parents the opportunity to side-step their basic responsibility of talking to, engaging with, encouraging and reassuring their child is a terrifying glimpse into a society where plastic dinosaurs rule and humans are little more than machines providing the babies for the reptile robots to nurture,” says Renate Samson, the chief executive of privacy campaign group Big Brother Watch. “We are used to technology providing convenience in our lives to the detriment of our privacy, but allowing your child to be taught, consoled and even told to meditate by a WiFi connected talking dinosaur really is a step in the wrong direction.”

***

Toy companies and parents are one thing, however, and to many it might seem trivial for a child’s privacy to be comprised in this way. Yet many smart toys are also vulnerable to hackers, meaning security and privacy are under threat in a much more direct way. Ken Munro, of Pen Test Partners, is an ethical hacker who exposed security flaws in the interactive smart toy “My Friend Cayla” by making her say, among other things, “Calm down or I will kick the shit out of you.”

“We just thought ‘Wow’, the opportunity to get a talking doll to swear was too good,” he says. “It was the kid in me. But there were deeper concerns.”

Munro explains that any device could connect to the doll over Bluetooth, provided it was in range, as the set-up didn’t require a pin or password. He also found issues with the encryption processes used by the company. “You can say anything to a child through the doll because there's no security,” he says. “That means you've got a device that can potentially be used to groom a child and that's really creepy.”

Pen Test Partners tells companies about the flaws they find with their products in a process they call “responsible disclosure”. Most of the time, companies are grateful for the information, and work through ways to fix the problem. Munro feels that Vivid Toy Group, the company behind Cayla, did a “poor job” at fixing the issue. “All they did was put one more step in the process of getting it to swear for us.”

It is one thing for a hacker to speak to a child through a toy and another for them to hear them. Early this year, a hack on baby monitors ignited such concerns. But any toy with speech recognition that is connected to the internet is also vulnerable to being hacked. The data that is stored about how children play with smart toys is also under threat, as Fisher Price found out this year when a security company managed to obtain the names, ages, birthdays, and genders of children who had played with its smart toys. In 2015, VTech also admitted that five million of its customers had their data breached in a hack.

“The idea that your child shares their playtime with a device which could potentially be hacked, leaving your child’s inane or maybe intimate and revealing questions exposed is profoundly worrying,” says Samson. Today, the US Electronic Privacy Information Center (EPIC) said in a statement that smart toys “pose an imminent and immediate threat to the safety and security of children in the United States”. 

Munro says big brands are usually great at tackling these issues, but warns about smaller, cheaper brands who have less to lose than companies like Disney or Fisher Price. “I’m not saying they get it right but if someone does find a problem they’ve got a huge incentive to get it right subsequently,” he says of larger companies. Thankfully, Munro says that he found Dino to be secure. “I would be happy for my kids to play with it,” he says. “We did find a couple of bugs but we had a chat with them and they’re a good bunch. They aren’t perfect but I think they’ve done a hell of a lot of a better job than some other smart toy vendors.”

Benini appears alert to security and the credibility it gives his company. “We took the security very, very seriously,” he says. “We were still building our systems whilst these horror stories were coming about so I already set pipelines and parameters in place. With a lot of devices out there it seems that security takes a backseat to the idea, which is really unfortunate when you’re inviting these devices into your home.”

As well as being wary of smaller brands, Munro advises that parents should look out for Bluetooth toys without a secure pairing process (ie. any device can pair with the toy if near enough), and to think twice about which toys you connect to your WiFi. He also advises to use unique passwords for toys and their corresponding apps.

“You might think ‘It's just a toy, so I can use the same password I put in everything else’ – dog’s name, football club, whatever – but actually if that ever got hacked you’d end up getting all your accounts that use that same password hacked,” he says.

Despite his security advice, Munro describes himself as “on the fence” about internet-connected smart toys as a whole. “Most internet of things devices can be hacked in one way or another,” he says. “I would urge caution.”

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Is all of this legal? Companies might not be doing enough ethically to protect the privacy of children, but are they acting responsibly within the confines of the law?

Benini explains that Dino complies with the United States Children's Online Privacy Protection Act (COPPA) of which there is no real equivalent in the UK. COPPA says that companies must have parental permission to collect personal information over the internet about children under 13 years of age. “We’ve tried to go above and beyond the original layout of COPPA,” says Benini, when describing CogniToys transparent privacy documents. Parents give their consent for Elemental Path to collect their children’s data when they download the app that pairs with the toy.

Dino bears a striking similarity to Amazon Echo and Google Home, smart speakers that listen out for commands and questions in your home. Everything that is said to Amazon Echo is recorded and sent to the cloud, and an investigation by the Guardian earlier this year discovered that this does not comply with COPPA. We are therefore now in a strange position whereby many internet of things home devices are legally considered a threat to a child’s privacy, whereas toys with the same capabilities are not. This is an issue because many parents may not actually be aware that they are handing over their children’s data when installing a new toy.

As of today, EU consumer rights groups are also launching complaints against certain smart toys, claiming they breach the EU Unfair Contract Terms Directive and the EU Data Protection Directive, as well as potentially the Toy Safety Directive. Though smart toys may be better regulated in Europe, there are no signs that the problem is being tackled in the UK. 

At a time when the UK government are implementing unprecedented measures to survey its citizens on the internet and Jeremy Hunt wants companies to scour teens’ phones for sexts, it seems unlikely that any legislation will be enacted that protects children’s privacy from being violated by toy companies. Indeed, many internet of things companies – including Elemental Path – admit they will hand over your data to government and law enforcement officials when asked.

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As smart toys develop, the threat they pose to children only becomes greater. The inclusion of sensors and cameras means even more data can be collected about children, and their privacy can and will be compromised in worrying ways.

Companies, hackers, and even parents are denying children their individual right to privacy and private play. “Children need to feel that they can play in their own place,” says Samson. It is worrying to set a precedent where children get used to surveillance early on. All of this is to say nothing of the educational problems of owning a toy that will tell you (rather than teach you) how to spell “space” and figure out “5+8”.

In a 1999 episode of The Simpsons, “Grift of the Magi”, a toy company takes over Springfield Elementary and spies on children in order to create the perfect toy, Funzo. It is designed to destroy all other toys, just in time for Christmas. Many at the time criticised the plot for being absurd. Like the show's prediction of President Trump, however, it seems that we are living in a world where satire slowly becomes reality.

Amelia Tait is a technology and digital culture writer at the New Statesman.