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Venezuela

Ramírez demotion headlines Venezuela’s cabinet reshuffle

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Since 2004, Rafael Ramírez has served as the president of Petróleos de Venezuela, S.A. (PdVSA), the country’s state-owned oil company, and since 2002, Ramírez has served as Venezuela’s energy/oil minister. Venezuela Flag Icon

That all changed on Tuesday, when president Nicolás Maduro announced a reshuffle of his government, the most significant since his controversial and narrow election in April 2013.

Ramírez, after Maduro and after Diosdado Cabello, the president of the Asamblea Nacional (National Assembly), was the most powerful of the chavistas remaining in government in the aftermath of Hugo Chávez’s death almost exactly 18 months ago. Since that time, Ramírez became, in addition to PdVSA head and oil minister, vice president in charge of economic affairs.

A longtime old hand within chavismo, he was among the most pragmatic and moderate of the chavistas. Ramírez may have run Venezuela’s oil industry into the ground, and he may have been as corrupt as anyone in Venezuela’s government. But he didn’t radiate the kind of socialist, true-believer aura of other leading chavistas, such as former planning minister Jorge Giordani and former foreign minister Elías Jaua.

In the Maduro era, Ramírez endorsed reforms, such as reducing the gasoline subsidy that keeps the price of fueling Venezuelan cars lower than anywhere else in the world and otherwise liberalizing the economy, including with respect to the massively overvalued bolívar. 

Asdrúbal Chávez, the cousin of the late former president, will become the next oil minister, while PdVSA engineer and executive Eulegio Del Pino, a close Ramírez ally, will be the oil company’s next president.

Though he was simultaneously named foreign minister, it’s hard to see how Ramírez hasn’t suffered a demotion for a country where 97% of foreign earnings derive from oil. As PdVSA head, in particular, Ramírez controlled the most enviable element of Venezuelan economic policymaking — he controlled the profits.  So while the move to foreign minister would be a promotion for many ambitious politicians, in Venezuela, it’s a way of sidelining Ramírez.  Continue reading Ramírez demotion headlines Venezuela’s cabinet reshuffle →

Venezuela

‘Pragmatic’ Merentes winning control over Venezuela economic policy, but to what end?

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When Venezuelan president Nicolás Maduro appointed Nelson Merentes as his new finance minister shortly after Maduro’s controversial election in April, no one knew whether Merentes would actually be the official in charge of economic policy.Venezuela Flag Icon

That’s because the former finance minister Jorge Giordani, the longtime policymaker in the era of former president Hugo Chávez, remained planning secretary — and in a huge public-sector country like Venezuela, there’s little left untouched by central planning.  Giordani, more than anyone else, was responsible for the statist economic policies of the Chávez era, including currency and price controls.

But this week, there was no mistaking that Merentes is now ascendant — Edmée Betancourt, who had served as president of Venezuela’s central bank (BCV) for just over three months, stepped down in favor of Eudomar Tovar, an economist who was most recently the head of Venezuela’s currency exchange (CADIVI).  Betancourt, a former commerce minister, was seen as closer to Giordani and the more ideological, statist wing of chavismo, while Tovar and Merentes are associated with a more pragmatic, moderate view of economic policy.  Rumors swirled last week that Giordani might soon leave the planning ministry, abandoning a recent push to raise taxes, to take up an ambassadorship soon.

Leave aside for a moment that in an era of central bank independence, neither Giordani nor Merentes would be dominating the BCV’s monetary policy in a country with sounder financial institutions.  If Merentes and Maduro really want to shake up Venezuela’s economy for the better, they should start by reintroducing a line between the ruling Partido Socialista Unido de Venezuela (PSUV, United Socialist Party of Venezuela) and the institutions of the Venezuelan state — starting with the BCV, but also with the national oil company, Petróleos de Venezuela, S.A. (PDVSA).

Merentes’s rise should provide at least some cautious optimism — if Giordani would have doubled-down on statist Chávez-era policies, at least Merentes seems to realize that Venezuela’s basketcase economy has some problems.  The central bank’s reserves are dwindling, Venezuelan GDP growth has slowed to nearly nothing, and inflation has reached its highest level since before Chávez came to power in 1999 on the road to a potential hyperinflationary collapse.

But it remains far from clear that Merentes is willing to embark upon a program of true economic reform or whether Maduro has both the political capital and the political will to enable him to do so.  Moves to devalue the bolívar both officially and unofficially earlier this year was a start in bringing the Venezuelan currency’s stated value in line with its real market value, but the currency has decline further in value throughout they year: despite an official value of 6.3 bolívares to the dollar, its real value has dropped from around 20 at the time of the April 14 election to more than 30 or 35 today.  Maduro took steps to tweak the currency exchange system through the introduction of SICAD auctions earlier this spring — because the vast majority of U.S. currency comes to Venezuela through the government’s sale of oil products, the government must develop a mechanism to sell those dollars to importers who need hard currency.  But neither Maduro nor Merentes have been in a rush to hold regular dollar auctions (only around $600 million has been auctioned off so far in 2013) or to deliver the actual dollars from the government to the private sector.  But the fuss over SICAD and currency exchange is really just a stop-gap measure — if the ‘pragmatists’ can’t even get this right, it leaves little faith in their ability to overcome more fundamental problems with Venezuela’s economy.

Maduro and Merentes still hope that they can borrow their way out of Venezuela’s current malaise, and the government had the brass to float the possibility two months ago that Merentes would go on a roadshow to New York and London to gauge appetite for Venezuelan bonds.  That roadshow plan quickly fell apart when it became clear that there’s little appetite for risky Venezuelan debt among global investors — yields on Venezuela’s benchmark bond have been in the double digits since Maduro’s election. Continue reading ‘Pragmatic’ Merentes winning control over Venezuela economic policy, but to what end? →

Venezuela

Should Capriles automatically get a second shot at Venezuela’s presidency?

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Venezuela’s now-acting president Nicolás Maduro is tending to affairs of state today, including a funeral for the late president Hugo Chávez on Friday, and making sure that his longtime Venezuelan predecessor’s death doesn’t result in any turbulence.Venezuela Flag Icon

But as Francisco Toro, of the always-insightful Caracas Chronicles writes today in The New York Times, politics has not stopped simply because the 14-year leader has died:

And now, Chávez’s hand-picked successor is telling the man’s grieving followers that we — those who disagree with him — are responsible for the illness that took his life.

Within hours of the president’s death being announced, gangs of motorcycle-riding Chávez supporters burned down an encampment where opposition-minded students had been demanding that the government tell the truth about his condition. Rumors of riots circulated feverishly on Twitter throughout Tuesday evening, still unverified.

Maduro, for now at least, seems to have firmly grasped control of the government, including the immediate support of the Venezuelan military, and the parallel power structures of Chávez’s governing Partido Socialista Unido de Venezuela (PSUV, or United Socialist Party of Venezuela).

Foreign minister Elías Jaua (former vice president), who announced that Maduro was taking over as acting president, seems to be on board the Maduro bandwagon, and Cuba has long thought to have favored Maduro as Chávez’s successor (incidentally, one of the most fascinating aspects of the past three months and the months ahead is the role that Cuba plays in Venezuelan governance).

There’s a chance that Diosdado Cabello, the speaker of the National Assembly, could attempt to win the presidential nomination, but that seems unlikely, at least today. Time will tell.

Under the Venezuelan constitution, Maduro must call an election within 30 days of Chávez’s death but, as Diego Moya-Ocampos noted last month in Americas Quarterly, it’s not clear whether Maduro must call the election to be held within 30 days or whether Maduro must make the announcement within 30 days.

In one instance, Venezuela faces a presidential election on or before April 5.  In another instance, Venezuela faces an election anytime over the course of 2013, conceivably, so long as it is announced before April 5.  My first instinct is that Maduro will want to schedule the election as quickly as possible — to take advantage of lingering sympathy for Chávez and the legacy of his ‘Bolivarian’ project, to subdue intraparty rivals such as Cabello and to avoid giving the opposition a chance to develop support over a long campaign, especially at a time when so many problems are so visible: Venezuela’s economy remains in shaky condition, shortages and outages are commonplace and the country’s violent crime remains, as ever, some of the worst in the Western hemisphere.

Chávez’s former opponent, Henrique Capriles (pictured above), is assumed to become the candidate who will challenge Maduro in the upcoming presidential election to determine Chávez’s successor — he was the candidate of the unified opposition umbrella group, the Mesa de la Unidad Democrática (MUD), in the October 2012 presidential election.

There are a lot of strong reasons to make that assumption: Continue reading Should Capriles automatically get a second shot at Venezuela’s presidency? →

Miranda, Venezuela, Zulia

With Chávez’s health in doubt, regional Venezuelan elections assume greater importance

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With Venezuelan president Hugo Chávez recovering from surgery, due to what may be terminal cancer, it’s easy to forget that this weekend will mark a handful of key regional races throughout Venezuela, including a gubernatorial race in Miranda state that pits Chávez’s former presidential rival against Chávez’s former vice president.zuliamiranda flagVenezuela Flag Icon

Although the attention this week has been mostly on Chávez’s health, his departure to Cuba for surgery and, perhaps above all, his speech last Saturday night indicating that his preferred successor is former foreign minister and vice president Nicolás Maduro, the results of Sunday’s races will establish the backdrop for the leading figures of both Chávez’s Partido Socialista Unido de Venezuela (PSUV, or United Socialist Party of Venezuela) and the broad opposition coalition, the Mesa de la Unidad Democrática (MUD).

Indeed, with rumors flying of complications after his surgery, the weekend’s races have counterintuitively become more important as Venezuela prepares for the possibility, at least, of a new early presidential election if Chávez resigns or dies in office.

In their own right, however, because 20% of the federal budget is (theoretically) allotted to state governments, governorships provide the MUD and other opposition candidates a platform for government, notwithstanding the centralization of Venezuela’s federal system under PSUV rule.

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The key race that everyone will be watching is the governor’s race in Miranda, where the incumbent, Henrique Capriles, recently finished his unsuccessful presidential campaign against Chávez as the MUD’s standard-bearer — although he lost by 9 points, Capriles won 45% of the vote, making him Chávez’s most successful political opponent in his 13-year reign.  Miranda state is likely Venezuela’s most developed state and its second most populous, bordering (and in some cases including) the broad Caracas metropolitan area.  Chávez actually won this state in the October presidential race by a squeaker — with 49.96% to Capriles’s 49.52%, and Capriles won the 2008 election with just over 52% of the vote.

His opponent is the somewhat humorless former vice president, Elias Jaua, and although one poll has shown Jaua with a five-point lead against Capriles, other polls have shown varying Capriles leads and it’s certainly difficult to believe Capriles is an underdog.  By all accounts, the fresh-faced Miranda governor has been a more-than-capable administrator in the past four years, bringing a dose of good government to Miranda after the corruption of his predecessor, Diosdado Cabello.  Furthemore, Jaua’s record as a colorless Chávez yes-man makes it seem like he’s less than likely to sweep to victory, although if Chávez’s health takes a serious turn for the worst between now and Sunday, Jaua may yet benefit from a vote of sympathy.

Capriles defeated Cabello, the governor from 2004 to 2008, in the prior election, and Cabello, who’s since become the leader of Venezuela’s PSUV-dominated National Assembly, would temporarily take over as president in the event that Chávez resigns or dies after he is sworn in for his next term (set to begin January 10), with a snap presidential election to follow within 30 days.  Despite Chávez’s speech anointing Maduro as his preferred successor, Cabello has long harbored presidential ambitions, he, along with Jaua (especially if Jaua wins) may try to become the PSUV’s presidential candidate in any such election instead.

Of course, in the event of such a rapid election, Capriles is very likely to lead the opposition against Maduro, Cabello or whomever the PSUV runs.  But that  could change if Capriles doesn’t win Sunday’s vote in Miranda handily — given his narrow loss to Chávez and the very short 30-day window for a new presidential election, Capriles may nonetheless still be the main opposition candidate.  But it would open the door for another candidate to emerge, likely from among the other six states where opposition governors are currently in power.

That brings us to Zulia state and with 3.8 million people, it’s Venezuela’s most populous.  Nestled in Venezuela’s far northwest bordering Colombia along the Caribbean coast, Zulia’s oil and agricultural wealth makes it, like Miranda, one of the country’s wealthiest states.  Pablo Pérez (pictured above, top), who widely lost the MUD’s presidential nomination to Capriles by a 2-to-1 margin way back in February 2012, is running for reelection in what should be an even more solid opposition win for Un Nuevo Tiempo (UNT, a New Era), the centrist party that was founded in Zulia in the late 1990s and which has controlled the governor’s office since 2000 (until 2008, under Manuel Rosales, who lost the 2006 presidential election against Chávez by a 25-point margin).  Pérez is running against the PSUV’s Francisco Arias Cárdenas, governor of Zulia from 1995 to 2000, though Pérez is heavily favored.  Capriles did better in Zulia than he did nationwide in October, winning 46.27% to just 53.34% for Chávez.  Both Chávez’s national government and Pérez’s UNT regional government have spent large sums on social programs in the state, and a win for the PSUV would be quite a staggering victory for chavismo.

If Capriles falters in Miranda, Pérez, who lies politically to the left of Capriles, could well become the next consensus opposition presidential candidate.

Continue reading With Chávez’s health in doubt, regional Venezuelan elections assume greater importance →

Venezuela

Chávez officially names Maduro as anointed successor

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Venezuelan president Hugo Chávez, only two months after winning reelection against his strongest opponent in 13 years in office, appears to have taken a turn for the worse in his ongoing struggle with cancer, has returned to Cuba for surgery. 

Before leaving, however, he indicated his express preference for his successor — for the first time — in the event that his health declines terminally.  That’s as close as any indication that Venezuelans have received from Chávez that he is battling terminal cancer, in a hasty address to the nation late Saturday night:

Unfortunately, comprehensive tests (performed in Cuba) found the presence, in the same area (previously) affected, of malignant (cancerous) cells. It has been decided that it is absolutely necessary and essential to undergo further surgery. This should happen in the coming days. Doctors even recommended performing the surgery yesterday (Friday) or this weekend at the latest.

Not surprisingly, Chávez anointed Nicolás Maduro (pictured above, left, with Chávez) as his favored successor, expressing openly what he had indicated implicitly in October when he elevated Maduro, formerly foreign minister, to become Venezuela’s new vice president.

Maduro, a former bus driver and trade unionist, has been part of Chávez’s ruling Partido Socialista Unido de Venezuela (PSUV, or United Socialist Party of Venezuela) since its foundation, and he was by Chávez’s side in 1998 when the PSUV first won power.  He was a member of Venezuela’s parliament until 2006, serving as speaker from 2005 to 2006, when he was named as Chávez’s foreign minister.  As such, he’s a fairly well-known figure to Venezuela’s key allies and opponents alike, including China, the United States and Cuba, although observers are cautiously optimistic he would be a more moderate leader, more in the mould of former Brazilian president Luiz Inácio Lula da Silva than Chávez.

Chávez is set to be inaugurated for his fourth term on January 10 — if he were to die during his third term, Maduro would take over as president until January 10.  If Chávez dies after reelection, Diosdado Cabello, the speaker of the National Assembly, would take over temporarily while new elections are organized.  Under Venezuelan law, a new presidential election would be required within 30 days of Chávez’s death or resignation during the first four years of his term (which is set to run for six years, through 2019).  Chávez’s announcement on Saturday makes it very likely that, despite Cabello’s presidential ambitions, Maduro would likely lead the PSUV in any such presidential election in the near future.

Venezuelans return to the polls on December 16 to vote for regional governments, including in Miranda state, where Chávez’s one-time challenger Henrique Capriles is facing a strong challenge from Maduro’s predecessor as vice president, Elías Jaua.

Capriles won 45% of the vote nationally against Chávez in October as the leader of the opposition coalition, Mesa de la Unidad Democrática (MUD).  If Capriles wins on Sunday in Miranda state, he will be well placed to compete in any future presidential election against Maduro.

Venezuela

Eventos, my dear boy, eventos

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No sooner than a week after an opposition candidate was selected with greater-than-expected turnout in the opposition primary, we learned earlier this week that Venezuela president Hugo Chávez will return to Cuba Friday afternoon for surgery early next week, concerning a new lesion that he admits may well be malignant, coming just a year after cancer treatments and ongoing angst about the health of the cancer-stricken president.

With a fairly popular and united opposition candidate in Henrique Capriles giving Chávez his toughest contest in perhaps the entirety of his 13-year reign as president, Chávez’s health becomes the central issue for the foreseeable future in the election battle, with Chávez to be in Cuba for treatment and recovery for weeks thereafter.

The change of events leaves more questions than answers: Continue reading Eventos, my dear boy, eventos →