Venezuelan leader Nicolás Maduro fails to dispel economic concerns with cabinet shake-up

Posted on Wednesday, 09.03.14

Venezuelan leader Nicolás Maduro fails to dispel economic concerns with
cabinet shake-up

Seventeen months into his term, Venezuela's president shuffled his
cabinet but failed to provide a clear path out of the country's
punishing economic crisis.
BY JIM WYSS
JWYSS@MIAMIHERALD.COM

BOGOTA -- Venezuelan President Nicolás Maduro fused ministries, created
new vice presidential posts and shuffled loyal staffers this week in
what he called a grand "shake-up" of his 17-month-old administration.
But after the dust settled, it was unclear what the rattling had
accomplished as it raised doubts about the future of the beleaguered nation.

"I think the president's use of rhetorical superlatives produced
frustrated expectations," said John Magdaleno, director of the
Caracas-based Politi consulting firm. "People were hoping for real
measures that might help fight their two main concerns: scarcity and
inflation."

Despite sitting on the world's largest oil reserves, Venezuela is
struggling to keep afloat. An annual inflation rate of 61 percent is
ravaging the economy, and sporadic shortages of food and other
necessities have soured the national mood. Maduro's approval rating is
near 35 percent by some measures. Even so, Maduro called the country's
socialist economy "a success" and said it had helped lower unemployment
to 6.8 percent in June, the lowest in three decades.

The most notable element in Tuesday's almost three-hour speech was the
sidelining of Rafael Ramírez, who had become perhaps the most powerful
man in the administration.

Until Tuesday, Ramírez held three titles: vice president for the
economy, minister of energy and mines, and president of the state-run
PDVSA oil company. On live TV, Maduro split his job three ways. Rodolfo
Marco Torres, the former minister of finance and an ex-general, became
vice president of the economy and finance; Asdrúbal Chávez, the cousin
of late president Hugo Chávez and a longtime PDVSA executive, became
minister of energy and mines; and Eulogio del Pino, PDVSA's vice
president for production, took the helm of the company, which is vital
to the nation's well being.

While Ramírez was made foreign minister and vice president of politics,
most analysts saw it as a demotion.

The announcement, made late Tuesday, "was a joke, because the only
person that was 'shaken up' was Ramírez," said Alfredo Croes, a
Caracas-based political analyst.

Croes said Ramírez's ouster speaks to the ongoing power struggle within
the ruling PSUV party. For many, Ramírez was the voice of pragmatism. In
the weeks before the move he had advocated unifying the country's
chaotic three-tiered foreign exchange system, easing up on price
controls and scaling back the gasoline subsidy that costs the country an
estimated $12.5 billion a year.

Until recently, Maduro seemed on board with those measures, which are
typically anathema to PSUV hardliners, Croes said. Now, it's clear that
the president will avoid the root cause of the malaise and continue to
attack one of its most visible symptoms: smugglers who are spiriting
cheap Venezuelan goods into neighboring Colombia and Brazil to sell for
hefty profits.

Maduro is also advocating the use of thumbprint scanners to limit
hoarding, a move seen by many as tantamount to Cuba-style rationing.

"Ramírez's surprising demotion is important in that it reinforces our
long-held view that Maduro was reluctant to implement Ramírez's
much-publicized adjustment plan," Risa Grais-Targow, a senior analyst
with the New York-based Eurasia Group, wrote to subscribers. "And that
[Maduro's] preference was to exert more control over the economy, a
trend that has become more evident in recent weeks."

While little is known about the policy preferences of Torres, the new
vice president of economy, "He is a figure from the military and though
not radical, seems to have been opposed to Ramírez's plan," Grais-Targow
wrote.

Even so, breaking up Ramírez's portfolio made sense, said José Rafael
Mendoza, an independent political analyst in Caracas. He said it was too
dangerous having the ministry of energy and the head of PDVSA in the
same hands. He also said the new appointees were qualified for their jobs.

Even so, Mendoza said he wishes there had been more new blood pumped
into the administration, which often plays musical chairs with familiar
faces.

Since 2006, for example, Elías Jaua has been minister of agriculture,
vice president, foreign minister and, as of Tuesday, vice president of
"territorial socialist development."

"The government is locked in a vicious circle," Mendoza said. It "has
relied on people who haven't really been able to fulfill the jobs."

Some believe Ramírez's exile is profound and permanent, but Magdaleno
said he may still play a key role from his post as foreign minister.

As the head of PDVSA for more than a decade, Ramírez enjoys close ties
in the region thanks to Petrocaribe, the program that offered cheap fuel
at favorable terms to allies, including Cuba, Nicaragua and Bolivia. His
work at the petrol giant has also given him ties to the United States
and Europe.

If the country decides to cut back its petrol largesse and restructure
its foreign debt, Ramírez's contacts and background may be key,
Magadaleno said.

"Yes, it's an obvious loss of influence," he said of Ramírez's new job.
"But as foreign minister, I don't see him as being segregated and excluded."

Before Tuesday, expectations were high that Maduro would announce more
concrete measures. However, once on television, he lashed out at the
media for echoing those expectations. In particular, he focused on
outlets that speculated about the fair market price of Venezuelan
gasoline — currently the world's cheapest at 5 cents a gallon.

"They're so bold that they even fix the prices for fuel," Maduro said.
"But we won't be blackmailed. … We will not turn this debate into a
spectacle to sell newspapers."

Croes said he believes that Maduro is feeling vulnerable, isolated and
trapped between factions with differing views on the country's future.

"There were no decisions made because his decision was precisely not to
decide," Croes said. "He's trying to buy time."

http://www.miamiherald.com/2014/09/03/4326356/venezuelan-leader-nicolas-maduro.html