Archive for January 26th, 2013

Venezuela Trip Notes

January 26, 2013


After spending a week in Caracas, it would appear as the word division is the common ground for both the opposition and Chavismo. While Chavismo shows unity so far, this unity is likely to dissolve once Chavez is finally enshrined and many try to claim to be the true spiritual son of Hugo. Diosdado and Nicolas claim to adore each other, but to me their behavior seems to show exactly the opposite, as Diosdado seeks the limelight daily and tends to be much more aggressive than Maduro. He also seems to always make statements whenever Maduro says something, indicating there is little coordination between the two.

Meanwhile I found that almost every opposition person I talked to had a different plan and/or opinion on what to do now. The range goes from those that swear they will not vote in the upcoming Presidential election, to those that believe that Capriles strategy is the only possible strategy. More surprisingly, it seems that the only thing that unites all these people is the belief that absent Chávez, Maduro is beatable, which I disagree with, if the election were to take place before April.

The Government is clearly trying to build up Chavez’ mythical image and Maduro’s campaign is clearly going to be based on exactly that, which may be the only explanation for delaying the election: They intend to take advantage of the adoration of Chávez to insure PSUV’s permanence in power. And it will work, as long as the election is not delayed beyond March.

Beyond March, because the country continues on hold, even if Maduro arrived last night claiming to have a set of economic measures approved by Chávez. Meanwhile my conversations with local manufacturers shows that CADIVI has not been paying bills for months, creating shortages of all sorts of products and indicating that the devaluation has to be larger than expected in order to insure that demand contracts. The fiscal numbers simply do not add up and monetary liquidity has gone up 142% since the last devaluation, that is there are 142% more Bolivars in the system than two years ago, but reserves are the same, giving an implicit exchange rate of Bs. 25 for each dollar in reserves.

But I really do not expect much from these “measures”. It is likely to be more smoke and mirrors to support the system until an election takes place, rather than real economic measures to attempt to resolve the many distortions in the Venezuelan economy.

You can bank on that and it is likely to be the subject of my next post.