Archive for April 21st, 2013

Mostly More Of The Same In New Maduro Cabinet

April 21, 2013

Ministra

Very few changes in the new Cabinet announced by Maduro tonight. Nelson Merentes moves to the Ministry of Finance, a post he held in 2001 and 2004. He was later President of the Venezuelan Central Bank. Giordani stays in Planning, so that Maduro went the conservative route, splitting the two Ministries. Jesse Chacón is back, as Minister for Electric Energy. He has held at least four Ministries, I lost count. He was also pollster for the Government recently, predicting a 9% Maduro win. Andres Izarra is Minister for Tourism, he is also back to a new Cabinet post. The Head of the intelligence agency SEBIN, becomes Minister of the Interior. The Minister of Health is removed and replaced by Isabel Iturria, the President of the Children’s Cardiological Hospital. And in the Ministry for Sports (picture above), the former Olympian and model Alejandra Benitez.

Maduro shows he either can’t change much or does not know how to. There is still no trained economist in the Cabinet. We thought there would be one. Merentes in Finance is probably good for the Government’s foreign exchange policy, as he is known to be more pragmatic, but bad for debt, as he is likely to restart issuing debt internationally.

Advertisements

Venezuelan Election Postmorten: Maduro Ain’t Chávez

April 21, 2013

20130418_TALC1_7_2_F1

Independent of the outcome of the audit (Just think, besides the irregularities and votes abroad, 166,000 people could not vote because the border was closed ahead of time and 140,000 new voters were not allowed to vote, despite the law saying they could) Nicolas Maduro starts his term weakened by the close electoral result, his backtracking on the audits and the protests and the questioning of his victory. Had he allowed the recount on day one, he would be in a much stronger position, even if still quite weakened by the fact that his candidacy lost some 600,000 votes from the October Presidential election.

Maduro won in 16 states, while Capriles won in eight states, but the latter are the most populous and urban states in the Nation. Among large population states, only Carabobo went for Maduro and in that State is where the opposition appears to have the largest numerical inconsistencies.

Maduro was a very inexperienced candidate and that had a lot to do with his narrow victory. In contrast, Capriles started out weak last year in his campaign against Hugo Chavez, but improved dramatically as the election approached, Maduro had never been involved in a large campaign and the electorate did not get a clear picture of who he is, other that Chavez’ chosen successor. Maduro tried to be Chávez, but he is only a bad imitation, without the quickness, the wit or the charisma.

Maduro´s weakness began in January, when he started out on the wrong foot, as the Venezuelan Supreme Court created the concept of continuity to justify Maduro becoming interim President and guarantee that he would be President and candidate at the same time.

Maduro’s campaign began by appealing to the emotions associated with Hugo Chavez’ death. But he went too fast from mourning to singing, sending a mixed message to the electorate. Moreover, he never defined who he is, trying to sell himself as the son of Chavez, his successor, without clearly explaining what that meant. Voters really knew him very little, since as Foreign Minister he has not been in the public eye in the last six years and he presided over the country for the last three months, a period in which inflation and shortages have increased significantly. (The Venezuelan Central Bank did not report the shortage index in March for the first time in years, inflation was 2.8% that month)

And people were never too satisfied with the announcements of Chavez’ illness and the constant assurances that he was recovering, only to die on March 5tth. And while the long funeral gave people a chance to grieve and pay their respects to the leader, Easter week, a vacation week in Venezuela, broke the mood and by the time it was over Maduro’s campaign seemed to change, talking more about Maduro, son of Chavez, than about how much Chavez was missed. In the end, he never explained who he was or why he deserved to be chosen by Chávez.

And Chávez can also be blamed for the failure. Clearly, Maduro was not the best choice and he never explained beyond his loyalty, why Maduro should be the successor. Because loyalty was the only reason Maduro rose in the Chavista hierarchy. He did what Chávez asked him to do. He never questioned anything. Clearly, Chávez somehow thought he would not die, but not considering the possibility and announcing or even just promoting his successor earlier, now has a big political cost. In fact, even refusing to accept he would never go back to the Presidency had a cost. Had he stepped aside and an election held in February with Chávez alive, would have guaranteed a more ample victory for Maduro.

Time always was Maduro’s worst enemy.

Capriles on the other hand, reignited the opposition by frontally attacking Maduro, something he never did with Chavez. He managed the timing of the campaign very well, even beginning with an intrigue campaign the first weekend, creating the impression he had not decided whether to run or not. Two days later the MUD told him he was the candidate if he wanted, which he readily accepted the same day. This allowed him to be on the forefront of the news while Chavez’ funeral was still taking place.He treated Maduro as an equal, while carefully respecting Chavez and his memory. And Capriles also talked more about the problems that concerned the people, mostly shortages, inflation and crime, which Maduro seemed to be avoiding or trying to blame the opposition for, while making a few gaffes which made him look bad.

But perhaps the biggest surprise is not that the election was so close, but that it was close because a significant number of voters shifted their votes from Chavismo and actually went and voted for Capriles. Before the election, and in the absence of detailed polls, it appeared as if Capriles’ only chance was for the Chavista light votes, the more independent minded voter, not to show up for the election.

But show up they did and to vote for Capriles, who actually increased his vote total, something that was not expected. In the end Capriles was up close to 600,000 votes, while Maduro’s total was lower than Chavez’ in October by a very similar amount. This was totally unexpected.

And polls were really off the mark in this election. You can blame the short period of the campaign or Easter week, but clearly they were not even close, with only two pollsters projecting a Maduro win by single digits, the closest being Datanalisis with a difference of 7.2%, outside the error of the poll

But as we suggested last week, none of these polls gave us an inkling of the electorate was thinking, particularly the voters in the middle, those that do not consider themselves Chavista, but traditionally voted for Hugo Chavez and did not trust the opposition. Abstention was 21% and continues to be the most difficult number to be precise about in Venezuelan elections. Polls said it would be 15%, history suggested close to 30%, but clearly people were engaged and interested in the electoral process, even in Chavez’ absence.

If the result stands, Maduro does not start his Presidency on the right foot. He did not get the mandate he wanted and it will be thus be much harder to press the revolution further, without a backlash from the population. Moreover, his handling of the recount issues and the protests has only undermined further his weak mandate.

Maduro also faces very difficult decisions on the economy, with shortages on the increase, oil dropping and inflation increasing and being felt by everyone. His best path would be to change course on economic policies, change the economic team and impose a new line of thinking to fix some of the distortions created by Chavez’ policies. But his weak mandate will make it difficult for him to change course, given the differences within Chavismo. And these are huge. But beyond that, people need jobs, infrastructure needs investment, a model of distributing a now decreasing amount of money is now doomed unless there is true change.

For the opposition this has been a huge victory. Not only did they manage to show the country is divided exactly in half, coming very close to a victory, but the audits may show an even weaker victory for Maduro, which will only damage the credibility of the Government. Furthermore, Capriles, who appeared to be the person with the most to lose in this election, has now become the rightful leader of the opposition. He may not have won the election on Sunday, but he won the recount fight, a political victory in a country where a single man has dominated all political battles for the last fourteen years.

Politics is back in Venezuela, as we said a few weeks ago and some people have to learn how to play politics again.

But the opposition also needs a model for the country. We all know the things that have to be changed, from the exchange rate, to the gasoline subsidy, to restoring the rule of law, to the oil subsidy for foreign countries, to the subsidy to money losing enterprises, to really improving the electric infrastructure, to fixing infrastructure and promote local production.

But to the poor of Venezuela, there has to be real change, not the small change of money in the pocket seen in the last fourteen years, while crime soared, blackouts increased, less housing was built, human rights violations boomed, corruption increased dramatically, fewer jobs were available and the dependency on oil increased even further.

Until such change occurs, political instability will be the rule of the day, no matter who is in power in Venezuela.