The pragmatists “triad” Merentes, Porras and Tovar.
When you come down to it, about the only positive silver lining in the 100-plus days that Nicolas Maduro has been President of Venezuela has been the apparent (so far) more flexibility of PDVSA, in that Rafael Ramirez seems to be operating independently and trying to be more pragmatic about increasing the country’s oil production.
When Maduro first shuffled the Cabinet he inherited form Hugo, people were disappointed in that, while he named the more pragmatic Nelson Merentes to the Ministry of Finance, he split the Planning and finance Ministry into two, leaving the ever present and influential Jorge Giordani as Minister of Planning. Even worse, a Giordani ally, Edmee Betancourt, was named as President of the Venezuelan Central Bank, making everyone wonder whether the pragmatic side had any leverage to do what it wanted.
And the pragmatic side certainly has had a rough time so far, as there has been little change in economic policy, beyond a decree that should concentrate foreign currency in the Venezuelan Central Bank (but hasn’t) and a kluge of an foreign exchange auction system, named SICAD which has been as effective as aspirin for treating cancer.
But something funny happened today, when in a surprise move, the Venezuelan National Assembly approved Nicolas Maduro’s nomination of Eudomar Tovar to the Presidency of the Venezuelan Central Bank. (Which had something to do with the fact that Bandes’ President, Temir Porras, last Friday went to the Prosecutors office to ask to investigate the bond trading rip off at Bandes, which the SEC had jailed people for. (Edmee Betancourt happened to be President of Bandes when all of that happened).
But, t start with, Tovar happens to be an economist, that rare avis, seldom seeing in the fourteen years of Chavismo in any position where economic matters are discussed or decided. Indeed, Eudomar happens to be a bona fide economist, who even has done graduate work on financial matters, earning a Masters degree and studying for an additional one. Given that I have a soft heart for qualified people, no matter what their ideology is, I can only applaud this.
But more importantly, Tovar is a Merentes ally and buddy, who accompanied him in the Venezuelan Central Bank and Merentes forced in as President of CADIVI, after Maduro assumed office for Chávez in January.
And to top it all off, another economist (did you really think Chavismo had only three?) Jose Khan, was named as the new President of the foreign exchange office CADIVI.
Thus, in one apparent swoop, the “pragmatists” seemed to have wrestled control from the “ideologues”, including Jorge Giordani and, in my mind , that can only be positive for Venezuela.
Then, the Merentes, Porras and Tovar triad now represents a new powerful force on economic matters and it certainly seems as if Giordani’s influence is diminishing. That can only be good for Venezuela.
Maybe I am completely wrong, but I certainly hope that this means that Merentes will now have more autonomy to establish more rational and economically sound policies, within the bizarro world of Chavismo/Madurismo. Because so far, deciion making has not only been slow, but has been dismal in its execution.
Hope I am right. Watch international reserves in the next few days, if parallel funds move their money there in the next couple of weeks, that would be a great sign and a confirmation that I have some basis for being somewhat positive.
The Devil's Excrement 
August 15, 2013 at 3:09 am
Miguel, how does this relate to the indebtness law? $18 billion of new debt by the years’ end seems a tad* high to me.
*read: ludicorusly
August 14, 2013 at 9:38 pm
I am sorry but I think something really big is missing. While we have the SICAD bingo, oil at more than $100, and these changes in economic authorities, how do we explain Cucuta’s parallel rate at 36.20 Bs/$ ???
August 14, 2013 at 9:54 pm
It will be Bs. 55 by the end of the year, if nobody supplies that market with dollars, nothing can stop it.
August 15, 2013 at 7:35 am
In today’s El Universal appears this story:
“Congelarán precios de carros, motos y repuestos
http://www.eluniversal.com/economia/130815/congelaran-precios-de-carros-motos-y-repuestos
Prices for new cars, motos & parts will be frozen to Feb.28 prices.
Just great! How can they freeze prices of car parts, which are super difficult to find now, if this market has no official dollars to buy them?
Just another example of the stupidity of this government.
August 15, 2013 at 1:15 pm
When there are not available they can then blame the private sector and foreign countries for hoarding them. It’s a win either way.
The fools already went nuts over the pictures of Harina PAN US supermarkets, now they will be able to complain that the US imperialists at Autozone are hoarding mufflers and other desperately needed parts in Venezuela.
August 14, 2013 at 3:43 pm
This is like a drop of clean water in the Guaire river. Venezuela will have to pay $4.5 billion this year in capital and interest amortization. The Chinese are not lending any more, because they already got what they want and don’t want to stretch it. PDVSA will not be able to increase production on time. The subsidies in oil to “friendly” countries and to the “pueblo” will continue. There will be no (official) devaluation this year since it is election year. So basically the private sector will pay the price (as it is paying). Of course, this will drag everything else with it, since the “revolution” has instead of stimulating the productive economy, destroyed everything around it.
August 14, 2013 at 4:33 am
Chavistas face a conundrum – if they manage to revive the economy, they will face a challenge to their power down the line. Their power is secured to a large extent by controlling virtually all means of making money, so there is no serious challenge.
If you remove that, you need a democratic state eventually, or at least share power with a lot larger bourgeois, who has different ideas on how to run the county.
Unfortunately – or perhaps fortunately – this conflict of interest will eventually prevail. Fortunately because it could lead to a revolution which would sweep these particular crooks out of power and install new ones, who may at least try to be democratic. Eventually this could recover the country.
August 14, 2013 at 8:39 am
WE HOPE!!
August 13, 2013 at 10:06 pm
Miguel on what do you base your theory that these parallel funds exist?
August 13, 2013 at 10:08 pm
Bandes has dollars, lots of them, how much Fonden has I simply dont know, the question is why did they issue that decree if there was no money? I think it is more a power struggle. I think there is at least US$ 10 billion between the two.
August 14, 2013 at 2:52 am
And what if that money is earmarked for a ‘promised’ housing project? The money may exist in the parallel funds but underpins a number of important Chavista spending programs. Just a thought….
August 14, 2013 at 9:50 am
Well, if the dollars are changed into Bs. for these projects via BCV that in itself would be a positive.
August 14, 2013 at 3:52 am
BANDES is very much pushing money to any industrial project that can show it has a basis in reality.
They have, time and again, shown a willingness to set up financing for any project that has at the very least put together a coherent set of papers to show the investment makes sense.
Aside from whatever shenanigans that have occurred at BANDES, there has been a very strong push to try to kickstart industrial production.
The only problem is that the money comes with a set of sometimes onerous conditions that add all kinds of “socialist nonsense” to the investment.
That proposal, for example, to take 1% of gross receipts to fund “culture” that is going around is one of the conditions BANDES has had as part of their loans for the last few years.
Another condition is the insistence that workers not only have a 50% stake in the new investment but that they also have seats on the board of directors.
This last one is not so bad on the face of it, it just depends on who those workers happen to be. In some cases this could be the death knell of a company.
Imagine if you as a business owner had to deal with folks like the ones at EFE ice cream……..
August 15, 2013 at 1:12 pm
IS IT TRUE that you trained Iguanas in concert with the CIA, Mossad and Zionist Kabul to attack the Venezuelan power grid??
Chavez or death! … er, um, MADURO OR DEATH!