Archive for August 21st, 2014

Is There A Government In Venezuela?

August 21, 2014

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The question posed by the title of this post is not rhetorical. You have to wonder if there is a Government in a country where decisions appear to be random, if and when they are made and when incoherence seems to be the norm, rather than the exception.

Take, for example, Rafael Ramirez. This guy is supposed to be in charge of like half the Government. He is President of PDVSA, Minister of Energy and Oil and also holds a position with the over the top name of “Vice-President for Economic Affairs”.

Now, for months, Mr. Ramirez has been proposing a unified exchange rate to remove distortions and in his own words: “It is very difficult to manage three exchange rates”. Separately, Mr. Ramirez has been the main proponent of a gasoline price increase, calling the current level of subsidies “absurd”.

You would think that with all his titles Minister Ramirez has some pull in Venezuela’s Government. I mean, he made all of these proposals at the PSUV Congress (Where nothing was voted, in the best Stalinist tradition). The people even stood up and cheered for most things he said.

Despite this, not only has nothing been decided, but Ramirez has changed his tune. He now talks about “convergence” of the exchange rate, which should be read as “more than one”, maybe two or even three. But the timing is quite fuzzy too. He now says that additional measures have to be taken first, mostly monetary measures. Funny thing is, M2 not only keeps growing at the same unstoppable rate, but Treasury Bill auctions were recently declared null for the first time in years and the rates were really stupidly low.

Thus, it does not appear as this very powerful man has any power in Venezuela, as he has been preaching at least “reasonable” measures for months, but no decisions are made and his proposals change over time.

Of course, Ramirez has a boss, President Maduro. Thus, in the end it is your boss that decides things, no? But at the same time, you don’t go out publicly with anything without running it by your boss first, no? That is what organizations do, from the Girl Scouts, to companies, to Governments. They discuss, talk about it and run with the conclusions. Sure, sometimes in politics you float balloons to see how the public reacts, but these balloons don’t last six months.

But Maduro behaves much the same way. He says one thing one thing one day, only to promote the opposite later.

Take the whole issue of using fingerprint machines at supermarkets to control smuggling. The whole thing is absurd. Are you going to impose a system on the “people” you always cry you care about, given that it is hundreds of Tons of stuff that gets smuggled out of the country all the time? How much does this system cost? Who will run it? Who sells it? Who maintains it? Who profits from it? How do you implement it?

Even worse, just last week, one of Maduro’s powerful underlings, the Head of Sundde, declared the”war” on lines at supermarkets. Do you really think that implementing a fingerprint system with restrictions to boot, will help ease them.

Imagine the dialogue:

Cashier: “Sra. please move your finger. Ok, Ok, dry your finger before you place it on the scanner. Great, finally. Well, sorry you are limited to two bags of Harina Pan, two cans of powdered milk and one kilo of sugar, so we have to take it our of your cart.”

Sra: “But please, I have four kids, I need the milk. Even if I come tomorrow you will not give me any additional milk. Etc., etc., etc.”

Meanwhile the line backs up even more. People get upset, start complaining and who is going to come calm them down. The Sundee? Sure.  Most likely the National Guard.

But the worst part is that Maduro said a year ago that he was against this type of system. In fact, he ordered that Governor Arias Cardenas of Zulia State stop any form of rationing, arguing that producing stuff was the only way to go.

A year later, Maduro is the king of rationing and the surely corrupt biometric systems. As I tweeted, it would be much cheaper to put a voice transmitter on every military officer in the country, in order to stop them from charging commissions at every step, including all the flow through the borders.

Just watch this video from  this blog, and even if it is in German, you understand the guy is bribing the Guards to get thru and make a lot of money smuggling. So, are you going to check the cars or the Guards? Same idea applies to foodstuffs.

I mean, if as Ramirez says 100,000 barrels of gasoline get smuggled out of Venezuela, does Maduro believe it is one barrel per car? Or maybe it is like 500 barrels (80,000 liters) per truck and a few national Guardsmen helping out. And “colaborando”, wink, wink.

But going back to the title of the post, who then runs Venezuela?

I am starting to think nobody. This is a collection of individuals with no apparent command or direction, led by an indecisive man. I don’t think Maduro went to Cuba to receive orders. I believe he went to Cuba to ask Fidel which of the many proposals he should follow. And Fidel likely told him to just hold tight, try to sell Citgo, see how long they can last. And if they can’t sell Citgo, you can make very tough decisions, like hold payment on debt, borrow somewhere and try to ride it out. But Nicolas, Fidel likely told him: You are not Hugo.

And so the country drifts into som sort of economic black hole. Today it is fingerprint scanners, tomorrow it will be some different imaginary battle. But it will always be about attacking the consequences, not the causes. Those, they will not touch. Maybe a small adjustment in the price of gas. Maybe move the Bs. 6.3 per US$ rate to the Sicad 1 rate. But that’s it. In the absence of Government, there will be no decisions. No real policy changes until 2016

At the earliest.