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.

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46 Responses to “Is There A Government In Venezuela?”


  1. […] of excellent posts recently on the economic and political disaster that is Venezuela.  Here is one called “Is there a government in Venezuela?” It highlights the incredible […]

  2. Juan Largo Says:

    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?

    Imagine the colas. Caramba. And this kind of system requires non stop matainance. By who? There apparently are pilot programs alrady in play in some states and I wonder how thy have worked so far.

    Meahwhile the hospitals have little medications.

    Man, if an epidemic ever breaks out we’re in trouble.

    Juanito

  3. anagrammatt2 Says:

    Reblogged this on anagrammatt2 and commented:
    Me parece interesante el artículo!

    Es obvio que hacen las cosas a las buenas de Dios!

    Que crean un problema de desabastecimiento/acaparamiento/contrabando sencillamente por la inseguridad económica y la repressión política! Y que 30millones de personas no es como la islita Cuba y la poca población!

    Maduro y los Chavistas siempre tendrán este problema! Si de la islita se les escapa gente a los cubanos y desde Venezuela! Ahora imagínense controlar todas las fronteras de Venezuela!

    La falta de formas de trabajo crea el problema de los alimentos y artículos domésticos!

    Pero no dudo que no haya una cabeza o cabezas en otra intentona o alzamiento de fuerza!

    Cada rato andan depurando a los opositores y dirigentes y militares! PORQUÉ? Porque es así cómo Chávez hizo su intentona! La falta de la eliminación de militares comunistas!

    Bueno para qué hablar más!

    Nos es del Chavismo obviamente, hacer las cosas perfectamente! Sinó, a grosso modo!

    Lo que si me parece importante es establecer que el problema Económico adoloce al País y al Gobierno, más de lo que parece! Esto si es crucial! Repito, esto si es crucial!

    Me parece, que Yordani ya no daba para mas! En inventar formas de financiamiento del Estado Boliburguez…!

    Bueno, aguantar hasta el 2016, también es una afirmación importante! PERO PREGUNTO! AGUANTAR PARA QUE LUEGO HAYA ALGO MEJOR? LO DUDO!

    La ladrazón, siempre ha ido en decreciente y menguante!

    Tampoco creo que haya mucho mas que inventar!

    Lo que se maneja con la moral y etica de unos árabes y negros del Africa, dudo que sea pronto mucho mas que un país despojado!

  4. anagrammatt2 Says:

    Me parece interesante el artículo!

    Es obvio que hacen las cosas a las buenas de Dios!

    Que crean un problema de desabastecimiento/acaparamiento/contrabando sencillamente por la inseguridad económica y la repressión política! Y que 30millones de personas no es como la islita Cuba y la poca población!

    Maduro y los Chavistas siempre tendrán este problema! Si de la islita se les escapa gente a los cubanos y desde Venezuela! Ahora imagínense controlar todas las fronteras de Venezuela!

    La falta de formas de trabajo crea el problema de los alimentos y artículos domésticos!

    Pero no dudo que no haya una cabeza o cabezas en otra intentona o alzamiento de fuerza!

    Cada rato andan depurando a los opositores y dirigentes y militares! PORQUÉ? Porque es así cómo Chávez hizo su intentona! La falta de la eliminación de militares comunistas!

    Bueno para qué hablar más!

    Nos es del Chavismo obviamente, hacer las cosas perfectamente! Sinó, a grosso modo!

    Lo que si me parece importante es establecer que el problema Económico adoloce al País y al Gobierno, más de lo que parece! Esto si es crucial! Repito, esto si es crucial!

    Me parece, que Yordani ya no daba para mas! En inventar formas de financiamiento del Estado Boliburguez…!

    Bueno, aguantar hasta el 2016, también es una afirmación importante! PERO PREGUNTO! AGUANTAR PARA QUE LUEGO HAYA ALGO MEJOR? LO DUDO!

    La ladrazón, siempre ha ido en creciente!

    Tampoco creo que haya mucho mas que inventar!

    Lo que se maneja con la moral y etica de unos árabes y negros del Africa, dudo que sea pronto mucho mas que un país despojado!

  5. Kepler Says:

    Miguel,

    What about intervening private banks as a way to get more money?

    • moctavio Says:

      Banks have Bolivars, but few dollars, it would not help much.

      • Kepler Says:

        OK, this bank that bought the Spanish bank…I guess it created a new entity in Spain but still the shares are in the hands of the Venezuelan company, right? Couldn’t the government use that? Or is that too little money to make any difference? (I reckon this is the case)

        • moctavio Says:

          Do you thin they are dumb. Banesco’s holding company is in Spain, that is the one that owns Novagalicia, it existed prior to the purchase, it owns Bnesco in Venezuela, Banesco, USA, etc.

    • Island Canuck Says:

      And they just announced that all banks must keep dollar accounts deposited in the Central Bank.

      Wonder why?


  6. Fidel Castro’s mind is gone. They are trying to give him a wise old statesman image, but he’s useless.

    Maduro’s advice comes from Raul Castro. The advice is mostly how to handle Venezuelan communists as Maduro is forced to swing to the right. This is why Maduro can’t make decisions. He and Celia Flores are being told to make moves they can’t justify to themselves or their old friends.

    What the Venezuelan opposition needs is to focus on getting real about the methods they gave to use to free Venezuela from those gangsters. The pressure point is Cuba. But they keep ignoring this move.

    • steffmckee Says:

      What do you mean by “move to the right?” Become more liberal democratic or doctrinaire communist? In that case, it would be a move to the left.

  7. moctavio Says:

    Well, I dont know if he is exaggerating or not. But think about the 30% of the food that is smuggled. How much is that? I would bet it is an equivalent amount of trucks at least. It is organized crime. Is he denouncing it? No, I think he wants to stop it, because even with his limitations he understands the revolution is doomed otherwise.

    • PM Says:

      Were do these numbers come from?

      I keep hearing about the 40% of food that’s smuggled out of the country and the 100K barrels of gas. Yet I have no idea how these numbers are calculated. Quite frankly I think these numbers are made up.

      • Boludo Tejano Says:

        One metric where these figures come from is to compare gasoline sales and motor vehicle registrations. Zulia and Tachira most likely have higher ratios of gasoline sales per motor vehicle than states not on the border.

        • Kepler Says:

          That would be a method, if that data is available in Venezuela. I am not sure who has access to it, though.

        • Boludo Tejano Says:

          I asked Setty, who has a good track record for extracting PDVSA information. He replied that there is no openly available sales by state data. There is data for terminal sales data. Setty says there are 2-3 terminals in Venezuela.

        • Kepler Says:

          “He replied that there is no openly available sales by state data.”

          I suspected as much. The main smugglers pay the military.
          What we have now is this: smuggling will get reduced a tiny bit but the military will get as much or more money.

      • Boludo Tejano Says:

        Here is a TV report from ColOOOOmbia, courtesy of Daniel Duquenal’s Venezuela News and Views. Note the announcer talking about “hundreds of trucks.” That’s how you get the 100,000 BBL a day figures.

        http://daniel-venezuela.blogspot.com/2014/08/gas-smuggling-to-colombia-contrabando.html

        • Boludo Tejano Says:

          To further fan the flames of the ColOmbia versus ColUmbia brouhaha, here is a video featuring the Columbia University fight song: “Roar, Lion, Roar.”

      • Boludo Tejano Says:

        Quite frankly I think these numbers are made up.
        I doubt very much that the photograph of line of gasoline-smuggling trucks is made up.
        http://daniel-venezuela.blogspot.com/2014/08/the-bolivarian-revolutionary-army-goes.html

        • PM Says:

          Thanks for all of that, Boludo.

          I know theres a lot of smuggling going on. My only point is that (a) we don’t know where these numbers came from and (b) The government might me exagerating these numbers because they want to hide the fact that gas and food production is going down. Despite all the articles that you showed me, I still think 500 trucks full of gas crossing the border every single day is an exageration Ramirez pulled out of his derriere.

          • moctavio Says:

            Well, the Colombian Government estimates it a 55,000 barrels, Brazil is estimated at 10,000, add the tuna boats that go to Panama and the smuggling to the Caribbean islands and you are up at 75,000 barrels a day.

          • PM Says:

            Well, OK. I guess it’s not such an exaggeration after all. Thanks to miguel, boludo et al. This was very informative

  8. PM Says:

    Miguel, If it was true that 100K barrels are taken to Colombia every day, that means that the equivalent of

    (100,000barrels) * (160 liters/barrel) / (35000 liters / tank truck) = 460 tank trucks cross the border every day!

    So Ramirez is either blatantly lying or dennouncing major corruption by the military.

    And don’t forget Ramirez is among the smartest ministers Maduro has.

    What’s very obvious to me is that chavismo is not going to be able to solve any of the structural issues in the country because they are not even capable of correctly diagnosing the problems. Hell, if they weren’t so ignorant and stubborn they would realize by now that subsidizing imports and gas is the root of all their problems

    • JB Lenoir Says:

      The gasoline and diesel are smuggled to Colombia, also Brazil, Guyana, the Netherland Antilles, T&T and other nearby islands. Add up all the volumes and types of refined liquid hydrocarbons smuggled in all directions nearby by land and water, on foot even, and the total likely tops 100,000 b/d. Of course the Nat Guard and Army are directly involved. Duh!!! Gasoline at less than 5 US cents per gallon is hugely profitable even for mom-and-pop smugglers. 25 gallons of gasoline at 5 cents/gl = $1.25 and sold at $3/gl (cheap) = $75. Do that every day for a month and you have a $2,250 monthly ‘profit’ on a ‘cash investment’ of $37.50. And the numbers here are for a nickel and dime smuggling enterprise that needs only one 25 gallon container. Tronco ‘e negocio.

      • PM Says:

        Even so! if instead of trucks we talk about cars we’re talking about no less than 35 thousands car. Every. Freaking. Day. I don’t think it’s even physically possible to smuggle this much gas. I think RR is probably lying about gasoline production in Venezuela, blaming it on the smuggling.

    • wanley Says:

      A friend of mine wanted to get in the “business” of transporting gasoline to Brazil by trucks (40.000 liters). He went to talk to the national guard in santa elena. The business is simple, a 50% cut of the profits. They know the costs and the sale price on the other side.

  9. xp Says:

    “Every story has 3 sides:
    your side,
    my side,
    and my Truth”

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

  10. JB Lenoir Says:

    Who cares, really? Who cares anymore whether Venezuela has a government or doesn’t have one? Bravo pueblo. What a pathetic joke. Pueblo congenitalmente carente de bolas, letting themselves be driven like mindless cattle into the wilderness. If the pueblo is content to submissively let itself get shafted up its collective rectum without lube, they deserve it. The opposition – MUD – doesn’t and never has represented anyone or anything except their own sorry, incompetent keisters. The pueblo doesn’t listen to anyone in the MUD. There’s no real connection between the streets, the people, particularly the poor, and the self-proclaimed passel of pendejos pretending they’re national leaders who represent anything except their own very narrow economic and family interests. I listen to the idiocies coming from Capriles and the other chattering nabobs who are just as clueless and incompetent as the current crop of creeps in power and it’s as empty and irrelevant and meaningless as the BS I hear from the Boludarian regime. Venezuela ya no es una republica, ni siquiera es un pais si acaso alguna vez lo fue. Venezuela es una pila de gente montada sobre un bojote de petroleo cada quien jalando pa’ su lado buscando el resuelve to see how much they can steal. The national anthem should be changed from “Gloria al Bravo Pueblo” to “Quitate tu pa’ ponerme yo.” I’ve worked in Venezuela since the mid-70s, 1976 to be precise, and I have never in all my years in this country met a single Venezuelan of modest means from any political party who, having joined one or another government, didn’t leave said government filthy rich. Some of these folks even have have been, and still are, friends because in my line of work I see them with some regularity. And some of them are leading oppo ‘personalities’ who don’t even perceive the underlying hypocrisy of their regularly excoriating the regime’s corruption when they themselves stole sue mode in the IV Republic. Get real, Devil. Even you have wealthy partners whose children have become wealthier than their parents doing dirty deals with the red regime. Hint…Oberto and the Bolichicos.

  11. Roy Says:

    In one of the Caracas Chronicles threads, I had a mini-epiphany about current Venezuelan economic policy. In the thread I kept seeing the phrase “politically possible” repeated over and over again. To wit, everything the government wants to do or knows it should do is not politically possible. All of the events of the Chavez era have led them to this moment in which they have no political space to maneuver or change course. To make any significant changes would require political power and leadership. Chavismo does not have this. Sure, they have the guns, but that is not the same as having the political power to lead. They are painfully aware that any change at all to the system will create massive discontent that they are not equipped to deal with. So, every proposal for change dies from political paralysis. In the end, in spite of everyone knowing that Venezuela is approaching a fatal economic train wreck, the government will do nothing to prevent it.

    Therefore (as I stated in the CC thread), Venezuela will continue with system exactly as it is now… until of course, it can’t. When that point is reached, cash dollars for imports will dry up, industry and commerce will stop, and Venezuela will starve while armed gangs loot the country. Central authority will become non-existent for some time as high officials abandon their posts and flee the chaos. Eventually, some form of order will be restored by the military, but only after they settle their own internal issues.

    Short of a miraculous black swan event that changes the political equations, there is NOTHING that any of us on these blogs can do to prevent it. The die is cast. Have a nice day.

  12. Alberto Says:

    Put the emphasis in dollars. There are dollars for fingerprint machines, computers, programs, but no dollars for medical equipment nor medicines.

  13. Getashrink Says:

    I believe that, fortunately, this fingerprint thing will never be implemented. It’s all just talk, and nothing else. They are just to incompetent to implement such a thing. They said they would put such a system on the airports, so that people traveling would activate their Cadivi allowance with their fingerprints, and they could not even do that. Do you really believe they will be capable of implementing this in every single place where stuff is sold in Venezuela? Forget it!!

    Ironically, their utter incompetence will save us from this one.

  14. Glenn Says:

    Miguel a couple of things. What leads you to think something will change in 2016? Other than Maria Gabriela entering the political ring, I can’t think of anything.

    About the 100,000 bbls being smuggled – to put that in perspective each tanker trailer truck (big long ones) holds 150 to 180 bbls of oil. That’s 555 trucks every day which are very hard to hide. Boats with bigger hauls to Colombia and the islands are likely and I think skimming off formal loads is even more likely.

    • moctavio Says:

      They should make some form of economic adjustment now. If thy dont, they could last until 2016, but no more with current oil prices. Thus, if my thinking is correct, it will be after December 2015 they adjust. But they should do it now.

      • Dean A Nash Says:

        I too am surprised by your reasoning. Probably just my own ignorance. Are you saying that they’ve run out of things to steal, hock, pawn, etc…?

        I would imagine that they can continue for a very long time, on the present road. Will they have to make adjustments? Of course. They will have to repress more, use more violence, lie more (is that even possible?), and so on.

        What am I missing?

        • moctavio Says:

          Dean: They have run out of money. They can print money, run fiscal deficits and the like, but they need hard cash. Selling Citgo solves part of the problem, but only a very small part. Only in the third quarter of this year, Venezuela and PDVSA have to pay 6.3 billion dollar in bonds. They will try to stretch it until 2016, but I dont think they can, unless they do something drastic, like stop Petrocaribe or oil to Cuba or paying debt.

          • Dean A Nash Says:

            Miguel, I understand, thanks. But isn’t it possible that they would make more deals with, say China? Give up some oil fields, or let China take control of Maracaibo? I just think that there are endless possibilities. Of course, rational patriots would never do such things, but that’s not them.

            • moctavio Says:

              The problem is that with PDVSA owning 60% of each project, then PDVSA has to put up the money. And the Chinese so far have refused to lend the money to fund the PDVSA side of things. They are trapped in their own ideology now. Funding the other side runs the risk that if there is a change of Government, the new Government may decide not to pay. Selling Citgo may be even difficult as internally and ideologically it is being questioned. I think the viist to Cuba was a way for Maduro to look for ideological legitimacy.

  15. Kepler Says:

    I don’t know, I would expect some economist from the opposition to very directly attack and attack and attack Rafael, to talk in detail about all his failings, his ignorance of economic matters, to ridicule the regime’s policies, to tell about how stupid it is they are changing ministers every 3 months or every year and that they have been doing that since 1999.

    I don’t see that. Take Carlos Ramos. He is apparently an economist but I don’t see any analysis from him about those issues, just grumblings as anyone else,

    Don’t our politicians need to show their expertise?

    They need to show the ones in power are either thugs or ignorant or both.

    They need to make the rest of Latin America as a reference.

    Unlike Russia, we do have lots of neighbouring countries that are linguistically like us but who have different systems from us. Chile and Colombia, Mexico and Peru might have lots of issues, but they can be a proof for those Venezuelans who think otherwise that it is possible to have something else in Latin America than the Cuban-Venezuelan system.

  16. Ira Says:

    You have to edit the last sentence in the 3rd paragraph, ending with “absurd.”

    It’s not clear what you mean.

    If he’s a proponent of a price increase, it should say “he thinks current prices are absurd.”

  17. Ralph Says:

    As we’ve learned in these 15 years, the regime gets paralyzed in the face of elections, even when we’re more than a year away from them, even when they can try to drown the people’s reactions to the unpopular measures (That are going to happen whether the opposition politicians move their lazy asses or not) with censorship and more repression.

    Ah, and this time, the protests won’t be instigated by the commies as they were in the infamous “caracaso” in february 27, and are likely to have even worse consequences than in that time.


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