Merentes' sin? Brutal honesty

Giordani, with a tight grip on economic policy
Giordani, with a tight grip on economic policy

It’s hard to dislike poor Finance Minister Nelson Merentes. In a sea of chavista insanity, he usually comes across as a sort-of reasonable guy or, at the very least, someone you can talk to.

It is only fitting that he just got demoted.

His crime? I think it has to do with this interview, given in early September. In it, he says some sensible things: that Venezuela is an economic failure, that we need to loosen regulations and learn to export stuff, that the State has to work WITH private industry, etc.

In the interview, Merentes comes across as sensible and honest. As we know, that is a capital offense in chavismo.His quarantine comes on the heels of a powerful member of his group also expelled from state bank Bandes.

A government seemingly intent on ruining the economy as a way of consolidating power and its ideological vision is not going to feel comfortable with anything approaching internal dissent. In effect, Merentes put Maduro in a bind by burning his bridges with the rest of the loonies in the Cabinet. Maduro was faced with a choice, and he made it. I expect Merentes will resign from the Cabinet altogether soon.

While that happens: to your corner, Nelson. Off you go.

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  1. Maybe I’m being overly optimistic with this, but I’ve always seen Ramirez as one of the more pragmatic members of the looney bin. There is the slight possibility that Giordani, being the Buddhist monk he portrays himself to be, saw Merentes as one of the foremost perpetrators of what the permuta turned out to be -a very dirty business. Having said that, he refused to sign a proposal coming from him. However, Maduro might have thought that if the scheme design came from someone like Ramirez, perhaps closer to Giordani’s heart, a solution like permuta and certain other changes could be implemented with less friction. Thoughts?

      • I don’t know that it’s the amount of jobs, as much as it is the amount of jobs handling our MONEY somewhat directly, which worries me about Ramírez… As the Energy Minister and PDVSA’s President, his labor in the finances is, well, atrocious to say the least. Now, he will not only control oil production (our ONLY source of income, because we don’t see a dime out of drug traffic), but will also have kind of an important say in how that money is spent… He’ll pay himself and then collect the change. Brilliant example of corruption, there.

    • Ramírez only “ideology” are money and survival. He will do wherever necessary to keep his enormous cambur (He, his family and his in-laws are all part of a mafia that controls PDVSA legal services, insurance and other services), and after Merentes dismissal I think he is smart enough to figure out that the only way of surviving is being more monk-like than the monk.

  2. El Monje is probably right about one thing , the Cadivi system is full of wormy holes allowing both Chavista enchufados and private interests to get access to cheap official dollars by overinvoicing or falsifying the price of import purchases and then using the margin to either sell them at a huge profit at the black market or keep them abroad . If nobody gamed the CADIVI System the need for USD might drop 20% or plus . On the other hand if you allow a free market to float the dollar the govt would lose its control over imports and the power which goes with it ( which unthinkable) .
    We would make a big mistake if we overidealize Ramirez as being capable of a more rational approach , remember he is the author of the celebrated ‘rojo rojito´moniker , he is as dye in the wool red as they come . The only thing is that Ramirez has to deal with some tough practical problems in Pdvsa in order to keep it functioning and that forces him sometimes to be bit less riguid that Giurdani . Right now he is bent on an effort to get Pdvsa to retake lost or diminishing production and that means having to play ball with some ham fisted foreign contractors or investors, also he has to stop the rest of the gabinet from increasing the practice of mortgaging future oil production to would be lenders if only to end up by having to run a business which has no available income .

    • “If nobody gamed the CADIVI System the need for USD might drop 20% or plus”
      And if people could survive on good wishes no one would starve, but the chances of creating a currency control system without corruption are the same of people feeding on good intentions.

      • cacr210. Same as you I am convinced that no human system is impervious to corruption , that some measure of corruption is inevitable (human beings being as clever and as greedy as they are) and that at most what decent people can expect is to control corruption so that it becomes more exceptional than normal and does not prevent the relevant system from doing its basic job .!! . I have it from a good source ( non governamental ) that currently the gaming of the cadivi systems produces gaming yields close to 30% on most imports . This is very high !! Ideally if there was a free market price for FOREX there would be no gaming ( but apparently no one wants to face the consequences of such total liberation of the Forex exchange rate ) so if the gaming yield is reduced to 5% that would represent an enormous gain for the country. Dont see how that can be achieved under current conditions.

        • You also have to consider the country situation. It has been studied that in any country currency controls lead to corruption and excess importation, imagine that same adding a country with no institutions to control or punish the corruption and end up wandering why its not 50%.

  3. The idea apparently is being floated that the govt means to terminate the cadivi system and centralize all private foreign purchases through a govt controlled procurement entity thus notionally elliminating the possibility of individual arbitraging of govt provided dollars by importers .
    The huge problem with this is that no bureaucratic entity is capable of effectively handling all needed imports ( too complex too vast too varied) without incurring in enormous waste and errors and secondly that if CADIVI was corrupt this initiative would just take corruption another step further to the people running or operating that centralized procurement entity. The great gain for the Chavista system the monopolization of currency corruption . If they wanted this to work they would have to have that procurement activity divided by sectors and given to international procurement companies under the oversight of some reputable international auditing firm or company to closely monitor their operations. Of course that is never going to happen !!

  4. After Merentes’ interview I thought I saw a light at the end of this tunnel. Now I know it was only a high speed train approaching. We’re absolutely fucked.

  5. I’m very concerned about this enroque. I was reading the other day that Merentes’ faction was propping up a Floating Exchange Rate (a rational proposal) while Giordani’s faction was propping up centralized (nationalized) imports. May Madura has made up his mind ideed.

    The thought of Ramirez creating a PDVSA Importadora (think PUDREVAL for non-foodstuff) would bring about a whole new layer of corruption, inneficiency and arbitrage to our already distorted economy.


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