It's Rafa's world

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With this finger, I control your destiny
One of these men controls Venezuela. The other used to be a bus driver.
One of these men controls Venezuela. The other used to be a bus driver.

Whomever you choose to support in the current debate raging among Venezuelan economists (suggesting, by the way, that we economists need to tone it down and get out more), there is one thing we can all agree on: Rafael Ramírez is firmly in control of economic policy.

This doesn’t mean he’s in control of the government, but it does mean that he has consolidated his grip on power, particularly with regards to economic decisions.

Factors inside chavismo will resist any inclinations to implement what he laid out in his now famous London speech. And his moves will require something he doesn’t have: political leadership. If he were working for a President who could compensate for that, things would be different. Instead, he is working for Maduro.

No person in Venezuelan history has ever held the job of Oil Minister, President of PDVSA, and Chief Economic Minister. I venture to say that nobody short of Hugo Chávez has ever wielded as much power in modern Venezuelan history. Is it an exaggeration to suggest Ramírez is now more powerful than Maduro?

Ramírez makes the policies, he writes the checks that underwrite the policies, and he writes the other checks that finance (or doom) the political campaigns needed to reward (or punish) people depending on their support (or rejection) of his policies. Even the Cubans depend on him.

I tried to convey that in my latest piece for Foreign Policy’s Transitions blog. The value added:

Given the government’s terrible political situation, Ramírez may not have much room to maneuver. Implementing tough decisions may prove too costly for the government, and Ramírez may not have the time to convince the rest of the cabinet about the wisdom of his measures.

Yet after years of dealing with the world’s oil companies, he could be described as a skilled negotiator. Ramírez will need all the skills he possesses to navigate the waters of power in Caracas.”

1 COMMENT

  1. The most amazing thing is that Ramirez incompetence is the one that will cost the revolution its head.

    Think about it. If you were to fulfill the plan elaborated by Giordani, plan that Chavez strongly supported, only one thing was needed and that was income. And what better thing than oil income.

    Had Ramirez doubled PDVSA’s output, something completely doable in the last 10 years, Chavismo’s control over the country would be unparalleled.

    Ramirez is the revolution’s failure. It is where their plan went wrong.

    And somehow he retains control and support.

    • Well, we’ve always said that the bigger your failure, the higher your promotion. Ramírez is the embodiment of that.

      Still, we can all agree that he holds a whole slew of chips…

    • Not only doable. Old PDVSA (before the strike) had a roadmap for it. I believe the goal was 6 million oil barrels a day for 2010.

  2. Ramirez has basically proposed two things : 1.- to raise gasoline prices and 2. to unify the exchange rates (presumaby to raise the exchange value of the USD vs the Bs ) . If this is done (and Pdvsa can sell its dollars at a Bs50 rate) it will be able to cover its Bs expenses more easily and perhaps allow the BCV to stop printing money to loan to Pdvsa helping lower inflation from this last cause. This will of course impact the cost of imports, lowering their volume and perhaps making locally produced stuff more competitive .

    Additionally although less publicized he has endevoured to enter into agreement with international offshore oil companies / oil service companies so that they make investments for increasing , restoring lost oil production , that they can later recover through participation in the proceeds from the sale of such increased / restored production . This might help venezuela in the long term to raise its oil revenue .

    On another front some key oil industry contractors are being paid on time and ensured a good work load and the long frozen price of many staples are being allowed to rise very rapidly benefiting local industries.

    If all the above initiatives are succesful the regime will have gone a long way towards improving its current economic situation . There are a lot of factors beyond the control of Ramirez and his group that can throw the above initiatives off their track . many political , some plain operational , others related to external circumstances .(i.e lower oil prices, return of Iran to the international markets etc) .

    The basic framework which arises from interpreting the purpose of these measures appear to be much more rational than what has been the case for a long time .!! Dont think that they are enough to get us to a healthy growing economy that can sustaing all the regime promises , but it may make it stay afloat perhaps in relative comfort .

    Much of the data given in his speech is either false or exagerated , he is working hard to have the international financial markets allow the financial debt falling due in the following years to be rolled over
    but if he is rational he can see that issuing new bonds for extra money is totally crazy unless desperate.

  3. Most of the damage control of chavismo after GiordaniGate has been about reasurring their base that of course that Maduro is the one taking the decisions, we must be loyal to him!

    Given all the bullshit said to sneak devaluations, it seems that the Socialist dream is dead and buried, replaced by the neeed to save the goose of the golden eggs and hold on the power as long as they can.

    • “En el hospedaje, las siete puertas de vidrio quebradas durante el tiroteo fueron sustituidas ayer temprano; la normalidad volvía al Eurobuilding y algunos huéspedes disfrutaban el partido de fútbol en el lobby donde horas antes fue asesinado un extranjero.”
      Yowza

    • Hi, there is more Information about him in german here :http://www.rp-online.de/nrw/staedte/erkelenz/christoph-kleuters-erkelenzer-unternehmer-in-venezuela-erschosse-aid-1.4327196 “Der Spross einer zehnköpfigen Landwirtsfamilie war nach seinem steilen Aufstieg vom Steuerfachgehilfen (Ausbildung 1979) zum Sanierer und Geschäftsführer der “Erkelenzer Bohr” bodenständig geblieben. Der 56-Jährige engagierte sich in Geilenkirchen bei den Karnevalisten und den Schützen, spendete Geld an soziale Organisationen. 2008 ließ sich Kleuters für die Sat.1-Dokusoap “Geheime Helfer” als vorgeblicher Hartz-IV-Empfänger unter Arbeitslosen im Ruhrgebiet von der Kamera begleiten. Am Ende spendete er für Hilfsprojekte.” So he was social enganged and apparently morally integer (I’m sorry, it is too complicated for mi to translate…). Also here http://www.rp-online.de/nrw/erkelenzer-unternehmer-in-venezuela-erschossen-aid-1.4328284. “Christoph Kleuters … led from 1999 to 2012 the Erkelenzer traditional company Aker Wirth, a tunnel and oil drilling specialist company. … Kleuters remained owner of the property and shareholder.” (google translator and me)
      I would think of him being extorted or not accepting some sort of dirty business. Too bad he had to do business with thugs. He apparently had only hand luggage, I doubt he was wearing an (too) expensive watch…

  4. OT:
    Have you guys read the letter written by former minister and current mayor of Guarenas Rodolfo Sanz in response to Giordani? Here’s the link: http://rodolfosanzpsuv.blogspot.com/2014/06/normal-0-21-false-false-false-es-ve-x_19.html

    The money quote:
    “No creo que hoy exista ninguna confusión en relación a la política en torno a los agentes privados, simplemente la convicción de que el socialismo no es posible construirlo en este país, sin una alianza con el sector productivo nacional. El Estado Socialista no puede, ni podrá solo construir un modelo productivo con capacidad para satisfacer ampliamente las necesidades de la población venezolana. Todo lo demás es fantasía, pura paja Ex-Ministro Giordani. Además, sería bueno que él nos dijera cuáles son los mecanismos financieros socialistas que deberían sustituir los esquemas financieros propios del capitalismo e indicarnos, en que parte del mundo funcionan. La verdad es que todos los mecanismos financieros son capitalistas, incluidos los que usted Jorge Giordani como Ministro de Economía y finanzas de este país, le sugería al Presidente Chávez.”

    Interestingly enough, Rodolfo Sanz served along with Giordani as Industry Minister…

  5. I must disagree with the comment about “after years of dealing with the world’s oil companies, he could be described as a skilled negotiator”. Having spent 6 years on the other side of the table, there was never any “negotiating” involved… I’d use the expression “Bully-Tactics”. The strategy / tactics of those of us on the other side could be better described as playing the long game. Politics Change, Geology Doesn’t.

    • You are right in not attributing to Pdvsa s management having learned much from their dealings with foreign oil firms , they have indeed dealt with them with arrogant condescendention or bullying abuse , What might be true is that running a company as complex as Pdvsa in the long term forces people to face problems which cannot be solved using a riguid , purely sectarian dogmatic approach , that require at some point a more practical or rational stance

      While they had Chavez as the sacred boss whose commands were law and could not be rationally questioned they had to maintain a fachade of proud dogmatic overbearing prepotence , but after he died the problems have started getting worse and worse requiring a more balanced approach , this is what might make Ramirez a more realistic and practical person than blindly dogmatic utopian ‘scholar’ Giordani . This does not excuse Ramirez past blunders and mismanagement and abuses or his responsability for helping bring the current crisis to a head, nor does it make him a competent or clear headed person . but it does make him the one eyed person among the blind .

      The end result of some of the initiatives he seems to be favouring will not lead Venezuela away from its current ruin but in the long term if they are succesful ( a big if) they may make things more tolerable for the regime and generally for the country. .

      The problem for the opposition is that if it supports or doenst condem Ramirez apparent initiatives then they may be helping the regime perpetuate itself and somehow pardon it for its past crimes , if on the other hand it condems Ramirez for what it appears to be trying to do then it is really taking an irrational stance , one of unconditional rejection of what the regime does whatever its intrinsic economic merits .There is no easy way round this dilemma.

  6. Salve volevo solo darti un rapido heads up . Il parole nel article
    sembra essere in esecuzione fuori dallo schermo in Ie .

    Non sono sicuro se questo è un format formattazione
    di rilascio o di qualcosa a che fare con browser compatibilità del browser ma ho pensato pensato che avrei invii a farvi sapere
    . La progettazione sembrano grandi però! Spero che si ottiene il problema problema risolto presto
    . Grazie

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