There are many definitions of friendship, and to me most of them sound vacuous. Saying that a friend is someone with whom you have a mutual bond of affection, for example, seems to me to be circular at best. Perhaps a more useful definition is someone whom you want to hang out with, with whom you share interests and passions, and whom you find engaging and fun. By my definition, you cannot be friends with someone you get bored talking to. And a true test of friendship is when that person can look you in the eyes and tell you that you are doing something wrong.

By that token, I consider Quico’s lucid piece on my public positions a true act of friendship. Quico takes me to task for giving economic policy advice to the Venezuelan government through my role as technical coordinator of UNASUR’s economic policy mission to Venezuela in 2016. Drafting a report to authorities outlining the measures needed to stabilize the Venezuelan economy, Quico argues, is nothing more than a “monstrous conceit.”

Those are harsh words, and coming from someone whose views I respect and value, they merit careful reflection and consideration. At the very least, they are examples of my failure to communicate my views and reasons transparently enough so that those that I hoped would be on my side could understand them. I therefore put immense value on the opportunity given to me by Quico and Caracas Chronicles to engage, react to, and learn from these criticisms.

Just so you know what I did last summer

“Garden Leave” is Wall Street lingo for the time that you are forbidden from taking up employment at another financial institution after leaving your job. For most people, it is a couple of months of drinking margaritas and reading John Grisham. For me, it was time to write the longest unpublished piece of research that I have ever been engaged in.

In May of 2016, right after leaving Bank of America, I accepted an invitation from UNASUR to act as technical coordinator of a report outlining economic policy recommendations to stabilize the Venezuelan economy. (Why UNASUR? Simple. It was the only international organization that the government was willing to take advice from). Given that the Venezuelan government decided not to publish these recommendations, I am bound by my agreement with the organization not to discuss the contents of the report, though nothing precludes me from posting a link to a story that does. I did not request nor was paid any remuneration for my participation in this project, for which UNASUR only covered my travel expenses (including a terrifying Dynamic Airways CCS-JFK flight whose landing made me feel like I had just won the lottery).

I have yet to find a neoclasically-trained economist who has had access to the UNASUR report and disagreed with its key policy recommendations.

As Quico suggests, there is little in the substance of the report that would be very controversial among economists, and I have yet to find a neoclasically-trained economist who has had access to the report and disagreed with its key policy recommendations. But Quico does not take issue with the report’s recommendations. He takes issue with the ethics of writing it given the possibility that the government could have actually paid attention, stabilized the economy, and as a result consolidated its hold on power.

The humanitarian aid debate

To get a better sense of the arguments being made here, it may be useful to consider for a moment another dimension of the current policy debate: the Maduro government’s decision to block the receipt of humanitarian aid of food and medicines that could alleviate the country’s shortages of essential consumption goods and attend to the acute deprivations faced by thousands if not millions of Venezuelans.

To most of us, the government’s refusal to accept humanitarian aid – going as far as confiscating a shipment of 600 boxes of medicine by Caritas international – is the most blatant example of chavismo’s hypocrisy. Certainly, we say, if they cared at all about the Venezuelans who are dying of hunger or lack of medicines, they would have no problems in accepting the obviously needed donations of essentials that could directly and immediately help many Venezuelans live through the current crisis with a greater measure of dignity.

By the same token, the opposition’s insistence on the government’s acceptance of humanitarian aid, including its inclusion in the conditions for a broader proposed negotiated agreement with the government, serves as a clear and present demonstration that it continues to occupy the moral high ground. The opposition – so the argument goes – cares about Venezuelans and wants to help solve their problems. The government does not.

I fail to see how it can be morally right to advocate for humanitarian aid but morally wrong to advocate for economic policy assistance to Venezuela.

I have yet to see anyone make the argument that the opposition should block humanitarian aid to Venezuela to help provoke the regime’s demise. And I have yet to see anyone criticize aid organizations trying to organize assistance to Venezuela as collaborationist stooges helping to maintain a murderous dictatorship in power.

Yet I fail to see how it can be morally right to advocate for humanitarian aid to Venezuela but morally wrong to grant economic policy assistance to the government. In fact, if the estimates that other economists and I have come up with of the efficiency and corruption losses from exchange controls are even remotely right, fixing the country’s dysfunctional FX regime would generate increases in the actual supply of essential goods on store shelves that would dwarf those that could be obtained through any humanitarian assistance initiative.

This, in essence, is my problem with Quico’s argument. He believes it its morally wrong to give economic policy advice to the current government. I believe it is morally wrong to withhold it. This is not because I want to help the government. It is because I believe that fixing the Venezuelan economy would alleviate the sufferings and hardships of Venezuelans, and that goal for me is more important than any political objective.

Quico and the theory of textbook sanctions

Taken at face value, Quico’s argument is that we should do everything possible to make the Maduro government get economic policy – and possibly everything else – wrong. In his view, giving economic policy advice to this government is irresponsible: God forbid they actually listen, do the right thing, and as a result consolidate their hold in power. Flying to Caracas to give the equivalent of an Econ 101 lecture to the economics cabinet and their Spanish advisor is morally suspect: why would anyone in his right mind do anything that could help this government survive, and especially, of all things, tell them what they need to do to fix the economy?

I like to think of this argument as Quico’s theory of textbook sanctions. Mind you, this is not the same thing as a textbook theory of sanctions. Rather, it is the theory that denying the knowledge contained in basic economics textbooks is a useful way to pressure for regime change. Deny chavismo access to basic knowledge and the regime will collapse faster.


This set of ideas take me back to 2002. Chávez was at an all -time low in approval ratings, polls showed the opposition handily winning any election, and the economy was in recession after a poorly managed balance of payments crisis. Sound familiar?

In order to try to force the government to call a national election , the opposition coalition decided that year to call an indefinite general strike, bringing the economy to a standstill for over two months and causing losses estimated at upwards of 10 percent of GDP. The thesis was that the deeper the economic crisis, the easier it would be to force Chávez from office.

The result was that the opposition managed to convince Venezuelans of something that Chávez had not been able to on his own– that the Coordinadora Democrática couldn’t care less about the well-being of regular people, and that it was willing to do anything, even if it meant causing lasting harm to the nation’s economy, in order to put itself in power. The 2002-03 strike lent credence in the eyes of many Venezuelans to the characterization of the country’s opposition as led by an upper class group who could, of course, afford a luxury that regular people could not: spending two months without a paycheck.

Invisible peoples

Most of the useful things I know, I learned through or by the side of my love and lifetime companion María Eugenia. One of them is that anthropology is perhaps the most valuable – and definitely the most interesting – of the social sciences. It was almost twenty years ago that I borrowed her copy of Clifford Geertz’s The Interpretation of Cultures and immersed myself in it. Halfway through it, I found myself in the midst of a harrowing description of Indonesia’s 1965 coup and the ensuing violence during which 250 thousand persons, most of them Communist party members, were killed.

What struck me most deeply about Indonesia’s case is that the violence was ideological rather than ethnic or religious. I remember thinking to myself at the time that I had no institutional referent for a society in which mass killings of that type could take place. I did not know a place where people could hate those who held to different ideas so profoundly so as to usher such massive acts of violence.

What I began to learn that day is that violence begins by making people invisible. In order to do real harm to your opponents, you first need to convince yourself that they are not persons. Only when you can fully characterize them as the embodiment of what you are not, can you justify using all means available in their destruction.  And there is nothing more terrifying than understanding that my country has now become such a society.

One quarter of Venezuelans consider themselves chavistas, two-thirds have voted for chavismo at least once, and more than half think that Chávez did a good job as President. We ignore these facts at our own peril.

When I hear Quico characterize chavismo as the “people who’ve destroyed the hopes and aspirations of a whole generation of Venezuelans and turned our country into a goddamn dystopian nightmare,” I get scared. I am not talking about whether his statement is true or false. I am talking about the way in which that statement disappears chavistas from view. We are no longer facing a political movement made up by real people. They have become invisible, hidden behind the description of a thuggish narco-state that has jailed our friends and driven us into exile. What this statement says to me is that we are very close as a society to having reached that point where, as Geertz put it, we can no longer tell the difference between staring at the abyss and staring at the sun.

Stepping back

Like it or not, chavismo is part of Venezuela. One quarter of Venezuelans consider themselves chavistas, two-thirds have voted for chavismo at least once, and more than half think today that Chávez did a good job as President while he was in office. We can dislike these facts, we can disagree with them, we can even make it our project to try to change them. But what we cannot do is ignore them.

For me, chavistas are infinitely more relevant than the governing clique. Politicians come and go, but political movements and the people who form them remain. Forgetting that chavistas have ideas, aspirations, and a concept of the country that they want does little to help build the bridges that we are going to need to overcome Venezuela’s current malaise. Ignoring chavismo simply perpetuates the idea of that invisible otherness, as if they were inhabitants in a bad dream that we are hoping to wake up from. It pushes us to try to build a country without half of its people.

There is a more difficult but ultimately more worthwhile route. It is that of trying to build a shared vision of a country that captures the aspirations of the Venezuelans who have felt represented by chavismo as well as those who have felt represented by the country’s opposition. It requires deep thinking about what it is about chavismo that many Venezuelans felt identified with, as well as an earnest attempt to incorporate it into a national vision that all of us can share. It requires searching for areas of common understanding while finding spaces and mechanisms through which those who hold different views about society can resolve those differences.

There is a reason that Venezuelan politics is so polarized. Most leaders who have tried to occupy the space of the center have seen themselves demonized by both sides. It is much easier to find comfort in the automatic solidarity of one of the two blocks than to try to make tent in the middle of the cross-fire. Not being a politician myself, I have neither the privilege of a tent nor a loyal group of followers to help shield me from the bullets flying to and fro.

I would like to say that I don’t mind the attacks and criticisms, but I’d be lying. Like any normal person, I would much prefer to be praised by all my colleagues and friends. And trust me, it wouldn’t be hard: I would simply have to place myself full-square in the middle of one of the ideological extremes. If I’m half as smart as Quico says I am, I should be able to play that game very well. It’s not that I can’t. It’s that I choose not to. I prefer to take a stance that I believe in.

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  1. He’s right that ignoring Chavismo is a wrong approach. But it continues to happen, and now we’re witnessing a similar phenomena with Brexiteers and Trumpsters, who for whatever reason or another, were disgruntled with a system they felt had failed them. It is important to drown out the noise and understand the other side; otherwise we perpetuate the problem.

  2. Very interesting reply to a most unusual post by Quico. It is not the norm that two friends choose to air in public their disagreements on moral stances. I congratulate Rodriguez for not utilizing emotional arguments to defend himself and being able to argue his case in a very clinical manner. I believe that his not getting paid to work with the politically immoral UNASUR is a positive point in his favor. He did it for non-pecuniary reasons.
    The gist of Rodriguez’s argument is contained in this paragraph:
    ” This, in essence, is my problem with Quico’s argument. He believes it its morally wrong to give economic policy advice to the current government. I believe it is morally wrong to withhold it. This is not because I want to help the government. It is because I believe that fixing the Venezuelan economy would alleviate the sufferings and hardships of Venezuelans, and that goal for me is more important than any political objective”.
    In the defense of his position Rodriguez utilizes what he describes as a simil: Humanitarian Aid. He says that withholding economic policy advice to the Maduro narco-regime would be the same as to hold humanitarian aid to Venezuelans in an effort to accelerate its demise. It is clear that Rodriguez sincerely feels the example fits his case. I disagree with him.
    Reaching Venezuelans with humanitarian aid helps directly the population suffering the effect of a cruel and corrupt regime. Aiding the government with sound economic advice aids directly the regime to stay in power and would only help indirectly the people, provided the regime follows the advice faithfully and timely. Economic policy is a process that does not provide instant relief, as humanitarian aid would and, as a process, it could be applied selectively, as a means of staying in power without having to do all that has to be done.
    For economic advice to have some beneficial effect to the people we would have to wait longer than the people themselves should made to wait. Not only would we have to trust the regime and its intentions to do both the right things and do them right , but to wait for the policies to take hold, a time frame which is politically unacceptable. If Rodriguez’s advice was Economics 101, as he says, it is obvious that the regime could have applied it long time ago, without Rodriguez’s help.
    Therefore, what stands as substantial in Rodriguez’s move was its political symbolism, that of aiding a regime that has to be resisted and confronted with all our civic might. I believe this what Quico was talking about.
    I would have preferred not to see Rodriguez mixed up with that bunch.
    By the way, the Indonesian example Rodriguez mentions was not exactly as impersonal as he suggests. I was almost caught in that massacre but I managed to leave the country a few months before it exploded. As I remember it, It was a Muslim inspired reaction to an attempted communist coup to take over the government due to Sukarno’s frail health. The communists had killed many Kepala Kampung, the heads of the villages, in their attempt, usually Muslims. The massacre of communists was an ideological, religious and, even ethnic, event, as thousands of chinese businessmen, hated by the indonesians for their wealth, also fell victim of this tragedy. It was an affair that gave the opportunity to many Indonesians to settle personal grievances and satisfy xenophobic impulses.

    • Hi Gustavo,
      Thanks for your comment. You make an important point. However, I think I would disagree with the idea that the moral duty of providing humanitarian/policy assistance varies with the time lag over which this assistance’s effects are felt. If policy advice will alleviate suffering one year from now, I think it is still as important to give it as it would be to give humanitarian aid that we know will arrive one year from today. I also think that some of the economic policy changes recommended in the Unasur report would have had the immediate effect of improving Venezuelans’ living standards. Note also that you are assuming that granting economic policy advice would help the government stay in power, but that granting humanitarian aid would not. I am not sure that the answer is so clear cut; I could certainly visualize a scenario in which the arrival of humanitarian aid improves people’s perception of the current state of affairs and leads to a strengthening of the regime’s hold on power. My view is that, even if that were the case, we should advocate for the provision and acceptance of humanitarian aid.

  3. Mr. Rodriguez.

    Your very well written piece leave me with two questions:

    1. Why do you think ( and you have the right to think so) that humanitarian aid to “the people”(Venezuelans regardless of their ideology) is the same as economic aid to “the government”.

    2. What about the 2/3 of Venezuelans who want a change and the government that you are trying to help, keeps denying the opportunity to free elections? How invisibles are they? Is not democracy the rule of the government elected by the majorities, with respect to minorities?

    Finally, we are entitled in most countries in the world to do we our free time as we wish. Trust me not in Venezuela where my family spend their free time trying to get food. Why don’t do the same work and make your valuable work available to ALL Venezuelans? Even more, create a “Change for dummies” type of documents that could be understand by those Chavistas that you think are invisible, and by many of us in the other front?

    • Hi Santiago,
      1. Because for me what is relevant is whether they improve people’s lives and alleviate suffering. If policy assistance to the government turns into better policies, then it has the same effect on people’s well-being as direct assistance.
      2. I agree and favor an electoral resolution to Venezuela’s crisis. I believe that Venezuela’s government should represent the majority, and the current government is clearly not doing that. My plea is to try to forge a national project that goes beyond the current polarization and that represents the aspirations of both chavistas and non-chavistas. I want neither the 1/3 nor the 2/3 to be invisible.

      • Francisco,

        Thanks for taking the time to reply.

        As you know this “government” goal is not to alleviate people’s suffering. It’s just to hold power as long as it can. In any other “normal” or less “revolutionary” government your argument holds.

  4. Quico deals in the war of rhetoric. But you cant beat Chavez in a poor country. Thats why he rarely writes the big pieces anymore.

    We need to realize what battles weve lost before we can think of what winning now means. W.E.I.R.D. is just not an option yet.

  5. In times of war many legitimate moral considerations are set aside and innocents allowed to suffer because of the perceived overriding need to vanquish an enemy bent on the moral destruction of ones country……, this is not to say that those suspended moral concerns are deemed invalid but that when the imperatives of war create situation where war an only be won by engaging in actions or omissions which are morally reprehensible in ordinary times of peace they are condoned so as not to put at the risk ‘the greater good’ attained by the winning of that war….!!

    There are many situations where a lesser evil must be tolerated to preserve and ensure a greater good ……, and yet what is faced is a human situation where all choices open to the person are tainted with undesirable consequences and the person must choose which is most relevant and important in the long term. Was the dropping of atomic weapons on japan resulting in the death of hundred of thousands of innocent lives morally praiseworthy ..of course not and yet President Truman by having it done saved the loss of some 2.4 million lives if those had not forced the Japanese Empire to sue for peace…..

    These irreductably irresoluble dilemmas present us with conflicting answers all of which can be reasoned as correct but only one of which can be acted upon so that when a choice is made to realize one of them and forego the others , there is no unequivocal right answer to be had…..

    Mr Rodriguez is facing one such dilemma , if he helps the govt sort out its financial difficulties he is aiding and abetting an enemy which continuance in power will only result in a much bigger and lasting harm to the life of Venezuelans , if on the other hand he refuses such aid of his considerable talents then he is making things so much worse to his fellow countrymen !!

    Unfortunately Venezuela is now in the throes of a War which pits the Regime against its people to subject them to indefinite domination …and there is nothing which Mr Rodriguez can do to avoid falling in one of the the horns of this unescapable dilemma…!!

    • Hi Bill,
      I agree with you. This is the key moral dilemma. And this is why it is so useful to have discussions like this on sites like Caracas Chronicles that can help us grapple with the different perspectives on decisions with profound ethical and human implications.

  6. You win clearly and decisively the argument about your attempt to provide economic advice to your government: it clearly was not immoral. Your attempt to sidestep Quico’s claim that the Chavistas have turned your country into a dystopian nightmare fails. You assert it doesn’t matter whether that statement is true or false because an accomodation with the Chavistas is the only way forward. I respectfully disagree. It does matter to millions of Venezuelans who want two things, food on the table and the opportunity to realize their potential. It particularly matters when the folks who bring about a dystopian nightmare totally reject accomodation and the democratic process. By all accounts you have prospered and can practice your profession abroad, perhaps explaining your back of the hand dismissal of Quico’s claim.

    • Hi William,
      I agree that it matters a great deal. But it is not the only thing that matters about that statement. My point is that this type of characterization of the regime makes chavistas invisible, negates their humanity and increases the risks of an Indonesia-like scenario where we descend into much worse violence than we have yet to imagine. I didn’t say I disagreed with the statement. I said that it scared me.

  7. That people exist who voted for Chávez in no way makes the chavista GOVERNMENT less reprehensible, nor their corruption more justifiable, nor their human right abuses any less sordid, nor their oppression any less authoritarian.

    Absolutely yes, the Venezuelan GOVERNMENT is full of “people who’ve destroyed the hopes and aspirations of a whole generation of Venezuelans and turned our country into a goddamn dystopian nightmare.” The damaging hold on power of that “ruling clique,” which you brush off as irrelevant, has had very real effects on very real people, including the ones you cite as “invisible” (and the people eating the garbage outside my building as I write this).

    If you’re so concerned about chavistas and preventing “invisible otherness,” about understanding the “ideas, aspirations, and concept of the country that they want,” then your summer should’ve been spent in a western Caracas slum instead of Miraflores.

    You chose to devote this well-written piece to humanizing chavismo and rationalizing your involvement with the government, while deflecting from the very issue that you could’ve done yourself a big favor by addressing once and for all: Torino Capital and Venezuelan debt.

    • Hi Emiliana,
      I did not take on the issues regarding Torino and Venezuelan debt because I had no major disagreement with Quico’s article on this. Quico took a serious look at the conflict of interest argument, and concluded that there wasn’t much of a case that it existed. As I said to him – and as he quotes in the article – I agree that potential conflicts of interest should be disclosed and that those hearing me or any private-sector economist speak should take into account that information when they asses one’s statements. I also agree with him that the fact that this criticisms is so often leveled at me but so seldom leveled against other private sector economists who are similarly engaged in public debate suggests that the real underlying criticism has to do with other factors, such as my willingness to collaborate on the Unasur mission. That’s why I centered my response on this point.

      • I think when people are talking about a conflict of interest, what they are really concerned about is something different, and less nefarious, which is simply, the question of your interest, that is to say, your business interest, and whether that factors into your choice in advising the Maduro regime through the UNASUR mission and the like.

        As a person who is always delighted when his moral choices align with his pecuniary interest, I can say that the person making the choice is not always the best judge of what motive is really driving things, and that the tendency to cast our motives in the most positive and selfless light is a quality most normal people share. When we cast such choices of action as morally superior to those who choose the opposite decision (i.e. to not advise the dictatorship), and indicative of a blind spot to the suffering of others, well, I can understand why that might get people upset. It gave me a jolt.

        In any event, the question of what one might gain personally from a particular action, or how it might serve his business to have the ear of the Maduro regime – if at all- does not seem to me to be irrelevant to the issue of the choices we make.

        As for the decisions of other economists and the like- sure, other economists offer public opinions that coincide with their business interests. I would not expect the chief economist of Ford to recommend we all buy Toyotas. But other economists do not always make the argument that those opinions are the product of a superior moral obligation, and that those who make a different choice are making the less fortunate invisible, contributing to dangerous social division, and so forth. Those kinds of claims attract a greater level of scrutiny, and fairly so I think.

  8. “Yet I fail to see how it can be morally right to advocate for humanitarian aid to Venezuela but morally wrong to grant economic policy assistance to the government. ”

    Let me help you with this. The government of a country is not identical with the people who live in that country.

    A person who needs medicine on an urgent basis is an INDIVIDUAL. Helping individuals in direct and immediate need is a deeply-grounded moral principle.

    By providing medical or other aid directly to individuals, donors AVOID conferring a simultaneous benefit on the government. The government cannot use direct foreign aid to people in need as an argument that it deserves to remain in power. Policy advice to that government, especially if quite reasonable, does confer a benefit on that government, and allows that government to point to improvements as resulting from its policies.

    • Hi Jeffry,
      This may be right. Although it is not hard for me to visualize a scenario in which humanitarian aid leads to an improvement of perceptions of economic conditions and thus strengthens the government politically. However, my position is that if either the humanitarian or policy assistance can help alleviate people’s suffering, then that by itself establishes a morally compelling case to carry it out, regardless of whether it helps the government politically.

  9. Dear Mr. Rodriguez,

    I can understand your point with regards to your advocacy effort with the UNASUR mission. A sense of duty towards one’s own society can, in our minds, trump the ethical dilemma of helping somebody with patently bad intentions. It’s a very reassuring way to feel, even more when you realize those people didn’t listen to your advice, so
    1) your ideas won’t be used to help them politically; and
    2) you are scot-free if the venezuelan economy continues to go to hell, because “they didn’t listen to what I recommended”.

    All good right? Not at all.

    Your resasoning olympically ignores that you are currently associated with a financial institution (and that you probably were committed to said institution during your garden leave, as your wording implies) whose current business model, in essence, is sustained because of the political/economic status quo.

    If the Maduro administration steps down, debt service would probably (in my view) be suspended by a new government in the midst of a restructuring, friendly or not. Venny stops being the distressed (yet solvent) issuer it is now and becomes a defaulted issuer, with a much smaller investor base (and hence a smaller flow of ‘thank you trades’ and ‘soft dollars’ for dedicated market players).

    We have ample reason to believe (starting with your own articles at the aforementioned institution) that the current economic collapse is a direct consequence of the government’s disastrous public finances, hence the need for a radical change in economic policy as a necessary condition for growth.

    But we aren’t getting any, and even if your UNASUR proposal went through, there wouldn’t be any. You recklessly and stubbornly argue for the same ‘willingness to pay at all costs’ doctrine that has led Venezuela to a dystopian nightmare we are suffering in every day.

    Based on IMF’s debt sustainability framework for countries with access to the global capital markets, a fundamental condition to assess whether a debt restructuring is necessary has been met: the government’s so deep into debt that it has literally walked away from all of its stated policy objectives. This isn’t a government that is actively looking to improve literacy and public health; nor a government that seeks to develop a national industry. It’s definitely NOT a government that acts as if it really cares about the nation it rules upon. It has become instead a machine of debt-building and debt-paying, with oil revenues increasingly and worringly tied to servicing an ever-growing, absurdly-priced pile of liabilities in detriment of all of society.

    I think that your current position and ideological stance has blocked this fundamental truth from ringing in your mind because you know it’s true, deep down. We can argue day at night about the risks, costs, benefits etc of defaulting versus non-defaulting; in the end, this misses the point entirely.

    The point is that this government has long ago stopped helping its citizens, and advocating to keep it alive in its current form and practice is at best incredibly naîve, and at worst, shameless and deplorable collaborationism that borders on complicity.

    • Hi Daniel,
      Thanks for your comment. I regularly read your articles in Caracas Chronicles with interest and think they provide very valuable insight for understanding of Venezuela’s economy and finances. I believe in fact that you are not in a dissimilar position to mine, as you work as a trader for a fund that is devoted to investment in Venezuelan debt. I believe that these potential conflicts of interest need to be disclosed – as you and I have done – and that readers should take them into account in evaluating our arguments.
      I believe it is wrong to infer that a brokerage like Torino would lose out in a default. In fact, I think that it would benefit very much from an orderly restructuring which brought debt down to levels that the market sees as sustainable. I agree and have said repeatedly that the current policy mix is unsustainable. I have definitely not argued for willingness to pay at all costs. I have argued in favor of Venezuela changing its policies and believe that if it does so, then a default would not be necessary.

  10. I think there are a few issues with the assumptions presented here. One is that chavismo (not the masses, but the governing clique) is comfortably consolidated in power. They do not need Mr. Rodriguez advice to do so. They have taken the Castro’s, Mugabe’s, Pinochet’s and other’s to do so.

    The thing is that Mr. Rodriguez is willing to collaborate with known corrupt, murderous, kidnapping, drug dealing officials. Let me rephrase that. It isn’t that Rodriguez is willing to, he seems like is eager to. And that’s is morally reprehensible. And at best, incredibly naive.

    In Ethiopia, famine didn’t occur because of drought. They occurred because of terrible bureaucrats and an authoritarian that prevented the population not only from access to goods, but to be able to remove those bureaucrats out of office.

    The most effective course of action for Venezuelans, (and this is something that I hope is evident to Mr. Rodriguez now given that the chavista clique has ignored his advice over and over) is to find the means to remove these bureaucrats out of office. We have to publicly denounce them, we have to stop funding them, because as I am sure Mr. Rodriguez is aware, the supply chains for medicines and staples are broken down, but the repression machinery is lubed and over-funded.

  11. Francisco, I think the exchange between Francisco Toro and yourself missed most of the actual controversies surrounding you. So for your sake and for readers of this blog, I will spell them out here.

    (1) Lobbying vs. Describing, Disclosure

    A Chief Economist is meant to describe the market, find patterns trends, and tell clients about it so they can make good investments. You do this well, but you go far beyond. You actively lobby for policies in every venue that will host you, and incidentally, all the policies you recommend benefit bondholders. Normally, that wouldn’t be a problem, because the public would know you are a Wall Street guy lobbying for bondholder interests would ignore your advice. But–and here is the important point–nobody knows what Torino capital is, what it does, or how it depends on non-default. It’s like saying you work for “Atlas Capital” or “John Street Capital”… meaningless for el Venezolano de a pie. That means you can basically lobby on national television without 99.99% of people knowing that you’re lobbying. That’s bad. It’s a serious ethics conflict. And it’s especially serious because you have independent academic prestige and credibility (Hatvard PhD etc). The fact that Torino and its clients benefit from non-default is not prominently disclosed anywhere, and it should be. People deserve to know that you work for Wall Street and represent their interests. Failing to communicate that or putting the burden of figuring it out on the public is not acceptable.

    (2) UNASUR nonpublic information

    It’s difficult to imagine you were expected to come up with an economic recovery plan for UNSASUR without access to nonpublic information, such as GDP, balance of payments, and para-fiscal fund balances that haven’t been published in ages. If you saw those numbers, you have access to information that no other analyst on Wall Street has access to. It would be an unfair advantage. You would not be playing on a level playing field. And yes, FYI, many people suspect this of you.

    (3) Other nonpublic information

    This suspicion isn’t helped by the fact that you also appear to have access to other nonpublic information about Venezuela’s bonds. In one report, absurdly, you said that “PDVSA still has available for use most of the $1.5bn Rosneft loan signed last year”. How on earth can you claim to know that? That information was not disclosed in any press release, statement or public document at all! The only thing a reasonable person can be left to imagine is “bueno, llame a mi pana en la tesoreria de PDVSA y me conto, sabes?” And there are many other examples like this one, like when you hint about what is going on in the swap negotiations last year and it all basically comes true. How did you know???

    (4) Weak Disclosures

    When at Bank of America, your reports had an analyst certification and lots of fine print. Your Torino reports have a 6-sentence disclosure that says the report “is a product of the sales and trading desk and should not be considered research.” How can a reasonable observer be expected to believe that Torino’s reports, which have complex regressions and economic techniques, are somehow not research but somehow are a product of the sales and trading desk, even you are a professional researcher and not a salesman or a trader? Why are you/Torino sidestepping regulation about research reports? Are you/Torino careless or are you hiding something? Again, not helping yourself.

    (5) The Invsible Other

    In your post, you talk about the invisible other. How is this for an invisible other? In an interview, you suggested that the opposition-controlled National Assembly should authorize more government debt, which would help fund upcoming bond payments, in exchange for the release of political prisoners. As in: You are proposing a trade between human prisoners and measures to help pay Venezuela’s bonds. Would these prisoners count as invisible? What you are proposing is straight-up outrageous, especially coming from your position as a Wall Street lobbyist. This discredits any humanist claim about the “other” you make.

    Pana, the country doesn’t need this discussion right now. Wear the wall street hat and wear it kosher, or wear the politics/policy hat. But don’t do both. It’s wrong, it’s deceptive, and it’s killing your rep.

    • Hi Victorino,
      It is interesting that Quico began writing his piece trying to find evidence of these lobbying activities that you allude to, and he found no evidence of them. What I have done is nothing different from what many other economists, including many who work for the private sector, do regularly, including on this page: express my point of view about public policy decisions. Regarding the interview you cite, I did not propose an exchange of political prisoners for debt authorization. I described the ongoing negotiations, and said that this space for negotiation existed.

      • Here is a video of lobbying/advocating though implication.

        You say that if Venezuela stops paying bond debt, Venezuela’s dollar inflows could be “completely paralyzed” and that the country would “not have money” and that there would be “nothing on supermarket shelves”. I think you will agree with me that that is excessively strong language, not commensurate with the actual risks of defaulting. To me, that is advocacy through implication.

        Here is another

        Here you say “I think we should continue debt payments” and discredit arguments about the merits of not paying as “noise.” Notice how *should* is a normative verb. As in a claim about what ought to be. Not what is. Again, advocacy.

        It’s fine to make these claims ***if*** people know your institutional relationship to Torino capital and what it means. Otherwise, you are advocating without people knowing you may be looking after the good of bondholders and not the good of the country as a whole. That is not right in general, and from your position of academic prestige and reach/influence with government officials, it is even more problematic.

        Also, you did not reply anything re points (2) (3) and (4). That is probably wise of you to do. But please do keep them in mind. These perceptions are very damaging. Perhaps as damaging as the rest.

        • Thank you, Victorino. As I read both pieces I had an increasingly uncomfortable feeling that some of the real issues were being brushed to the side. I would not have had the knowledge or eloquence to pin it down so clearly, so I thank you for doing that – it gives me comfort to know that this is here for people to read and think about. Well done.

  12. “Never try to teach a pig to sing; it wastes your time and it annoys the pig.”
    ~Robert Heinlein

    I admire your attempts to teach the Maduro government how to govern. But I think your advice is going to land on deaf ears. They think they are smarter and better than you. And they will continue to screw things up.

    Sadly, they are smart enough to know that allowing direct outside aid makes them look incompetent. They are good at manipulating the masses. They learned well from their Soviet and Cuban teachers.

    So… at the end of the day, they aren’t going to take your advice. And they aren’t going to allow outside aid. We are witnessing a slow motion train wreck where the brakes and steering have been cut. And you are right. It is going to end badly. Perhaps like Indonesia or Rwanda.

    Best of luck my friend.

    • Do you really think it’s going to end like Indonesia? I don’t see that train wreck everybody keeps talking about, I see a slow ride to some sort of Petro-Cuba.

  13. I thought the same when i read Quico’s piece. We all want to help Venezuela no matter what. Wheter UNASUR or whatever, if we are invited to. A meeting we go and find out if we can help. The rest as theysay is history, whether it helps or not. But we all have ideas on how to improve something and not muchh power to do it. A lost opportunity!

  14. Mr. Rodríguez, I’m not an economist and I have zero knowledge of the intricacies and trappings of Torino’s maneuvering. But I live in Venezuela and I get to stare at this country’s ugly reality everyday. You can color your part in this however you want. It’s still bullshit. The fact stands that Venezuela’s regime is a criminal dictatorship, and you’ve been helping them for financial profit. Which means you’re an accomplice of criminals, and you’re in it strictly for the money.

    So, let’s cut the ideology crap, let’s stop the humanitarian shenanigans, and be clear about that, shall we? You’re not helping your people or this country. You’ve been giving this regime a lot of breathing room to do as they please. I don’t know if you’ve ever seen a line for food or people eating from the garbage, but maybe you should one of these days, so you can have a better idea of what you and your pals at Torino have really been supporting all this time, for the sake of your precious bonds.

  15. Many things to comment on, but I’ll start with two:

    1) Is there a limit to this equivalence between humanitarian aid and economic policy assistance? Or that equivalence always hold, no matter how repressive, corrupt and murderous the regime turns? I wonder if this equivalence always justifies working with these people. (And, yes, the people leading this government, who have a name, and are not a diffuse collective or group known as “chavismo”: Maduro, Cabello, Tareck, Reverol, etc; working *with them*). If the answer is that there is in fact a limit, a line where the equivalence breaks, where’s that line?

    2) When Francisco Rodriguez does rounds in the media, pushing the proposal that Venezuela must keep paying its foreign debt, without help from multilateral organizations, who’s talking then? The concerned citizen who penned this article, or the Chief Economist of Torino Capital, a firm whose clients have a financial interest in Venezuelan debt, and who want the country to keep paying no matter what? They are the same person, so there’s no way to separate the interests and incentives of the Francisco the Venezuelan economist, and Francisco the representative of Torino and their clients.

    Finally, when he proposes that the opposition trade with the government political prisoners for an approval of more foreign debt by the National Assembly, (as he did in a recent interview with Kon Zapata), who’s talking then? The concerned citizen, or the employee of a firm that would profit financially from such arrangement, and whose clients would benefit from the government being able to raise more debt to pay for the old debt?

    It’s hard to overlook the moral implications of a proposal to trade people for bonds, when it’s coming from someone who would profit from it.

    • Hi Pedro,
      1. This is definitely not an easy question to answer from an ethics viewpoint. However, I would say that the equivalence exists regardless of the regime. Because what should matter is the effect of the action on people’s lives. Economic policy improvements and humanitarian aid both make people’s lives better.
      2. I think it is incorrect to characterize my position as the argument that Venezuela should pay without help from IFIs. My argument has been that Venezuela should fix its policies, and that with adequate policies it does not need to default. Nor am I opposed to help from IFIs. I said in the past (at the beginning of the fall in oil prices) that IMF assistance was not necessary because the country could, given the correct policy mix at the time, address its key economic problems. The longer time goes by without policy corrections, the stronger that the case becomes for calling IFIs into the picture.
      3. Regarding the role of my opinion as Torino Chief Economist, all economists who work for the private sector have potential conflicts of interest. I do not think this means that they should abstain from participating in public debate. I do think that it means that we should disclose our private sector affiliations transparently so that people can weigh these against the quality of our arguments. I am far from being the only Venezuelan economist working in the financial sector and participates in the public policy debate.
      4. I did not propose an exchange of political prisoners for debt authorization. I described the ongoing negotiations, and said that this space for negotiation existed. Other private sector economists, however, have made the case for such an agreement (

      • Francisco,

        Thanks for your responses. Quick follow-up: you say that these negotiations are ongoing and you were only describing them, not advocating for them. To my knowledge, this is far from a known fact in the public sphere, and if true, the public should definitely be made aware.

        How do you know that debt-4-prisoners negotiations between the government and the opposition are ongoing? I may be missing some news report on the topic, so if you could clarify by sharing a link, that would be great. Thanks!

        • Sure. On January 21, facilitators proposed a 21-point document meant to re-start talks between the government and opposition. The document included points on political prisoners and National Assembly approval of debt. See My Konzapata interview, published on Jan 27, was essentially a comment on the possibility of negotiations around that agenda.

          • Francisco,

            Sorry for catching up late on this – was getting back from CCS on the same infamous Dynamic flight (I think they’re starting to get their act together a bit).

            Thanks for your response and the link. I see your point, but that was more a *proposal for* rather than the *result of* negotiations, correct? Didn’t the opposition say they wouldn’t sit down for negotiations right after the mediators came out with that proposal?

            Moreover, while the Konzapata interview quote indeed discusses that dialogue should address the issue of financing, I don’t see a reference to the UNASUR agenda or to any ongoing negotiations building from there. Maybe the reference just got lost in the Konzapata transcription? For clarity:

            “En este momento es riesgoso el no reconocimiento de la deuda externa. Es algo que está haciendo problemático el acceso a los mercados, porque los inversionistas temen que si la Oposición llega a gobernar podría no reconocer la deuda emitida por el actual gobierno y en particular desde el momento que se declara el desacato del Parlamento. Algunas decisiones deberían haber sido aprobadas por la Asamblea Nacional, como por ejemplo la Ley de Endeudamiento que fue aprobada por el Tribunal Supremo de Justicia. Ahí creo que lo importante es entender que puede existir una negociación en la cual la Oposición tenga esa carta de reconocer la deuda contraída por este Gobierno a cambio de concesiones en otras dimensiones. A la Oposición le importa el tema de los dirigentes políticos privados de libertad, el tema de las elecciones. De eso se trata una negociación. Creo efectivamente que el reto de los mediadores es impulsar el diálogo.”.

            It reads more like underscoring that the opposition should realize that they have leverage, and they should use it to trade debt for their electoral rights and freedoms. I don’t like the idea, but I also guess it could be argued for on the grounds of pragmatism?

            On a separate note, I noted in your responses above a slight change in tone in the discussion on multilateral participation and debt repayment. You used the term “Orderly restructuring” as opposed to “reprofiling”, as well as “The longer time goes by without policy corrections, the stronger that the case becomes for calling IFIs into the picture”. Am I wrong to read from this that you would today agree that calling the IMF is necessary, despite their possible request for “Private Sector Involvement” (Haircuts)? If so, I think some seemingly insalvable differences between Prof. Hausmann and yourself on the matter narrow drastically.

            Quite the Econ-*tubazo* for CC, if that is indeed the case!

            Thanks again and all the best!

  16. “But what we cannot do is ignore them.”

    You can’t tell them “oh, hey, you were right all this time along!” either, their principles and beliefs are inherently flawed, because they want to continue living in a model that exploits a part of the population so they can get free stuff, and they’ll do all sorts of mental gymnastics to justify and excuse their so called leaders.

    “For me, chavistas are infinitely more relevant than the governing clique. ”

    But that doesn’t change the fact that they must be told that they were wrong in voitng for Chávez before and now for Maduro, that they are wrong to celebrate everytime a business is seized by the regime or an oppositor protester is murdered by the death squads.

    The MUD leadership has been wrong in the fact that they wanted to avoid pointing Chávez or Castro as the source of all of chavismo’s evils, because that would “hurt the pride” of the chavistas.

    You might love your children, but that should not be an excuse to stop telling them what is wrong and what is good, regardless if that makes them hate you for it.


    “Pero no podemos ignorarlos”

    Tampoco se trata de decirles “¡Oh bueno, tú tuviste razón todo el tiempo!”, sus principios y creencias son falaces de forma inherente, porque quieren continuar viviendo en un modelo que explota una parte de la población para tener cosas gratis, y harán toda clase de gimnasia mental para justificar y excusar a sus susodichos líderes.

    “Para mí, los chavistas son más relevantes que la cúpula”

    Pero eso no cambia el hecho de que se les debe recordar que se equivocaron al votar por Chávez antes y por Maduro ahora, que están equivocados al celebrar cada vez que el régimen expropia un negocio o cuando un opositor que protestaba es asesinado por los escuadrones de la muerte rojos.

    El liderazgo de la MUD está equivocado en el hecho de que han querido evitar a como de lugar culpar a Chávez o Castro por ser la fuente de todos los males del chavismo, porque eso supuestamente “lastimaría el orgullo” de los chavistas.

    Puedes querer a tus hijos, pero eso no es excusa para dejar de decirles lo que está mal o bien, a pesar de que te puedan odiar por ello.

    • Hi Ullamog,
      I don’t disagree with you. I think that trying to convince people that they are wrong when you believe so is an essential part of democratic debate. My point is different: it is that we should not ignore nor forget the fact that there are a lot of Venezuelans that feel represented by chavismo.

      • Francisco,

        My estimation is that true believers in Chavismo make up about 10% of the population. The remainder who claim to be Chavista are people who are either Chavistas for convenience (benefiting from the regime in one way or another) or afraid to take a position against Chavismo for fear of losing their jobs, homes, or whatever. Of that 10%, many are so religiously dedicated that they cannot change. Their very identity is wrapped up in Chavismo. To reject it is the same as rejecting their own lives. Sad, but I cannot do anything about that.

        So, actually, yes we do need to ignore those who are represented by Chavismo. They have no right to enslave the rest of us to their delusions.

  17. Very, very sincerely, one should feel, as do I, extremely proud to be part of the CC commenters, after reading all the comments in this section, all excellent, well-reasoned, extremely well-expressed. One doesn’t recommend a quick fix to an addict, because all it may bring is, perhaps (even arguable), a temporary feeling of well-being, but at the cost of a very painful/often fatal future….

  18. I read the recommendations — they lack much and are very far from a comprehensive approach. And BTW, asset taxes are confiscation producing capital flight by those who you most need to invest in productive capacity in Vz.

    All that is by the way; without instituting the rule of law and eliminating violence, you have nothing.

  19. I said this in the previous post by F. Toro, and I’ll say it again here:

    It is NOT true that by providing economic advice to THIS government you are helping them to stay in power.

    This is so for at least two reasons:

    1.- They don’t really need the economy to improve in order to stay in power, at least not as long as they get enough money from selling oil to keep happy the only people that matters: The military (and maybe the colectivos).

    2.- Saying that an improved economy helps the government stay in power only makes sense in the context of elections, which the government seems determined to delay indefinitely. But should there be elections, the government has caused so much harm to the people that at this point no improvement in the economy can help them win an election ever again.

  20. With all due respect (in consideration of your friendship with Quico), your arguments are not so much rationale as rationalization. I believe that you are both legitimizing and “providing aid and comfort” to a dictatorial regime which is oppressing (not to say killing) its citizens. I am sure that on some level, you know this. However, your self-interests have led you to create an elaborate moral rationalization for your actions. I implore you to delve deeper and consider your motivations. You are uniquely positioned to “do the right thing” in a way that would have a real positive impact.

    I would implore anyone to avoid doing any sort of business with the regime (including buying their bonds) for the same reason that many companies and individuals refused to do business with the apartheid regime of South Africa. At some point, one can no longer continue doing “business as usual” with a criminal regime, without becoming complicit in their crimes.

    • Hi Roy,
      While I think we have fundamentally different views on this issue, I respect your position. I think there is a moral case to be made for refusing to do any business with certain regimes. I suggest, however, that you take a look at David Smilde’s testimony to the Senate hearings on Venezuela. He makes a very strong case that these sanctions are often ineffective and counterproductive.

      • Francisco,

        Yes, our views are “fundamentally different”. Mine are born of living in Venezuela and seeing the gradual descent into poverty and desperation on a daily basis. Mine are born of knowing personally, people who have been murdered and/or had family members murdered. Mine are born of personally knowing people whose friends or family are currently in jail (without trial!) for expressing their opinions.

        I am not Venezuelan by berth, as you are. However, I suspect that I understand the current experience of being a Venezuelan far better than you do. I doubt that you have ever stood in line to buy bread. I doubt that you have ever spent an entire day going from pharmacy to pharmacy to fill a doctor’s prescription. I could go on… If you have not lived in Venezuela over the last ten years, you simply do not know. And, no… business trips and family visits don’t count. I am talking about experiencing Venezuelan daily survival. The same thing applies to David Smilde. This is not an ivory tower thought experiment. This is not academic theory. This is about real people suffering and dying every day.

        And, Francisco, even so, Venezuelans are not asking you to help them. All they are asking you is to stop helping the regime that is oppressing them. I am sorry, I cannot be emotionally detached about this. But then, as a Venezuelan, neither should you.

      • OOOps, Smilde. He has been a consistent defender of the Chavez regime for deep seated ideological reasons that have defeated consistently his attempts at being objective. His arguments in Congress were far from strong and mimic the regime’s arguments about intervention. Sanctioning corrupt members of the Venezuelan regime are a very effective way to fight for democracy in the region and give encouragement to Venezuelans who feel abandoned by other countries. Who can argue that sanctioning El Aissami is counter productive?

  21. There are a number of fundamental assumptions in these arguments, discussions, and responses that make it all irrelevant.

    They assume that the current Venezuelan government:

    1. Cares about the economy
    2. Wants to do something proactively to improve the economy
    3. Cares about the people of Venezuela and recognizes their suffering
    4. Believes in some form of democracy and market economy
    5. Believes that they need expert advice on economic and political actions

    It seems that the entire world is trying to give them advice not just Francisco Rodriguez. Each actor has their own personal agenda …

    Bottom line is the dictator government of thugs just doesn’t care!

    The only thing that this government wants is power and money (thru corruption) and to continuing the status quo as long as possible. When the money runs out, they will just run and hide someplace with their offshore billions.

    • Hi Gringo del Norte,
      You may be right. If so, the key criticism of what I did is that I wasted my time. Nevertheless, I still think it was worth trying.

  22. Ultimately the regime decided to ignore Unasurs recommendations , blightedly worsening an already impossible situation , by doing this they showed that they did not deserve FRods expert assistance (even if it was given in good faith with the idea of lessening the countrys suffering ) and moreover that in actual fact Ricardo Haussman is right: the only course open to scape the crisis passes thru a change in regime , anything less and you are achieving nothing…… !!

    Lets get one thing clear , whatever FRod does , its not going to bring in any fresh money to the Regime , no one is prepared to risk lending it any significant amount of money , at most what it can do is stave off the insolvency of Pdvsa or the Republic until such time ( nobody knows when) as they are in better position to cope with their debt obligations …..!!, more probably it will only buy it more time before it faces total financial collapse ..

    Meantime I ask myself are there no sane people inside Chavismo who would be willing to accept Mr FRods recommendations ( assuming they are what they country needs) , are they ALL so blind to reason that none of them can see the advantages that accrue from following his suggestions ?? That is scary !!

    • Hi Bill,
      I have asked myself the same questions. I believe that there was significant support in the government for a change of polices. However, the decision was ultimately Maduro’s.

      • Thanks Francisco , I find that somehow heartening , From friends with access to inside the whale I got at different times the message , Maduro has several times been presented with proposals which could have prevented or improved our current situation , with ‘sensible’ proposals which had a measure of inside support but always he shot them down ……., They even tell me that many among them treat the so called economic war as something unworthy of notice or attention… , I dream of there being a group of Chavista leaders who are reachable using rational argument !! Except one never gets to see them!

  23. “…in 2002, Chávez was at an all -time low in approval ratings…”

    Chavez developed strong connections with the people using the money of the present and the future. He destroyed the country ensuring (ironically) that half of the country would love him forever (living like they are today!!!). The country was looted in exchanged of millions de televisores y lavadoras.

    And that’s what happened since 2003: he was not going to win another election, so he decided to squeeze all the money to avoid such a fate. It happened gradually till basically no more money was invested in public infrastructure around 2007-2008 (only an arepera socialista and some bird cages de la misión vivienda were opened since then), he used inflation to shrink the salaries, and then asked more and more money through debts and bonds and then selling all the country’s assets, no matter if the oil prices were above $100.

    Chavismo was construed on the ruins of a country, the suffering of millions for the greatness of a single person. And basically that’s the lesson his “sons” learnt the best.

  24. This exchange between misters Toro and Rodriguez is interesting and informative. I’d agree with the Wall Street Guy were he not a Wall Street Guy – sincere, disinterested and useful advice that would result in less hunger and more medicines to save lives and ease pain for the Venezuelan people would have to be a good thing.

    The government doesn’t seem to need to be told that they must satisfy Torino Capital and its clients come hell or high water. Kids fainting from hunger in their classrooms be damned, these bloodsuckers must get theirs!

    I’ve just about lost hope that my relatives in Venezuela will ever see tranquility again in their lives. There was a time not so long ago when Venezuela was considered the world’s happiest country.

    Oh, and no one has ever explained to me why there shouldn’t be thorough transparent audits both of the foreign debt and CADIVI dollars, the uses they’ve been put to and the wealth and properties of those who’ve been blessed.

  25. “Bottom line is the dictator government of thugs just doesn’t care!

    The only thing that this government wants is power and money (thru corruption) and to continuing the status quo as long as possible. When the money runs out, they will just run and hide someplace with their offshore billions.”

    Correct. They are just a bunch of thieves, each stealing enough for an early, luxurious retirement with the entire family. It’s much more about greed and thievery than ineptitude. A highschool kid could run the country much better, it ain’t rocket science.. Economists dream that they could “teach” such a corrupt government the better way to run the country.. when all they need s Police and bigger jails to send all the crooked politicians. Since there’s total impunity, no punishment, they all steal.

    Forget about fancy economic theories, all Venezuela needs is less corruption, and more education. That and severe punishment for any crime, starting with embezzlement. Then Of Course, you make some adjustments, no exchange controls, no ‘precio justo, and let good old Capitalism do its thing. If people feel safe, protected by police, they would get right back to work, instead of leaving the country first chance they get. (As most of the writers and readers of these blog did). Venezuela’s massive brain-drain is close to 2 million people, usually the best, better educated professionals. Gone, never to return. So what’s left behind are mostly thieves, crooks, and not very educated. So the pilferage continues at record levels, the economy continues to sink, crime and hunger everywhere, no one produces anything.

    Police, jail and education. That’s all. Forget about magic economic tricks from a college book..

  26. This “debate” has all the marks of a PR stunt. I can’t shake the impression that both pieces were carefully orchestrated before publishing them, there are just to many signs: the inexplicable mentions of the wife, the ode to friendship, the contrast between the bad-cop tone of Quico’s piece and the understanding tone of FRod piece. I’m betting FRod has been offered a ministerial position by one of the “presidenciables” and he’s prepping to follow on his father footsteps (in Quico’s words: ” a deep-down, to-the-bone conviction that his name will end up inscribed in Venezuela’s history books”) by first cleaning his name and reputation.

    On the other hand, let me just add that, at this point, no one is judging chavismo by its ideas, whatever they may, but by its actions. Every debate of this sort should start with the recognition that there is a causal link between chavismo’s ideology and its actual political behavior.

  27. I have no problem with you giving economic advice to Maduro’s regime, I mean, Friedman did the same with Pinochet and I’m not saying he did wrong. My problem is with you (or anyone for the matter) advocating to maintain the currency exchange control even if it is using one single fixed rate. I mean, seriously, what’s wrong with you? There’s no halfway approach on this matter, you’re either in favor of this brutal government control destroying the country or you are not.

    • Hi Carlos,
      I have repeatedly recommended that Venezuela should lift exchange controls and have a floating and fully convertible exchange rate. I agree with you 100%

  28. People talk a lot about Pinochet and even Perez Jimenez. But when you look at the facts, these 2 “monsters” were not as bad for their country as they seem.

    Arguably, thanks to Pinochet, Chile fixed a terrible economy and became what it is today, saving it from becoming another Cuba with comunism. Sure, the guy killed and tortured some people, but compare that to Cuba or Venezuela’s deaths per month today.

    MPJ was no angel either, but in just 5 years he built more infrastructure than Chavismo’s criminal regime has in 18 years. Ten or 20 times more. Yes, it was a dictatorship, but so is Chavismo, except much worse. But the was unprecedented economic prosperity, security in the streets, little corruption, virtually no crime.

    Makes me wonder sometimes what is worse for our messed-up country: a freaking dictatorship like MPJ, or a far more deadly and corrupt ‘democracy’ like we’ve had since. I sure believe no MUD will fix Venezuela’s deep, deep problems, crime and economy. Sometimes the only cure is Mano Dura.

    Or some Capriles can try to rescue the economy and control crime.. Good luck.

  29. I would understand you helping chavistas overcome the crisis, helping out with a charity for example. The problem is that you weren’t working for the people. You wrote that report for the government. If they had listened to you no one actually believes they would have turned the country around. As long as a gang of power hungry, corrupt drug dealers rules the country we will not move forward. What you could have done is given the economy some degree of stability and allowed them to stay in power for much longer. 3 hour lines for bread instead of 5 hour lines but for decades. That is not a solution…

  30. In the chaos following a regime change from a destructive and oppresive Government its not the life of the grassroot supporters, which is threatened, but that of the leaders high up in the hierarchy. At least thats what happened in Eastern Europe after the fall of communism. Ceauscescu was killed. Even Honnecker had to hide in the house of a priest for some time, while the middle ranks like stasi or securitate officers often landed management jobs in the post communism era, cause they were the ones who had recent experience in leadership and stuff. I find the Indonesian case very implausible in the current context of Venezuela. As Gustavo Coronel pointed out, there were other issues, which explained the violence against grassroot supporters of the old regime in Indonesia.

    I can’t understand how someone who allegedly cares for the future of his country earns money by marketing bonds of an obviously irresponsible Government, which obligates future generations of his “own” people to toxic interest payments.

  31. I just love this entire debate and the back and forth between authors and various participants. It is also very unfortunate that some people keep bringing down the level of the discussion due to personal attacks and insults due to political stances, failing to address the issues in question.

    I would like someone to mention a recent case where taking anti-economical and/or military actions towards a totalitarian government has worked out well for the majority of the population. A few examples: Cuba, Lybia, Irak and Iran. How did those go? Basically, what a large segment of the readers, authors and commentators here are indirectly advocating is some sort of violent action or mechanism that somehow ends up taking down the government. This under the assumption that the entire problem is the government, which is an extremely naive perception of the situation because reality is much more complex than that. It is obvious that the government is to blame, but just seating and waiting is not an option. Nor is it not recommending sound policy because some people perceive this as helping the government. How can just proposing economic policy that makes sense for the entire population be spinned in such a way that it supposed to actually be bad for the population? I struggle to come up with a logical explanation to this. In the same fashion that paying the bonds helps the flows of money in and out remain undisrupted and so forth and so forth.

    The majority that advocates that the people (whether it is an economist, a politician, a store owner, etc.) should just sit down and wait, or that the government should default, are very likely to be the same people that advocated that taking the government down at all cost has always been the best option. Including oil strikes, not going to congress elections, etc. etc. And where has that taken the country? But they will argue again: it is not because of us that we are here, it is 100% the government’s fault, etc. etc. But reality is much more complex than that.

    I have asked the question here many times and no one has given a simple answer to it: how are Venezuelans with almost no purchasing power going to afford anything at real prices going forward? And the majority has no answer because they are stuck in the short term timeframe and the basic responses. The truth is that there are no shortcuts to get out of this situation and you have to bite the bullet sooner or later, and better sooner rather than later. You have to implement sound economic policy, and that better gets started sooner rather than later. The population needs to be reeducated, and that better gets started sooner rather than later, etc. etc. And many people attack Venezuelans abroad (including FRod in some of these comments) mentioning that it is easy to make all this comments while living abroad and not being in Caracas; to those I would like to ask: have you been to Lybia recently?

  32. Creo que el post de F. Rodríguez no va al núcleo del tema: ¿puede haber un conflicto de intereses cuando una persona asesora a tenedores de bonos y, a la vez, asesora a un Gobierno que ha emitido bonos que están en manos de esos tenedores de bonos que son sus clientes?
    Pienso que tal es la cuestión que aquí se plantea. En el caso concreto, y de lo que se deriva de la información disponible, pudiera considerarse que quizá desde el punto de vista legal no hay tal conflicto. Pero más allá de ello, es muy posible que la independencia de F. Rodríguez esté cuestionada en este asunto. Aunque entiendo que el informe dado a UNASUR no es público, es muy probable que en el informe haya alguna referencia a si Venezuela debe o no pagar tales bonos y bajo cuáles condiciones. Y es aquí donde el conflicto de intereses puede generarse: en el caso específico de F. Rodríguez, su opinión al respecto se puede ver directamente influenciada por el hecho de que asesora a tenedores de esos bonos.
    Creo que, más allá de la actual discusión, este es un problema que se pudiera plantear luego más adelante: muchos funcionarios -electos y no electos- van a presentar conflictos de intereses, porque han representado a clientes nacionales e internacionales que se verán impactados por las decisiones del Gobierno. Ese riesgo va a ser particularmente importante, por ejemplo, en el caso de los abogados.
    F. Rodríguez no va al núcleo del asunto: intenta cierta victimización, y hacen comparaciones de las situaciones totalmente fuera de lugar.
    Un economista que lidere un plan de reformas con un mínimo de éxito
    debe contar con credibilidad interna: quizá F. Rodríguez no vaya a cumplir con ese requisito fundamental.

  33. Well, the original post by Toro is a travesty of piece that smell collusion. Beside describing Toro´s bromance with FR, and how his amoral brand of brightness causes him a boner, the piece is just lazy disingenuous face-washing crap that adds nothing. It is the old tactic of admitting a misdemeanor to divert attention from the real crime.

    It´s not Unasur, nor a generic interest conflict. Anyone wanting to review good reasons to scorn Franky´s recent actions should have started with the relationship of the Sierra-Piedrahita duo with the Ramírez-Dieguito Salazar ensemble, and from there connect the dots straight forward to the chavista policy choices and the people eating from the fucking trash cans all over Venezuela.

    It´s not anonymous investors behind Torino, they are the very same ones that choose to cause this tragedy and the ones paying FR salary. FR can try to avoid the issue in his piece, but the OFAC probably won´t.

    • Cutting to the bone. When trading/investing in bonds, it always helps to have an inside track, particularly one outside the scrutiny of the SEC (the no-man’s land of Venezuela).

  34. If the govt refuses to do anything rational to improve things then the first step has to be to take the govt down with whatever means will work most effectively , unless you take this first step nothing can be done to rescue the country ….., the second step then is finding what will work to rescue the country from the morass of its current miseries , this is very difficult and there is no certainty about all the measures and policies which will ultimately prove most effective but they have to be attempted and tried one after the other and discarded if they fail , the problem we know has deep cultural roots but unless you tackle them you dont even have a chance of getting anywhere, you dont look at the challenges as unsurmountable because then you give up and you dont even have a chance of getting out of the hole, the third problem is that while a course is found to get out of the hole lots of people are going to be discomfited as they will want inmmediate magical and definitive solutions which are impossible , so a method must be used that allows the trial and errors measures to be carried thru without the govt and regime being toppled by popular resistance….!! its a three step process , each involving the making of calculated gambles and the possibility of partial failures …..!!

    What Dr FRods experience tells us , what it teaches us is that the regime is incorrigible and thus that Dr Haussmans suggestion is the most practical , get it down and then start work on rebuilding the country on a new basis … and lets not be frightened of the drastic thinking and action such plan demands , the course is clear !!

  35. Francisco, te escribire como anitiguo colega y en castellano. Me considero un amigo tuyo, a pesar del tiempo sin conversar contigo. Me permito utilizar tu definicion de amistad verdadera para decirte, que no es correcta ni defendible tu posicion. Sabes claramente que este regimen se ha convertido en en un problema etico y moral fundamental. Ayudar a un necesitado es algo loable, pero no así colaborar para mantener un estado de cosas que requieren cambios fundamentales. este regimen debe irse en bien del pais porque se evidencia fundamentalmente que es un estado fallido.
    Te tuvieron como director de la OAEF, donde dictaste cátedra sobre lo que se debe hacer. Tuve en ese entonces el privilegio de colaborar contigo y recuerdo nuestras conversaciones técnicas en equipo. El regimen chavista tuvo el beneficio de la experiencia y la información, sobre lo que no debe hacerse. Se asumió en ese entonces la buena fe , pero tantos anos para mantenerse en el error solo permite concluir que este regimen convirtió al país en un estado fallido para perpetuarse en el poder, no por ignorancia. Te pide tu colaboración por mala fe y falta de escrúpulos.
    Tu colaboración en UNASUR no es vista con simpatía en consideración a tu persona. Tu difunto padre te habtria dicho que tuviste tiempo para hacerte escuchar cuando fuiste director de la OAE. Es mas eficiente y seguro buscar diamantes en una mina que en una cloaca. Aplica el principio del trader donde la opinion publica es como el mercado, te arrollara si la contrarias Ese s el principio fundamental al cual no podras sustraerte.

  36. To the comment of accepting to misdemeanour to avoid pointing a light on a crime!…

    The cold headed constructive responses of the author and all the hard worked reputation and PR fails me when he forgets to mention that it was chavismo who first did systematically promote and executed a campaign of dehumanization of everyone not chavista, well before the tide of the economy turned against it.

    It was chavismo who institutes political apartheid and the use of escuálido and other newspeak against the others.

    It was chavismo who destroyed a professional NOC and every other state institution, it was chavismo who promoted systematic corruption in the military ranks (plan Bolivar 2000!) and who would send home or discharge any one not in the take or opposing the anarchy.

    Our society has a short memory, I hope some of us do not.


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