From an economic standpoint, 2018 looks grim, with a government that refuses to change course. Meanwhile, the National Assembly’s Finance Committee has a plan and, according to lawmaker Ángel Alvarado, the drive to rescue Venezuela.

“I don’t see options for economic change without regime change,” says lawmaker Ángel Alvarado, who represents Petare neighborhood, Sucre municipality, in the National Assembly (AN). He’s an economist from the Andrés Bello Catholic University with a master’s degree in Statistics from the Simón Bolívar University.

The parliamentary year is about to start and, with the usual judicial obstacles, there’s much uncertainty on whether the opposition majority will be able to do much. After four straight years of economic recession, in the face of a 2018 that promises to be far worse, Caracas Chronicles sat with lawmaker Alvarado, a key spokesman for the Finance Committee, to figure out the role that the opposition majority will play in the fight to protect public finances from total collapse.

“They couldn’t sidestep the Assembly”

Limiting the government’s capacity to issue new debt has been one of the AN’s most effective efforts. Knowing that the government required Parliament’s approval to make the nation get in debt (even more), on May 30, 2017, the National Assembly spoke against the sale of PDVSA 22 Bonds to Goldman Sachs Asset Management, for a price 30% below the market price.

I don’t see options for economic change without regime change.

“These warnings have earned us the support and respect of the global financial community, along with more than 40 countries. On the session held in August 12, 2017 (the ANC had just been installed) we were accompanied by 12 ambassadors from the main countries of the world. They couldn’t sidestep the Assembly, despite rulings 155 and 156 issued by the TSJ and the installation of the fraudulent ANC.”

“In order to issue new debt, we must take a new political course. I don’t see options for economic change without regime change. As long as I sit in the hemiciclo, I’ll do my best to prevent Maduro from issuing new debt without the democratic majority’s approval.”

And that includes the Petro. According to Alvarado, the Petro is “noise”, because “a government that is incapable of managing one currency could not possibly manage a second one.” The cryptocurrency, which is backed by part of the oil reserves of the Orinoco Oil Strip, as per a presidential decree, would be “an illegal currency, because commodities can’t be sold without the AN’s approval.”

“Corruption is something we have to tackle with a plan to strengthen the institutions”

The ruckus caused by negotiations in the Dominican Republic and the apparent collapse of the opposition coalition has fueled rumors that some opposition leaders might have ties to the regime. Many believe that the monster of corruption is at home with the opposition caucus and in this regard, lawmaker Alvarado says they’re “working on an anti-corruption strategy that starts by: i) determining the amount of money that the regime and its cronies have embezzled (…) ii) exploring the legal options to return the embezzled funds to the country.”

“Corruption is something we have to tackle with a plan to strengthen the institutions. First, we must change the country’s economic structure, forcing the State to stop working like a company that subsidizes the interests of a few and buys people’s loyalty, and to return to the Rule of Law and to Justice. Second, we must reach an accord of governability with the unflinching commitment to fight against corruption, which we must honor as scrupulously as Betancourt, Caldera and Villalba did in 1958.”

The “Green Party”, Trafigura and PDVSA’s death spiral

2017 ended with an incomprehensible enigma: Why put a soldier in charge of PDVSA amidst this production crisis and in the face of eventual default?

They’ll destroy what’s left of PDVSA. You can see it on the street: there’s no gasoline or gasoil, there’s no cooking gas, no motor oil.

“Chavismo is divided. If that wasn’t the case, Maduro would’ve kept in his cabinet the two members that had some semblance of a good relationship with the financial community – Martínez and Del Pino (…) the men in green keep Maduro in power, but not for free. Since preferential dollars have almost run out, Maduro handed them the goldmine in order to hold on to power. Dicom is history and now Quevedo, a GNB, the most pro-Maduro security body, is put in charge of PDVSA. Quevedo isn’t there because of his skills, but because he represents the balance between PSUV’s political factions.”

But they’re not handling the crisis from a technical perspective, “they’ll destroy what’s left of PDVSA. You can see it on the street: there’s no gasoline or gasoil, there’s no cooking gas, no motor oil… PDVSA controls the entire economic process.”

There’s also Trafigura and its alleged agreement with PDVSA; the State-owned company would receive a cash loan on day one, under the contractual promise to ship crude on schedule. The lawmaker is skeptical: “[Trafigura is] taking a tremendous reputational and judicial risk if they choose to help PDVSA. They know what we think about the agreement.”

In any case, the reports issued by OPEC in October, 2017, showed that the oil output reported by Venezuela has fallen below the two million barrels per day, a level not seen since the 80s.

According to lawmaker Alvarado, “the problem lies in the political model,” which is concerning, but also “gives us hope because, once there’s regime change, we’ll have many allies. Material capital can be recovered and, in a reasonable time, we could also recover the company.”

When asked to comment on the partners of Joint Ventures, the lawmaker stated that “they’d rather not discuss it”; even though “they know that PDVSA’s situation is a disaster and that it’s difficult to do business in those conditions,” they’ve admitted that “after political change, they’d be willing to significantly increase their investment to boost output levels. Some of them are quite optimistic and tell us that they’re foreseeing output to rise significantly in the medium term, especially in the western field abandoned by Chávez’s government.”

Foreign debt and knocking on doors

“The government doesn’t learn, and they hold on to their mistaken strategy of paying debts with more debts in increasingly worse conditions. They’ll never evade default like that…”

Hunger is unforgiving.

In order to deal with the colossal foreign debt and the inevitable default, Alvarado thinks it’s necessary (and urgent) to implement a plan to recover PDVSA, unify all foreign currency exchange rates and allow joint ventures to operate independently. At the same time, “we require all the technical and financial assistance we can get from allied countries, from the global financial community, our creditors, multilateral institutions, foreign oil companies, etc. I think we need to refinance the debt with massive financial assistance.”

The priority “must be tackling the humanitarian crisis”

The recent pernil protests and delays in the delivery of CLAP boxes is a clear indication that “the hunger is unforgiving.” Alvarado, who has actively promoted the program Alimenta La Solidaridad to care for malnourished children in Petare, believes it’s a priority of any economic plan to tackle the humanitarian crisis. “Recovering our consumption levels requires that we recover PDVSA with an urgent plan to raise production.” We need to implement “new social policies based on direct cash transfers to the poorest families, along with the restructuring of the current network of subsidies and a plan to supply food and medicines based on the price system, as well as international humanitarian aid.”

What now? “We must conquer the future in 2018”

According to the lawmaker the AN opposition caucus and a sizeable group of collaborators are already creating a “fast, credible [economic plan] for stabilization and expansion since day one, focused on people’s wellbeing and on reactivating production.”

He immediately adds: “I’ll focus on two aspects of our strategy of democratic fight in 2018. One, accompanying the people in their suffering. We’re on the verge of a biblical famine. In Petare, my electoral circuit, we’ve opened five public diners to help children suffering from malnutrition thanks to Maduro’s hyperinflation and economic collapse. The idea is to reach 10 this year and prevent more children from starving to death. You have no idea how lives can change with proper access to food. We’ll have to write our own Schindler’s list.”

“Two, I work on the premise that we must accept our mistakes, admit our defeats and go out to conquer the future in 2018. That’s the only way we’ll channel people’s dissatisfaction through our fight to face the dictatorship and the fraudulent Constituyente. We must recover free elections as the tool for political change because this situation is too volatile, and without that political option, we’ll lose every chance to pull the country out of this catastrophe.”

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23 COMMENTS

    • Heck Texas produces about 3.5 million barrels / day and is laying new pipelines from West Texas to the Corpus Christi refineries, where one of the Citgo refineries is located.

      That said, there will always be a market for Venezuela oil traded on a free market. Price is the question.

      • A suckers bet. As the need to import more light crude goes up, the margin on VZ mud goes down. Only higher prices can soften the blow.

        Oil output is expected to be cut another 25% over the course of the next year… And then what?

  1. “We need to implement “new social policies based on direct cash transfers to the poorest families, along with the restructuring of the current network of subsidies and a plan to supply food and medicines based on the price system, as well as international humanitarian aid.”

    ~~~~~

    Well, here we go with more of the same “great planning” that got you into this in the first place. Replace one administrator of a worthless paradigm with another administrator of the same worthless plan? “Chavismo lite” is your plan? Your current regime had the same damn thought, and look what it got you. This is why I have very little faith in the MUD. Too many Big Government ass-kissers and sycophants who think that if a little government is good, then a LOT of government must be better.

    1. Depose Chavismo. Prison or “the lamp post necktie” for Maduro, Cabello, Jaua, Delcy, Isturiz, El Aissami, et al. An example needs to be made. Or. let them go to Cuba is that is their desire. The salient point: Any last remnant is GONE, including El Finados mausoleum. Turn it into a garbage tip. Charge people a dollar to piss on his headstone.

    2. Humanitarian aid. Every single meal, every aspirin, every bag of penicillin to every destitute Chavista comes in a box with a big ass American Flag on it. Paid for by Venezuelan oil. There nose needs to be rubbed in it, like a dog who just took a shit on the new carpet. Not a farthing in “cash transfers” until the economy is back on its feet. NO SUBSIDIES. A loaf a bread costs what it costs to bring it from farm to table.

    3. The Bolivar becomes tied to the dollar, or outright dollarization. Or the Euro. Either way, it doesn’t matter. Venezuelans cannot be trusted with their own currency. After this last fuck up, you will learn to like our obscure political figures that we force on our own population via our dollar notes. Plus, it makes it easier for tourists to visit. Plus, oil is sold in dollars.

    4. Disband your military, and PROFESSIONALIZE your police force. Sell your tanks/bombs/guns to whoever will take them. You become Costa Rica.

    That is some hard, tough lovin’. But it’s what Venezuela needs. Either that, or keep going with Chavismo until anarchy hits. Then Guyana can annex YOU.

  2. “A government that couldn’t manage one currency won’t be able to manage two.”

    No, but a Tropical Narco-Kleptocracy that could steal in one currency can steal in two.

  3. Captain Obvious Alvarado.. another Muddy politician full of it, saying absolutely nothing new, while repeatedly regurgitating the painfully obvious : “regime must change for economy to improve”.. DUHHHHHHH…. get a grip on PDVSA and control Corruption.. triple DUUUUUUUHHHHHHH.

    And top of that, Captain O. has the nerve to still believe in “recovering free elections”… Pathetic.

    Thanks to genieuses like this guy the MUD is what it is: a shame.

  4. Punch 1: “…apparent collapse of the opposition coalition has fueled rumors that some opposition leaders might have ties to the regime”

    Punch 2: “Many believe that the monster of corruption is at home with the opposition caucus”

    AA Non-answer: Whenever we become government we are going to fix that but not before.

    This line is golden:

    “…unflinching commitment to fight against corruption, which we must honor as scrupulously as Betancourt, Caldera and Villalba did in 1958.”

    This genius still believes in the sanctity of the fourth republic…no wonder we haven’t been able to shake off the other guys.

    Lord have mercy…

  5. You can recognize the trolls because of how they keep harping their single monotonous message , the oppo leadership is made up of crooks in cahoots with the govt , and abandon any hope of succesfully confronting the regime because the regime is invincible , evidently their task is to discredit whoever opposes the regime and to try to make people despair ……., they also create echo chambers to make themselves more loud …., they more about the oppo leaderships faults than about the govts , no evidence just tedious repetition …!!

  6. Towards the end of WWII , when it became evident that Germany was headed towards a catastrophic defeat , something even Hitler couldnt miss , he started saying that the development of some miracle weapons would save the day and wrest victory from the dark jaws of defeat ……the V1 rockets for example would turn the tide , or tanks so large and heavy that they sank deep into the ground as they moved , etc , etc the more desperate the situation became the greater the belief in something extraordinary saving the day at the very last minute ……..the government is facing financial ruin , a total breakdown in its economic foundations , they kown they cant deal with the problem using anything conventional so they invent the notion that this crypto currency , the petro ‘supported by the countrys oil reserves’ will give them the money they need to continue in operation not realizing that oil reserves are worth nothing except to the extent they become commercially exploitable and yield the income that comes from its sale which in turn requires huge amounts of money (which we dont have) or the trust of foreign investors that see it as a reliable investment at a time when the country is paralyzed and the venezuelan oil industry is in shambles and a totally corrupt dysfunctional govt spurned by the whole world is the one giving away the oil reserves…..!! One is inevitably reminded of Hitler and his miracle weapons that at the last minute will save the day…..!! The foibles in the mind of desperate tyrants repeats itself in different ways !!

    • I hear what you’re saying, but on the flip side:

      The British were brilliant in creating new weapons, “tools” of war, that added up, helped the move the Allies toward victory. Granted, half of these innovations were flops, but you gotta have the flops to get the successss.

      Maybe’s VZ’s future lies in the little things, where individually, they seem insignificant. But together, all aimed a common sense goal, can do magic.

  7. “What now?”

    Now UNT takes the reigns as a government proxy of the already useless Congress.

    Captain Obvious could tell you that of course the chavistas need to leave so the economy might be restored, which of course needs all their laws reversed and revoked and a new model to set in.

    The problem is no political party in the MUD will implement such model since none of them is remotely liberal.

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