In Surprise Move Venezuela's President Reshuffles Cabinet, Dumps Oil Minister, Names New “Economy Czar”
Posted by Tyler Durden on January 4, 2017 11:05 pm
Tags: 2014–16 Venezuelan protests, Americas, Aristóbulo Istúriz, Bond, China, Crude, default, Economic policy of the Nicolás Maduro government, headlines, new economy, Nicolás Maduro, OPEC, Organization of Petroleum-Exporting Countries, PDVSA, Politics, Politics of Venezuela, Reuters, Socialist Party, Venezuela
Categories: 2014–16 Venezuelan protests Americas Aristóbulo Istúriz Bond China Crude default Economic policy of the Nicolás Maduro government Economy headlines new economy Nicolás Maduro OPEC Organization of Petroleum-Exporting Countries PDVSA Politics Politics of Venezuela Reuters Socialist Party Venezuela
In an unexpected move, Venezuela’s embattled President Nicolas Maduro on Wednesday reshuffled his cabinet by naming a new economy czar to oversee the OPEC country’s decaying socialist system and a new oil minister to face the economic difficulties caused by low oil prices, suggesting that the economic upheavals faced by much of the nation have reached the very top.
According to Reuters, economist Ramon Lobo, who has been serving as a legislator for the ruling Socialist Party, will assume the dual roles of finance minister and economy vice president – making him the country’s top economic authority.
“You shall assume, with a firm hand, the oversight of the economy,” said Maduro during a televised broadcast, describing Lobo as an expert in budget matters.
Meanwhile, in a move that will likely have far greater consequences, especially within the OPEC community, Nelson Martinez, who has led the U.S.-based refiner Citgo, will take on the role of oil minister. Outgoing minister Eulogio Del Pino, who was the source of so many oil-algo spooking headlines, will remain on as president of state oil company PDVSA. The oil minister has traditionally served as the
representative to OPEC, where Venezuela has for nearly three years been
one of the strongest voices for production cuts.
At the same time, Maduro also named state governor Tarek El Aissami as new vice president, replacing outgoing Aristobulo Isturiz, who had served as an intermediary with the opposition-run legislature.
Maduro shakes hands with Venezuela’s new Vice-President Tarek El Aissami.
The vice presidential post is an appointed position, and Maduro has swapped it out in the past. But the position holds extra significance this year as the opposition has vowed to force Maduro from office. That could lead to his vice president serving the rest of his term, which ends in 2019. El Aissami was interior minister before being elected governor of the central state of Aragua. He has been accused of participating in the drug trade by members of the opposition. He has called those who speak ill of him traitors who seek to harm Venezuela.
Unfortunately, the cabinet shuffle will achieve nothing. Venezuela is suffering from triple-digit inflation, Soviet-style production shortages and increasing street protests as a combination of dysfunctional state controls and low oil prices. Maduro says he is the victim of an “economic war.” Furthermore, such cabinet reshuffles have been relatively common in Venezuela where officials tend to come from the inner circle of the ruling Socialist Party, and as such do not tend to be the leaders of broad policy changes.
Economists say Venezuela’s economy will not return to growth until it lifts corruption-riddled exchange controls and dysfunctional price control system and rolls back hundreds of nationalizations that have left many industries unproductive.
Which is also unlikely.
But the real question on everyone’s minds is when does Venezuela finally default. So far, its crude exports have prevented such a terminal fate. Furthermore, the recently disclosed “mysterious” $5 billion bond deal in which China had dubious involvement, confirms that Venezuela may no longer even have full sovereignty, having effectively become a Chinese oil producing output which persists in exchange for vendor financing.
It is unclear how today’s power move will change the status quo between Venezuela and China, and whether or not it is Beijing that is ultimately pulling the strings in the country’s government.