Reshuffle won't change Venezuela 'mess', says ex-diplomat

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Wednesday, September 3, 2014

Venezuelan President Nicolás Maduro's latest cabinet reshuffle will produce little real change for Venezuela, a former US ambassador to Caracas told BNamericas.

"I'm willing to bet that in six months they'll be in the same mess or worse," said Charles Shapiro, who is currently president of the Institute of the Americas.

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During a three-hour televised speech on Tuesday night, Maduro announced multiple ministry changes, most notably the replacement of Rafael Ramírez.

Ramírez is to step down from his positions as oil minister, president of national oil company PDVSA and vice president of the economy. He has served as oil minister since 2002 and was seen by some as a relatively pragmatic voice inside Venezuela's ruling PSUV socialist party.

Asdrúbal Chávez, a cousin of Maduro's predecessor Hugo Chávez, will take over as oil minister, while geophysicist Eulogio del Pino will become PDVSA's new president. Ramírez becomes foreign minister.

Venezuela's vice president of the economy role has been eliminated and replaced with the newly created vice presidency of economy and finance. The position will be held by former brigadier-general and Chávez ally Rodolfo Marco Torres.

The flurry of changes fails to address root problems, Shapiro said. "Maybe one or two of these new ministers may actually make some progress but on the macroeconomic scale I don't see anything happening."

"The basic problem since Chávez took power is their lack of ability to execute. They can't find people to implement bad policy let alone good policy," he added.

Economists have blamed Venezuela's currency and price controls for a host of woes including this year's more that 60% annual inflation, empty supermarket shelves and rampant cross-border smuggling.

According to the Venezuelan government's own figures, approximately 100,000b/d of subsidized fuel is smuggled into Colombia to be sold at higher prices. However, with Ramírez's replacement, potential plans to reduce fuel subsidies have been put in doubt.

"What's hard for non-Chavistas to understand is they believe these policies will actually work. So they're not going to bring in someone who doesn't agree with them," Shapiro said.

Despite economic troubles, Maduro and the PSUV will continue to resist real economic reform, the former diplomat said. "The only thing that will make them change is unrest within their support base and it's hard to predict how that will happen."

BNamericas will host its second LatAm Oil & Gas Summit in Houston, Texas, on September 10-11. Click here to download the agenda.