Venezuela’s Maduro shuffles cabinet amid sinking economy

Battling a sinking economy and simmering unrest, Venezuelan President Nicolás Maduro promised to “shake up” his administration on Tuesday. Instead he put one of the country’s most high-profile names in charge of its economic engine.

Asdrúbal Chávez, the cousin of late President Hugo Chávez, was named minister of petroleum and mines in a country that has the world’s largest crude reserves and depends on the state-run PDVSA oil company to finance its socialist revolution.

In addition, Rafael Ramírez, the former vice president of the economy and the head of PDVSA, who was seen as an economic pragmatist and reformer, was named foreign minister and vice president for politics.

Replacing Ramírez at the top economy spot is Rodolfo Marco Torres, who had been working as the minister of finance. A former general, he’s held several positions within the administration since 2011.

The sidelining of Ramírez from the economy is likely to dampen hopes that the government might make any substantial policy changes in the short term.

Rumors had been swirling about a shakeup since the entire cabinet submitted its resignation two weeks ago.

Speaking for almost three hours Tuesday, Maduro outlined five “revolutions” he said the socialist administration needs to take, including the economy, knowledge and what he called “eco-socialism.”

“Beginning today we begin a new stage of the revolution, where we activate a number of revolutions to create a new dynamic,” he said.

There were hopes that Maduro might make more significant economic announcements, including a further devaluation of the bolivar and trimming the country’s gasoline subsidies that cost the country an estimated $12.5 billion a year.

On Tuesday, Maduro said he wouldn’t be pressured into making economic adjustments and said that if gas prices were ever increased it would be done with a “humanist and socialist criteria.”

Although Maduro has conceded that adjustments are needed to fight spiraling inflation and product shortages, he seems unwilling to make the painful changes that many economists are calling for. Instead, the administration has directed its efforts at keeping deeply subsidized products from being smuggled across the border into Colombia and strictly regulating the private sector.

Since launching its anti-smuggling crackdown 21 days ago, the government said it has seized 1,168 tons of food and more than 122,000 gallons of gasoline.

Also in the works are thumbprint scanners to control food hoarding. That news has sparked sporadic protests in the border state of Táchira, and opposition political parties have been trying to organize demonstrations around the issue.

On Tuesday, the leftist but dissenting political organization Movement toward Socialism, or MAS, asked the Supreme Court to block any attempts to implement the biometric controls.

Maduro “should quit talking to the 30 percent of the country, which he believes is listening to him, and talk to the 70 percent that he ignores completely,” MAS General Secretary Felipe Mujca said in a statement.

The dearth of clear-cut proposals is a message in its own right, said Jessica Grisanti, a senior economist at the Ecoanalítica group in Caracas.

“To not create a policy is a policy also,” she said. “It’s the policy of continuing with the uncertainty and the lack of direction…economically, politically and socially.”

In prior weeks, Ramírez had talked about the need to unify the country’s three-tiered exchange rate system, which has led to rampant speculation in the currency market. While the official exchange rate remains at 6.3 bolivares to the dollar, Venezuela’s currency was selling at 88 to the dollar on the black market in Colombian border towns.

“We do expect a devaluation sometime before the end of the year, along with additional price hikes,” the Eurasia Group, a New York-based analytical firm, wrote Tuesday. “However, the government [is] unlikely to undertake meaningful adjustments and will instead move towards more tightly controlling the economy, as evidenced by the recent biometric fingerprinting system and crack-down on smuggling. The latter implies that the economic outlook will likely continue to deteriorate and social discontent will continue to mount.”