Among 24 million people there must be someone better than Giordani
<a href=www.vheadline.com>Venezuela's Electronic News Posted: Wednesday, April 30, 2003 By: Gustavo Coronel
VHeadline.com commentarist Gustavo Coronel writes: Some 15 months ago the President reluctantly sacked his mentor, Planning Minister Jorge Giordani, in order to inject some modern ideas into his collapsing economic cabinet. He also replaced the Minister of Finance, Nelson Merentes, who had illegally diverted ...at the President's request ... some $3 billion away from the Macroeconomic Stabilization Fund (FIEM) and into the government payroll, to pay for central administration bureaucracy Christmas bonuses.
You might think that anyone coming in would have been more satisfactory than the Giordani-Merentes team ... but what has happened in these months of performance by the new economic team, has left no doubt that the problem can not be solved simply by playing musical chairs in the economic cabinet.
The replacement team of Felipe Perez and Tobias Nobrega proved to be as inefficient (Perez) as Giordani and as unethical (Nobrega) as Merentes.
Felipe Perez was honest but came to his job armed with unusual economic theories, in which the Holy Spirit should be invoked in order to improve the situation of the economy. Although this is a method frequently resorted to in our churches, it had never been used as an official component of national economic policy. His first public announcements were related to the need all Venezuelans had to believe that everything was going to be alright. "If you fervently think that the currency will not be devalued, it will not..." To think otherwise, he added "would be an insult to the Holy Spirit."
These declarations sent Catholics and atheists alike rushing to the Currency Exchange Agencies to buy dollars, and produced a clearly blasphemous capital flight estimated at some $8 billion during the past year.
"Felipe the Brief" soon started to become harsher in his pronouncements ... he said, at one point in time, that dissident PDVSA managers should be shot.
He became extremely critical of the World Bank and other multilateral financial agencies, asserting that they had never been able to predict how the Venezuelan economy would behave.
He claimed that Venezuelan inflation would not be bigger than 20% when it was already apparent that it would be closer to 35-40%.
He said that the fiscal deficit would not surpass 3-4% when in fact it was inevitable that it would reach 8% or more.
He never stopped sounding extremely optimistic ... which is a healthy attitude in normal circumstances, but not when you are a piano player on the Titanic.
One thing was positive about his performance: He opened up an Internet channel of communication with the general public, something that no other cabinet member has done, since there are no conclusive indications that they have heard about Internet. On this website, Perez discussed economic theory with gusto, true to his vocation as an academician. He was sold on what he termed the theory of positive expectations ... or something like that ... which simply means that, if you repeat endlessly that things will be okay, they will be okay. This did not work...
Worse, Felipe started to encroach on Nobrega's turf where he is a hard ball player ... not in vain, he had worked as an economic Advisor at the National Assembly ... a shark tank ... and had been quite a hustler in the hotly competitive economic consulting sector. When Noriega saw that Felipe wanted to do the two jobs, that of Planning and Finance Ministers, he complained to Chavez ... and Chavez came up with a brilliant move ... he brought Jorge Giordani back!
But I really have to ask: Among 24 million people or so in our country, can no one better than Giordani be found to do the job of Planning Minister?
After all, we already found out what he could do the first time around. His major contribution to the government was to describe the Venezuelan economy as a "submarine" ... temporarily being underwater, until government programs would make it surface...
As readers would do well in suspecting, Giordani's submarine theory was simply an aquatic variation of Perez's theological thesis. Marine science and religion coming to the rescue of our economy during the 5th republic. Giordani's pet program to produce the surfacing of the submarine was the development of the Orinoco-Apure fluvial Axis. This program is reminiscent in scope to the program dreamt of by old Sukarno in Indonesia (the father, not the daughter) ... that of transmigrating some 50 million surplus Javanese from the overcrowded island to other units of the Indonesian archipelago.
The small problem with this was the logistics ... with the amount of ships Sukarno had, it soon became obvious that moving this crowd from Java to the other islands would take about 1,100 years. In other words, the program had an almost geological dimension, rather than political.
- As we know now, Sukarno would not have been able to see the results of his efforts, as he died soon after.
The program conceived by Giordani is more modest but no less unrealistic. It has to do with converting the southern portion of Venezuela into a true industrial and economic emporium, to be built along the big rivers.
In order to do this, some substantial money will be needed ... which is nowhere to be seen. Only the preliminary studies ordered by Giordani almost exhausted the money allocated to the total program in the desperately cash short government. Still, the return of Giordani to the cabinet means that the Orinoco-Apure project will be resurrected ... in fact, Chavez already mentioned it during his last radio program.
Predictably the return of Giordani to the government, as the main financial and development ideologue, produced an immediate dive of the Venezuelan Bonds.
My telling this will not add much to the panic already existing among international investors who have stakes in the country ... or will make up the minds of those who are thinking about coming, to come or not to come.
They are well informed. We have a saying in Venezuela: "La culpa no es del ciego sino de quien le da el garrote" ... The one to blame is not the blind man but he who gives him the stick...
Giordani is not the guy to blame, but he who named him ... both the first time around and, incredibly, this second time around.
It could be argued that Giordani could have graciously declined, but this would have needed another kind of man...
And these kind of men do not exist in the 5th republic.....
Gustavo Coronel is the founder and president of Agrupacion Pro Calidad de Vida (The Pro-Quality of Life Alliance), a Caracas-based organization devoted to fighting corruption and the promotion of civic education in Latin America, primarily Venezuela. A member of the first board of directors (1975-1979) of Petroleos de Venezuela (PDVSA), following nationalization of Venezuela's oil industry, Coronel has worked in the oil industry for 28 years in the United States, Holland, Indonesia, Algiers and in Venezuela. He is a Distinguished alumnus of the University of Tulsa (USA) where he was a Trustee from 1987 to 1999. Coronel led the Hydrocarbons Division of the Inter-American Development Bank (IADB) in Washington DC for 5 years. The author of three books and many articles on Venezuela ("Curbing Corruption in Venezuela." Journal of Democracy, Vol. 7, No. 3, July, 1996, pp. 157-163), he is a fellow of Harvard University and a member of the Harvard faculty from 1981 to 1983. In 1998, he was presidential election campaign manager for Henrique Salas Romer and now lives in retirement on the Caribbean island of Margarita where he runs a leading Hotel-Resort. You may contact Gustavo Coronel at email gustavo@vheadline.com