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Venezuela’s Economic “Architect” Giordani’s Exit from Government Causes Controversy

Mérida, 20th June 2014 (Venezuelanalysis.com) – The dismissal of one of the government’s long standing economic figures, Jorge Giordani, from his ministerial post has caused debate and controversy in the South American country.

Since 1999, almost without interruption, Giordani had been planning minister in the Bolivarian government. He also periodically held other posts. The septuagenarian is regarded as one of the architects of the system of currency and price controls which regulates the Venezuelan economy. He is also known as a promoter of more orthodox Marxist thinking within the Bolivarian process.

“He is a man who delivered all of the tasks entrusted to him by the revolution with absolute honesty,” said Maduro on Tuesday night when Giordani’s exit from the government was announced.

According to Venezuelan daily Ultimas Noticias, a series of analysts from left and right agreed that the move signals a shift in the economic policies of the Maduro administration. This change comes in the context of high inflation, product shortages, and pressure on the currency exchange system. Possible reforms include unifying the multi-tiered exchange rate system as part of efforts for macro-economic stability, it was announced to international investors recently.

Giordani’s reported opposition to the proposed changes meant the Maduro administration had its “hands tied”, according to the analysts cited by the paper. Giordani was substituted by Ricardo Menendez, a former industries minister.

The planning minister's exit means that Rafael Ramirez, the Vice President for the Economy and head of the petroleum ministry and state oil company PDVSA, emerges as the government's principal economic spokesperson.

Meanwhile Wall Street is likely to welcome the decision. Merril Lynch recently wrote a report in which the investment firm noted the falling influence of Giordani, who it called the leader of the “radical Marxist wing” of economic thinking, in favour of so called “pragmatists” within the government’s economic cabinet.

Departing letter

Shortly following the announcement of his departure from government, Giordani published a long letter entitled “testimony and responsibility before history” where he gave his version of the events leading up to his dismissal.

The former minister outlined how he felt many of his proposals had not been taken into consideration by President Maduro. In the weeks leading up to his departure Giordani had also been removed from the executive boards of the Central Bank and state oil company PDVSA.

Giordani criticized Maduro’s policies and performance. “It is painful and alarming to see a president who doesn’t convey leadership and seems to want to affirm himself by repeating, without due coherence, proposals like those of Chavez,” he wrote. He explicitly stated his opinion that there existed a “power vacuum” in the presidency.  

In response to some of the economic proposals being considered by the government, Giordani warned against what he saw as the possible “opening of the path to re-install capitalist financial mechanisms that satisfy the attempts to recapture petroleum income via the financial route”.

“What I cannot do is be a participant in circumstances and decisions…against my conscience and most profound convictions,” he concluded.

Without mentioning Giordani by name, Nicolas Maduro appeared to respond to the letter during a televised cabinet meeting on Wednesday. “There’s no excuse for anyone’s betrayal of the revolutionary project…of the trust Comandante [Hugo] Chavez left us,” he said.

The president continued, “No one here sits in representation of any transnational company, no one…only with humility, sensibility and honesty is it possible to understand the job that it falls to us to carry out…that I am fulfilling and will continue fulfilling for the people”.

Maduro also outlined what he felt was the government’s role in the current situation. “We in the government have to be the vanguard of the vanguard…opening paths, overcoming obstacles, confronting difficulties, [and] orientating our people in the middle of the worst circumstances, if these were to present themselves in any moment of our history”.

Giordani’s exit and letter were front page news in Venezuela. Opposition media focused on the former minister’s more negative comments about Maduro, while pro-government press reported Giordani’s proposals for the coming period, such as doing more to attack corruption and reducing “wastage” in public spending.

Pro-government independent website Aporrea was also filled with articles from commentators who debated the news and either agreed or disagreed with Giordani’s stance.

Published on Jun 21st 2014 at 1.07pm