Petkoff:
the Communicator from the Big Apple
In New York, at the Council of the Americas we listened to an inspired and
measured Teodoro Petkoff (Minister of Planning) addressing himself to a hall full of
representatives of Wall Street investment banks. His speech was clear,
concise, and on more than one occasion with an acceptable dose of good humor.
With thick brush lines he sketched an optimist version of the Venezuelan Agenda.
He made clear that the macroeconomic adjustments plan was irreversible and that
it was President Caldera's firm intention to stay on that track, with no concern for
political costs.
Petkoff said that people have begun to realize that something is happening
in Venezuela, that the announced changes were made without deceiving anyone
and that, accordingly Venezuelans did not have the impression that they had been
ambushed. He acknowledged that Venezuelans have accepted the hard measures,
as well as their consequences, with serenity, resignation and a good deal of
understanding. Although he admitted that some concessions were inevitable, he
flatly rejected any return to subsidy policies.
He made clear that the Venezuelan Agenda is not a plan but a program to
abate inflation and to create a macroeconomic environment allowing for growth and
development of the country's economy. He pointed out that the fiscal issue was
the program's medullar spine and that the primary objective was to reduce the
budget gap from 8% to 2% in 1996 and to 1% in 1997.
He recognized that these adjustments would be useless if a series of
undeclinable reforms are not undertaken at the same time. He included among
them the income tax reform, the reduction of national bureaucracy, the reform of the
judiciary and the boosting of a privatization program. In the latter he included, on
top of those we know of already, Sidor's privatization in 1997. It is worth
mentioning that he did not refer to any privatization in the oil sector nor in the
petrochemical.
He made also a thorough review of Venezuela's social security problem. On
this respect he said that President Caldera was convinced of the need to reform the
system used to calculate separation benefits. He added that any amendment
required a previous minimum ground of agreement between employers and unions,
allowing for an amendment of the law. He somehow leaked that if the union leaders
prevented an agreement, government would be ready to take the terms of the
government proposed amendment directly to very same labor sector..
He also dealt quite extensively with the issue of the financial systemţs
restructuring, recognizing its fragility. He also acknowledged that the sector had
been able to endure, better than it had been expected, the adjustments that had
been made already. He said that part of the Venezuelan financial system was
pre-capitalist and he went as far as using the term "medieval" in defining its
efficiency.
He ratified that an agreement had been reached with the IMF and that the
process was at the Fund's internal stages. He estimated that the agreement
would be signed in about six weeks. he expressed that from the balance of
payments point of view, the agreement with the Fund was not necessary but that,
however, it was obviously useful since it ensured the credibility of an adjustments
plan and it secured a well needed technical assistance. Moreover, the agreement
would introduce an element of supervision that is indispensable in order to reinforce
local discipline, a key element for the success of any adjustment plan.
Summing up his speech, he quoted the Bible when recalling that God made
the world in six days and that, accordingly, miracles could not be asked from the
government. He closed with a phrase that he had already used in other occasions:
"We are not well but we are going well." One may sat the tone and contents of his
speech fell well. There are, however, some doubts still there, as to the viability of
the Venezuelan Agenda.
Fortunately for the government, Petkoff has proven that he has sense, moderated
and balanced. Moreover, without pretending he has turned
into the goverment Great Communicator. For instance, during this meeting of the Council of the
Americas, when faced with a question made by a director of Morgan Greenfell,
expressing doubts as to the viability of the Venezuelan Agenda if the rates of
exchange remain tied to negative interest rates, Petkoff knew how to dodge the
question. The same friction evidenced some days earlier in Caracas between
bankers and the Executive were not present this time. In effect, a rebuttal by the
government of Morgan's monthly report that had been published earlier by the El
Nacional newspaper – criticizing the Venezuelan economy – , had turned into a
sample of the government's low tolerance level and into an additional evidence of
its lack of ability to verify and review information. The report had been made and
published before the government had adopted the recent macroeconomic
adjustment measures, which were favorably reviewed in the bankers' subsequent
monthly report.
This dispute between government and investors is not sound in a country
pretending to recover its international credit standing. In this context, one must
emphasize that the Morgans' incident is not an isolated occurrence, as evidenced by
the hard expressions aimed at Lehmans' Brothers that were used by the government
when referring to the agreement that this bank has with the Investments Fund for
the sale of the CANTV shares. One should also point out the tense relation existing
between VENALUM's Japanese partners who claim their contractual rights when
faced with a denial of them by some government officials who pretend to disguise
the business law right of preference assisting them with a brittle veto right.
Government should give thought to this issue. Superminister Petkoff's words
do not suffice, no matter how well expressed. The fact is that his cabinet
colleagues and President Caldera must understand at the same time that the way
out of the crisis goes necessarily through dialogue and not, precisely, a dialogue
of the deaf, but one where criticism and necessary remarks may be accepted
without anger, if the road towards trust is to be followed.
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