Venezuelan cabinet changes tilt power balance

President Nicolas Maduro's sweeping cabinet changes suggest that his support within the ruling socialist party (PSUV) is shrinking amid political infighting and a dire economic outlook for the Opec producer.

In a series of tweets issued late yesterday, Maduro named loyalist firebrand Delcy Rodriguez to the powerful position of executive vice president, replacing Tareck El Aissami who served in the key role since January 2017.

El Aissami, a key target of US sanctions for drug trafficking, was named head of a newly created Industries and National Production Ministry in what appears to be a demotion aimed at curtailing his influence.

El Aissami was also named economy vice president, a post hierarchically inferior in the government to the executive vice president post now occupied by Rodriguez, who had served as president of the Constituent Assembly from 4 August 2017 until yesterday.

Rodriguez also previously served as Venezuela's foreign minister from December 2014 until June 2017.

Maduro did not change ministers in posts now held by army and national guard generals. These include the ministries of energy, defense, interior and justice, and finance. Maduro also retained foreign minister Jorge Arreaza, who is the son in law of late president Hugo Chavez.

In other key appointments, former National Assembly president Diosdado Cabello's wife Marleny Contreras was named public works minister, a post through which the government normally channels all non-oil infrastructure contracts. The move could strengthen Cabello's power base within the government.

"Maduro appears to be seeking more balance between competing political factions within his government by raising Cabello's profile through his wife and simultaneously reducing El Aissami's very significant influence," a presidential palace official told Argus.

"President Maduro, Cabello and El Aissami currently are the three most powerful figures within the government and PSUV, but Maduro apparently is concerned that El Aissami had become too powerful since he was first named executive vice president of Venezuela in January 2017," the official added.

Maduro hinted at plans to reduce El Aissami's political influence earlier this week when he dismissed his ally Ysmel Serrano from the post of executive vice president at state-owned oil company PdV and ratified Manuel Quevedo, a national guard general close to first lady Cilia Flores, in the twin posts of energy minister and PdV chief executive. Maduro did not name a new PdV executive vice president, and it is unclear if the post created in 2016 has been abolished.

Other cabinet appointments unveiled yesterday bring new, previously unknown figures into the government as heads of the ministries of foreign trade and international investment, transportation, tourism, urban agriculture, "eco-socialism", labor and women.

Three senior ruling PSUV officials separately told Argus that the cabinet changes are largely cosmetic appointments aimed deflecting the public's attention from a growing concentration of power in the hands of a shrinking circle of hardcore Maduro/Flores supporters such as Delcy Rodriguez.

"Yesterday's cabinet changes indicate that Maduro's political support base within the PSUV and military establishments is hemorrhaging as the collapse of PdV and the overall economy accelerates," Caracas-based economic and political analyst Robert Bottome said.

Venezuela's GDP is forecast to shrink by over 15pc in 2018, a central bank economist said privately. Annualized inflation in May accelerated to over 25,000pc, "with prices of everything rising by up to 3pc daily so far in June," the bank economist added.

Former central bank chief economist Jose Guerra, a leading government opponent, forecast this week that Venezuela's inflation rate could reach a 100,000pc annualized rate by next December.

"We are heading toward a genuine Productive Revolution, we have clear ideas, clear diagnoses…We will achieve economic stability and prosperity for our people," Maduro said on announcing the changes.