The View From Above
Government sources report on a development that focuses on a power dynamic more substantial and consequential than Trump’s latest meme—turning Venezuela into the 51st state—or Delcy Rodriguez’s performative Hague trip to broadcast Venezuela’s position in the Esequibo claim. This week, we cover the build-up to punish a symbol of the Maduro years, a star in the repressive apparatus, and a chavista figure that was around the Comandante even before Hugo Chavez conquered power: Tarek William Saab.
The former Prosecutor General, who enforced chavista justice since his predecessor Luisa Ortega Diaz was fired for denouncing state violence in 2017, was demoted a few weeks ago and appointed director of an irrelevant program to promote folk festivals. Since then, stories about how he took part in violent interrogations and even recorded torture sessions to show them to Maduro are being told and spread by former political prisoners like Freddy Superlano and Perkins Rocha, and human rights lawyer Joel Garcia. The ramp up of claims against Saab happens as he is under the spotlight, together with many other chavista officers of diverse stations, in the chain of responsibilities around the death of political prisoner Victor H. Quero—who not only died while in custody, but whose death appears to have been concealed for over 9 months.
Then, came a testimony released by Zair Mundaray, former right hand of Attorney General Luisa Ortega Díaz, according to which former PDVSA president Tareck El Aissami claimed during his own trial that Tarek William Saab directly harassed and menaced him during the PDVSA-crypto scandal investigations—the scandal that brought down El Aissami and an entire political and business clan. The surprising detail is not that Saab allegedly told El Aissami he was “dead,” or that he vowed to make the prisoner suffer—it is that we are hearing from El Aissami at all. He has been in isolation for years, with rumors swirling that he has a terminal illness that would have him die behind bars. Now, suddenly, his name is allowed to resurface —just as Saab finds himself under fire from multiple directions.
If Delcy Rodríguez moves to charge Tarek William Saab, it will signal something far deeper than a single prosecution: a purge serious enough to make everyone wonder whether this is a first step toward removing a far more dangerous piece from the Jenga tower—that other name that’s synonym for human rights abuses, Diosdado Cabello. But it will not be easy. Saab saw this coming and will use every card he holds; it’s hard to think of anyone with more sensitive information on the regime and their leaders than Saab. His case is a sharp test of Delcy’s willingness—and her ability—to push further the reengineering of the Chavista government, take on the old guard, burnish her reformist image abroad, and neutralize the power brokers who could threaten her rule.
As the political telenovela unfolded, big news pushed economic headlines to the top of the page. A high level letter exchange between OFAC and the Delcy administration shows an intention to move toward a debt renegotiation. Venezuela has hired financial advisors and lawyers to represent them in this process. A strange dance between propaganda—from the Trump and Delcy administrations—and reality is taking place. While there is common interest from Venezuela and the United States to communicate to the world and international investors that there will be cash to pay for the massive infrastructure overhaul required to be able to significantly increase oil output and to actually be able to deliver the promised economic miracle, the IMF and every expert in the field are raising their hand to say that simply declaring that the most complex debt restructuring in two decades is starting is not enough to magically materialize cash, and that if incorrectly executed it would have catastrophic consequences for the medium and long-term economic stability of the Venezuelan economy. In practice, getting the restructuring plan online and actually being able to get financing from the international finance system (at probably terrible rates) will take some time—months, maybe even a couple of years, depending on how hard a bargain bondholders drive, and how desperate is the Rodríguez regime to raise funds again from the international financial markets.
The IMF seems like a readier source of cash for the government than the bond markets, even if it carries its own difficulties. As we wrote recently, even if Venezuela agrees soon on a program with the IMF, these disbursements are rarely lump-sum. They are usually structured around a handful of disbursements every year, all of them contingent on fiscal performance metrics and on implementing reforms. An IMF program would definitely serve to shore up the FX market in Venezuela, but these are years-long programs. The main advantage is that IMF loans are the cheapest option; depending on the amount of the loan, Venezuela could get loans from the IMF at an interest rate of under 8%. Ecuador, a country with its own troubles but in far better economic shape than Venezuela, recently returned to bond markets at just over 8%—so there’s no chance Venezuela could raise funds from abroad at rates anywhere near what they can get from the IMF.
But just as it happened when it was reported that energy companies Siemens and GE Verona were reluctant to be engaged with the Delcy administration because there were no payment guarantees on the table (the Trump administration jumped right in to vouch for Rodríguez), we have other players from Billionaire Alley showing up to plant their flag. Erebor, Peter Thiel’s 3-month-old bank, appeared to say that they’ve got international investors covered for cash. The last couple of weeks have been crowded with news of heavy players moving toward Venezuela, either preparing investments or with aggressive exploratory interest, but as we’ve mentioned in previous reports the crux of the issue remains: beyond Rodríguez’s best intentions, if any, she has a massive scarcity problem in technical talent. There’s just not enough expertise and talent in the government to be able to take advantage of the opportunities opening up for them and the country.
Beyond her personal and political affinities with Maduro, and the help from her brother, one of the reasons why Delcy climbed the ladder so successfully in the Maduro regime was her reputation—inside chavismo, at least—of competence. Over the past 25 years several others leveraged this type of reputation in chavismo to survive. Now that Delcy climbed all the way to the top, she’s finding she doesn’t have her own Delcys to get stuff done. Three years ago we heard from a high-ranking chavista bureaucrat that the State “had basically disappeared,” and that he had trouble finding staff inside ministries that knew the basics about designing and implementing a public policy. He couldn’t even find policy or program management manuals to give his staff in the public administration staff school, he told us. That was three years ago.
Crosshairs on two Saabs and one Cabello