Carlos Fernández Gallardo, the new president of Venezuela’s federation of business chambers, explains how the approach to the government was brokered and insists that the private sector can solve many of the population’s most urgent problems.
By Caracas Chronicles – Marianela Palacios
Aug 17, 2021
“My three priorities as the new president of FEDECÁMARAS (Venezuela’s major business chamber), are to contribute with economic reactivation, to impulse an inclusive economic model, and to help society return to politics as the way to manage differences, as an achievement of modern civility,” says Carlos Fernández Gallardo. He talks about using his position to help bridge the gap between the private sector and the government – which has been characteristic of the chavista era. He sees himself and FEDECÁMARAS as a political actor not in the sense chavismo usually frames business people – as players who want to topple the government and enslave the population – but as a mediator and a source of quality employment and protection for common Venezuelans.
Fernández Gallardo is saying this in the context of approaching the Maduro regime and the negotiations starting in Mexico, where FEDECÁMARAS would want to have a seat. Fernández Gallardo does have vast experience doing business in Venezuela: born in Maracaibo into a family with a long history of entrepreneurship, he was vice president of FEDECÁMARAS’ previous board, and has led the retail chamber CONSECOMERCIO, Maracaibo’s retail chamber, the Caracas Stock Exchange, and the foreign investment promotion council CONAPRI. He’s a lawyer with a masters from ADL School of Management in Cambridge, Massachusetts.
In your speech at FEDECÁMARAS’ annual assembly, you said CAF offered 400 million dollars to improve power generation in Zulia and Táchira, but the process got stuck because “some group” refused to “give oxygen to a political option.” What happened there?
While the State – which reserved key sectors for itself – can’t provide solutions because it was left without an income with the drop of fiscal income and the oil industry, private and individual initiatives can come to the rescue. One example is the de facto dollarization, the people’s response to a problem. We can solve many other problems – services, transportation, fuel, etc – by aligning with the public sector and working in coordination with it. What we wanted to say in that speech is that if proposals that actually bring solutions to Venezuelans arise, whoever gets the political credit for that is absolutely secondary. It seems to us that not bringing a solution that benefits so many millions of Venezuelans because it politically benefits some factor would be a miscalculation. It isn’t time for such pettiness in the midst of all this chaos. We can’t put political gains above the solution to the problem.
Almost three years after the March 2019 blackout, the country still has unprecedented deficits in basic services. What does FEDECÁMARAS recommend doing to solve them?
We’re trying to convince the country that we must accept reality as it is. That is the first thing to do in order to start solving our problems together. The State is concentrating on those things that the government considers a priority. We don’t want to invade any spaces, but many of the spaces currently reserved to the State are natural to the private initiative and would be working if they were managed by the private sector. We can discuss whether electricity is a strategic sector or not for them, but that isn’t the bottom line: what’s truly strategic is having electricity, not who owns it. Maybe the solution to the water problem is much simpler than what most imagine, for example. If you decide to decentralize, maybe we’ll solve it more efficiently. It’s just a matter of looking at the problem differently and not relapsing into mechanisms that have already proved not to solve them. The dynamics that brought us here aren’t the dynamics that are going to get us out of this.
You asked the Executive to lift tariff exemptions and Delcy Rodríguez, after participating in the annual assembly in July, announced that they’d stop exonerating almost 600 imported products or goods to favor national producers. What other things did you request from the Executive?
We have no news about the proposed solutions to come out soon. It’s likely that a little more bank credits and microcredits in bolivars will be activated, due to the issue of reserve requirements and inflation. President Maduro has already spoken about that.
But Maduro also spoke recently of credit in euros and yuan. Why, if the official rhetoric seems to have already given the green light, do we not see a regulation?
Credit in dollars is born as a response from the market. Then the government paralyzes it. I think there are ideological issues there.
The government allows some companies listed in the Caracas Stock Exchange to issue securities in dollars, but not loans in dollars, when it’s precisely the adoption of this currency that’s allowing the economy to reactivate.
Of course. And I believe that the fall of the Venezuelan economy would have been less dramatic if they hadn’t restricted bank credit as they did. One of the things that has allowed some activities today is that commercial credit is reactivated thanks to dollarization. If we manage to reactivate bank credit, obviously that would have a great effect on the economy.
What would it mean for the Venezuelan economy if loans in dollars were approved en masse from deposits in foreign currency currently held by banks?
The multiplier effect of credit is something that has been absolutely proven in all economies throughout history. It’s essential to understand that money is the key to getting out of the recession. A virtuous circle of wealth generation would be created: that money that reaches the banks has to go back out as productive credit to have that effect, in order to feed the economy.
What does FEDECÁMARAS recommend to the current economic cabinet to get Venezuela out of its recession?
Delve into new schemes of productive relationships. It’s very difficult to reactivate the economy while you have consumers without purchasing power or with salaries of 10, 20, 50 or 70 dollars a month. We must find a way for the worker to have a higher income without affecting the company in its subsistence and future sustainability. There are many functional schemes, in the world and in the country, that exist informally and should be given visibility, impulse and protection. The economic world needs trust and trust is nothing other than institutionality. I would tell them, for example, to be very careful with this fiscal voracity, because its excess and the disorder that it brings could bring very vicious elements because people lose the incentive to continue working or feel the incentive to “informalize”. And the informalization is much worse for tax collection.
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Read More: Caracas Chronicles – ‘Whoever gets the political credit for the economic solutions is secondary’
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