Venezuela's Maduro Admits Mistakes, Calls for Oil Investments

(Bloomberg) -- Venezuelan President Nicolas Maduro said his government isn’t “doing things well” and needs to boost oil output by 1 million barrels a day as he prepares for another six-year term in the midst of the country’s worst ever economic downturn.

Venezuela's Maduro Admits Mistakes, Calls for Oil Investments

“Let’s not lie to ourselves or to anyone, we need to drastically relearn things and to do them better,” Maduro said in comments made in front of the constituent assembly. “We aren’t doing things well and we need to change this country.”

After calling and winning the May 20 snap election, which was recognized by only his closest allies, Maduro rushed to swear himself in to boost legitimacy. The constitution says the ceremony should take place on Jan. 10.

The government, which no longer publishes economic data or openly admits that its citizens are struggling to feed themselves amid hyperinflation and severe economic distortions, rarely fesses up to mistakes and routinely blames the nation’s ills on the private sector, U.S. sanctions and more broadly “an economic war.” The fact that turnout for Maduro’s re-election was just 46 percent and that the minimum wage only fetches $2 at the black market rate, may force the government’s hand to shift direction -- albeit slightly.

A statistic difficult to mask has been the abrupt tumble in crude oil production. From 3 million barrels a day just a few years ago, the country is now pumping out just 1.4 million barrels with some analysts expecting that figure to dip below 1 million barrels by year-end at this pace. Crude represents about 95 percent of export revenue.

Maduro told Manuel Quevedo, who wears the hat of both oil minister and head of state-run oil company Petroleos de Venezuela, that he has free range to make the changes he deems necessary to revert the situation. The oil industry has been plagued by paltry investment, a brain drain of experienced professionals and even government raids that have jailed many former top officials.

Venezuela will speak with OPEC, China, Russia and Middle Eastern countries about ways to boost production, Maduro said. Financing has become much more difficult with the government in default on most of its bonds and U.S. sanctions intimidating would-be lenders.

In his speech Maduro also called for the release of some detained protesters, referring to a number of people detained for crimes of political violence. “I want them to go free,” he said.

While he didn’t specify, that’s likely to fall short of releasing top political prisoners including opposition politician Leopoldo Lopez, U.S. citizen Joshua Holt and targets of his government’s own internal crackdown on those who sat beside him just months ago in cabinet meetings.

While relations with the U.S. have worsened after a tit-for-tat this week that saw the U.S. Charge d’Affaires booted from Caracas and the U.S. responding in kind with Venezuelan officials being sent home, Maduro said that he’s ordered meetings with European officials and companies to resolve differences.

Contrary to the United States, European nations have yet to enact new sanctions against his regime following the vote. President Donald Trump took no time to sign a new order on May 21 that prohibits the purchases of debts owed to the government along with other measures.

The date of the swearing-in ceremony wasn’t Maduro’s only problem. He also had to consider where to do it.

The constitution stipulates the ceremony should take place at the National Assembly, which Maduro has stripped of all its powers. Instead, the president took the oath before the Constituent Assembly, which the U.S. has condemned as a puppet assembly stacked with his supporters and close allies. He’ll be sworn in a second time in mid-January.

“They are looking for a way out of this constitutional entanglement to achieve the legitimizing effect that they did not achieve with the elections,” said constitutional lawyer Juan Manuel Raffalli, who advises the political opposition. “They need an excuse for an early takeover of the presidency.”

Speculation is building that Maduro’s uncharacteristic self-criticism over the handling of the economy may also bring with it a sweeping cabinet change. Though so far, there are few signs of significant reordering and the oil minister -- who has failed to stop the output declines -- was ratified in his post.

©2018 Bloomberg L.P.

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