No. 1 Target on Venezuela's Purge List Is Holed Up in Manhattan

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(Bloomberg) -- In the past four months, Venezuelan President Nicolas Maduro has ramped up the arrests of high-ranking oil industry executives in an audacious purge, with 65 in custody so far.

But the one Maduro wants to nab the most remains free: Rafael Ramirez, the Venezuelan ambassador to the United Nations. The two have been intense rivals for years, dating to the days when the firebrand revolutionary Hugo Chavez was alive and rapidly converting Venezuela into a socialist economy. Back then, Ramirez was energy minister, overseeing the world’s largest oil reserves, while Maduro served most of that era as Venezuela’s foreign minister.

The vast bulk of the executives imprisoned by Maduro’s forces are considered disciples or allies of Ramirez. The sense from Venezuelan watchers is that having successfully crushed the political opposition, Maduro is turning his attention to his enemies from within Chavismo as he prepares to run for re-election next year.

It all comes at a delicate time for the government and state-run oil giant Petroleos de Venezuela SA, both of which are struggling to fight off default after years of slumping output. The outcome of the power struggle will likely determine what kind of oil company will be left for bond creditors to negotiate with.

Read more: Why Venezuela’s Sliding Toward Dictatorship, Default: QuickTake

Public Prosecutor Tarek William Saab announced the latest arrests Thursday: Nelson Martinez and Eulogio del Pino, who had alternated between running the oil ministry and Petroleos de Venezuela, known as PDVSA. Rumors were rampant that Ramirez was in custody too, or about to be.

Reuters reported Wednesday that Venezuela had ordered his removal from his post at the UN. Soon after, a reporter for the Wall Street Journal tweeted that Ramirez had denied that any such thing had occurred. A Bloomberg News reporter communicated Thursday with a Ramirez aide who gave the impression that Ramirez was still ambassador and still residing, a free man, at his residence in Manhattan. An official at Venezuela’s Information Ministry declined to comment on Ramirez’s current status, or if authorities had issued a warrant for his arrest.

He is the prime target for Maduro’s administration, said Diego Moya-Ocampos, a political risk analyst at IHS Markit. “The country is on the brink of a formal default -- it’s already in a technical default -- and they need someone to blame to send a sign to the population ahead of presidential elections that something has been done about corruption.”

‘My Revolutionary Duty’

While Maduro is Ramirez’s boss and can simply fire him if he so chooses, such a move is fraught with risk. Rather than returning to Caracas, Ramirez could instead just walk over to federal prosecutors’ offices as other ex-Chavistas have in recent years to share details of murky business transactions that have raised suspicion in the U.S.

In recent tweets and op-eds in a pro-government policy discussion website, Ramirez has pushed backed at his critics and at claims that he has broken ranks. “I demand respect. I cannot accept being discredited or called names simply because I give my opinion while completing my revolutionary duty,” he wrote. “I’m in complete exercise of my loyalty to Chavez.”

Ramirez, 54, rose to power as oil minister in 2002, during Chavez’s regime. Two years later, he also took the lead at PDVSA and held onto it for a decade, breaking a long-standing separation between the country’s Energy Ministry and the company it was meant to oversee. 

‘Significant Competitor’

He was behind the trademark slogan “roja, rojita,” first using it during a speech in PDVSA’s auditorium more than a decade ago. It was adopted by Chavez and his supporters, who commonly dressed in red uniforms and berets to reflect their allegiance to the socialist government. Chavez once suggested the phrase should win the Nobel prize for publicity, if such a category existed.

Following Chavez’s death in 2013, Ramirez rose to a new post as Venezuela’s economic czar while simultaneously holding on to his other two titles. Under Maduro, he tried to enact a series of reforms such as unifying the country’s multi-tiered exchange rates and reducing generous subsidies, but faced staunch resistance in socialist party ranks and was transferred to his current UN post in 2014.

By now, “Ramirez has accumulated enough money and influence to become a significant competitor against Maduro,” said Angel Alvarez, a political analyst and former professor at Central University of Venezuela. “Beating Ramirez is a way to end the financing of a possible non-Maduro candidate.”

In a country where corruption has been endemic for decades, the veracity of the accusations being leveled against those now in custody is difficult to judge. But the arrests highlight Maduro’s efforts to consolidate his grip on the oil producer, which is the socialist regime’s economic mainstay despite flagging production and quality.

Maduro named Major General Manuel Quevedo as the replacement for Martinez and Del Pino on Sunday, before their detentions. The military officer, who has no experience in the industry, is representing Venezuela at a meeting of the Organization of Petroleum Exporting Countries in Vienna.

There’s no telling whether the roundup of executives is over, or whether only Ramirez remains in Maduro’s sights.

“The government needs a scapegoat,” Moya-Ocampos said. “They need to make someone responsible for the economic mismanagement -- and it has to be him."

©2017 Bloomberg L.P.

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