Dr. Pedro Carmona, President of FEDECAMARAS

‘Your move.’ The game of chess is popular in leisure and politics

Dr. Pedro Carmona, president of La Federación Venezolana de Cámaras y Asociaciones de Comercio y Producción (FEDECAMARAS), Venezuela’s largest and most influential business confederation, sat down with The Washington Times to discuss the state of affairs of the country and Fedecaramas’ role in society today, in light of the political and economic challenges Venezuela faces.

The Washington Times: Briefly explain how FEDECAMARAS’ mission and objectives are relevant in today’s climate.

Pedro Carmona: FEDECAMARAS is an institution that unifies all principal sectors of the Venezuelan economy – production, commerce and services – as well as the regional chambers among Venezuela’s provinces. Its primary role in its 58-year existence has been to promote the interests of the private sector. It’s principle mission is to promote the values of free enterprise, and to guarantee that the country provides a favorable climate for all private investment.

What we see is that private investment has declined over the past 18 years to low levels today. If we do not reverse this trend the country will continue being trapped in a perverse cycle, heavily dependent on the oil sector within Venezuela, tied to the fortunes of oil prices on the international market and losing opportunities for employment. Unless we invest at least $20 million per year to help create jobs and grow and diversify the economy, our situation will worsen.

We also must recover lost confidence in the laws, political rules and norms that build confidence in investment. This simply isn’t occurring now. We tried to establish a dialogue, build bridges of discussion, and have a closer and more profound relationship with the government, but to no avail. The administration’s mentality in passing 49 laws in November (2001) produced a rupture in our communications. In all of the actions we have taken since – our proposals, our nation-wide civic stoppage on December 10, and our actions before the Supreme Court and the National Assembly - we have asserted that these laws are unconstitutional. At this moment we are separated by a difference both in attitude and in action, and what we have lost is democratic rectification of the distinct sectors of society that can participate in the formation of policy. But, we will succeed.

WT: Many consider both the December 10, 2001 nation-wide stoppage, spearheaded by FEDECAMARAS, and the peaceful January 23 street march for democracy to be the greatest domestic challenge the President has faced to date. How were you able to mobilize the support of such a large coalition so successfully?

PC: December 10 was truly a historic date, without precedent, because it was an initiative in which Venezuela’s business sector helped transform and mobilize the nation. The fundamentals were in place to have had the capacity to transmit the message to the rest of society. For example, we worked with the syndicate labor organizations who, in another unprecedented step, united with business workers under the same objective. Ultimately, it was the people of the country who strongly supported the objectives behind the civil democratic protest we organized. For this reason we were successful.

WT: What were FEDECAMARAS’ objectives for the Dec. 10 initiative?

PC: Modification of the laws, a more democratic attitude on the part of the government, respect for opinions from various sectors and for the democratic institutions of the country, and the guarantee that there be more tolerance from the government for dissident opinions. We were protesting for all of these reasons, to rectify and change attitudes, as well as for other reasons, such as insecurity and unemployment.

WT: You’ve stated publicly that FEDECAMARAS is obliged to maintain an attitude of “proactive vigilence.” What do you mean?

PC: Because we believe that our democratic institutions are being threatened. Also, because the government tries to assert much force and control over the economy. When I speak of risks and threats to democratic institutions, I mean the actions taken against the modes of communication, such as the newspapers, television, at times the intimidation to the church, and against the private sector. The government’s attitude has become increasingly authoritarian.

WT: Would you say this has unified the business community more than ever?

PC: Yes, there has been a great sense of unity, and given that the current situation produces so much anxiety, this unites us even more. From a political perspective, we feel that there is an orientation toward more intervention and control from the state, more centralization, and more federalism that is contrary to what Venezuela needs. This has truly shut the door on private investment. What we want is to change the direction, because civil society feels that the fundamental and historic decisions related to defining the future of the nation should include all of us, not only the government. We want to share. To say it in a few words, we want a confrontation, not an armed confrontation, but a confrontation of ideas, to decide the future direction of Venezuela, because this theme is pertinent to all of us.

WT: How is FEDECAMARAS continuing to promote the development and diversification of the Venezuelan economy in spite of the polarization between the government and the private sector?

PC: We want to make more productive a Venezuelan economy that is using only half of its machines and generally running on 50 percent capacity. We have proposed policies to revive industry, commerce, tourism, energy, banking. . .all the sectors. For example, we believe the construction industry can be a sector that, with sustained growth, can have a significant and positive effect over the rest of the economy and generation a great deal of employment. We are proposing to the government a plan to invest $45 million in 12 years into this sector, enough to create tremendous growth and wipe out the country’s entire deficit.

WT: Would you say that recently decreed laws such as the Hydrocarbons Law and Mining Law serve as examples to show that a constructive dialogue about Venezuela’s future is not taking place?

PC: Of course. The Hydrocarbons Law is one of the most important for Venezuela as an oil country. The government permitted us to send our ideas or thoughts about this law, but, for the most part, there was no interaction. Our proposition is that, if Venezuela should continue with its current level of production capacity and its vulnerable position in the international petroleum market, our rules and laws must be more flexible.

WT: Many foreign investors consider Venezuela to be an especially risky place to invest their money now because of the country’s perceived political turmoil and fiscal problems. Do you agree with this assessment?

PC: Venezuela offers investment opportunity and has potential to develop – the situation is in no way catastrophic. There are risks in the national economy, but the macroeconomic indicators are not catastrophic. For example, the external debt is only around $20 million, and inflation has decreased from high levels in recent years. There are some sectors, such as energy, which will require more modifications in the law to bring about investment. In the gas sector, there are many new private sector investment opportunities, but in the oil industry, the problems lie in the new law, and we do not know if this sector will bring new investment. The manufacturing sector has been battered in Venezuela. The overvalued exchange rate damaged competitiveness and hurt our ability to produce and export.

But was what plagues Venezuela most right now is the lack of investor confidence in the country because of the confrontational environment between the (public and private) sectors. Without a doubt, this affects Venezuela’s valuation in the eyes of foreign investors.

WT: What actions should Venezuela take in the short term and long term to become more attractive to private investment?

PC: First, we need policies that address specific sectors. Second, we must take macroeconomic measures. For example, we must address the problem of high interest rates that hinder the ability of our producers to recover. Such actions cut off important lines of credit to businesses. These actions should be part of an integrated strategy to generate more favorable conditions for foreign investment.