Monday, August 14, 2017

Stormy summer in Venezuela – what’s next?

Gone are the days when thousands of people gathered in the streets of Caracas to worship the President Hugo Chávez. The day of this charismatic and controversial leader’s funeral was probably the last day that Venezuela saw the crowd on the streets in immense proportions. “Chavez is not dead. He lives on in every one of us,” said Johnny, a mototaxi driver at the funeral. Somehow, when Chavismo lost its leader but foremost run out of money, it lost its appeal. To give a simple example, while Chavez's approval ratings accounted for 57% before he died, Mr Maduro gets only one third of it (18%) according  to (respectively) Gallup and Datanálisis, the pollsters.

Today nobody doubts that the GREAT leader and his lofty ideas died four years ago. By creating social programmes and services known as “missions” and subsidizing food and energy, people felt their standards of life improved. Additionally, his charisma and the gift of conviction made his compatriots believe that their voices are finally heard. In reality, Chávez left a largely negative legacy, including the deterioration of democratic institutions, threats to freedom of expression, high rates of crime and murder (the highest in South America), and an economic situation characterized by high inflation, collapsing infrastructure, and food scarcities.

The situation has worsened under President Maduro due to two reasons. First, the rapid decline in the price of oil (main source of national income), which now costs 49 USD per barrel to compare with 138 USD in 2008, and mismanagement of economy made it impossible to keep financing the socialist model created by President Hugo Chávez. A combination of the former plus and the lack of charisma and good oratory skills of Nicolas Maduro led to a multifaceted political, social and economic crisis. Venezuelan economy contracted by 10% last year. The IMF forecasts that by the end of this year it will be 23% smaller than in 2013. Inflation in 2017 will probably reach 1,600%. According to a study by three universities, 82% of households now live in poverty. That compares with 48% in 1998, when Chávez came to power.

Price controls and the expropriation of private firms have led to shortages of food and medicine and made people’s life extremely difficult. Grocery shopping takes approximately three hours (if there is anything you can afford to buy). To get a state-funded bag of food called “solidarity bag” (“bolsa solidaria”) from CLAP (the state funded community centres) for which one has to wait up to one month, the family has to be very cautiously screened. Bolsas solidarias are only distributed to the supporters of the regime and contain very basic ingredients such as 1l of milk, 1 kg of beans, 1l of oil, 2 kg of rice per family per month. The new study shows that over the past year 74% of Venezuelans suffer from “Maduro’s diet” and lost an average of 8.7kg in weight.

The separation of power, the rule of law and the democratic institutions are gone in Venezuela. A Constituent Assembly that was established at the beginning of August have basically erased the Parliamentary Assembly controlled by the opposition since 2015. Since Mr Maduro has lost his majority two years ago (he got 5.6m votes against 7.7m for opposition), he does everything he can to stay in power. The Constituent Assembly, which nominally serves to rewrite the constitution, is designed to legitimise President’s suppression of the opposition and to take over a legislative power.

As a consequence, more Venezuelans flee to neighbouring countries such as Colombia, Brazil or Peru. Some countries such as Chile open their doors, offering asylum to those who request it at their Embassy in Caracas. The scholars estimate that perhaps 2 million Venezuelans (out of the population of 31 million) have already fled the country in search for new home. Apart from the violent clashes between protesters and security forces (in almost four months of protests, more than 100 people have died), Venezuela has a high rate of extrajudicial killings by security forces and the highest crime  victimization and homicide rates in the region. The more people emigrate, the weaker the opposition becomes. It is already difficult to attract the crowds to the streets.

Every day, Venezuela becomes more and more isolated internationally. It is not only due to the fact that ten airlines, including Iberia, AirFrance, Delta, United Airlines, have suspended their flights to Caracas, but because the regional allies are turning their backs on Nicolás Maduro. First, Venezuela was suspended from MERSOCUR trade group. Now its main regional economic partners – Brazil, Argentina, Colombia and Mexico - are showing their discontent and do not recognise the convocation of the new constituent assembly. As for now, Venezuela can count with its ideological allies such as Cuba and China but also Russia, Bolivia, Ecuador, Salvador, Nicaragua and some Caribbean island-states.

A lot depends of course on the United States, which is Venezuela’s key trade partner (it accounts for 38% of its trade). Behind Canada and Saudi Arabia, Venezuela is the third-largest foreign crude oil supplier to the United States. If the US would cut off the oil imports from Venezuela, the country would be at risk of default. This could potentially trigger the pacted-transition, but it would also have the negative consequences. First, because it would hit the most the regular people. Second, it would be a confirmation and great excuse for President Maduro to blame the US and “devil” Western capitalism for catastrophic situation in Venezuela. The recent implications of the US military intervention in Venezuela, can unfortunately backfire by strengthening Mr. Maduro’s position.

Unfortunately, there is no good solution for Venezuela. The best option would be a negotiated transition where Mr Maduro gave up the power in exchange for instance for legal immunity for him and other senior Venezuelan officials. However, there is no sign that the regime will voluntarily surrender power. The negotiations triggered by Pope Francis in October 2016 failed. Additionally, the opposition cannot agree on a single, charismatic leader who could appeal to the crowds and confront the regime. Finally, the army seems to be in line with President Maduro, who equipped them with control over food imports and distribution, ports and airports, a bank and the mining industry. Even though some generals are fed up with the state of play, they don’t see any guarantee that the opposition would be able to run the country.

Despite this bad weather scenario, the international community should not give up on Venezuela. The USA, Latin America and the Europeans should join efforts, harmonise the the individual sanctions and pressure the government to restart the negotiations with the opposition. The alternative would be humanitarian crisis and a slide into generalised violence that would have serious consequences for the region.

Dr. Kinga Brudzińska
Senior Research Fellow
GLOBSEC Policy Institute

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