By David Smilde, WOLA Senior Fellow
(Note: this piece was originally published on WOLA's Venezuela Politics and Human Rights blog)
A year ago I published an essay called “The End of Chavismo?” in Current History. In it I suggested that the Chavista equilibrium—characterized by an economy fueled by state spending and an over-valued currency supporting a democratically-elected government—seemed to be coming to an end.
I suggested that the Maduro government was faced with three possible futures. It could: change its economic policies, be voted out of power over the coming two years, or become significantly less democratic.
SEE ALSO: What's Next for Venezuela?
I also suggested that Maduro was hamstrung by being the successor of a charismatic figure like Chávez. Maduro’s main attribute recommending him for the presidency was having been chosen by Chávez, putting him in a poor position to deviate from Chávez’s policies. The latter had anti-neoliberalism at the center of his ideology, complicating necessary reforms such as devaluation of the national currency and raising or lifting price controls.
So what has happened in the ensuing year and where are we now?
Over the past year the government seems to have chosen the second option. It has declined to make any significant change in economic policies and got punished at the polls in last December’s National Assembly elections. Even after this setback it still does not seem willing to change course—there are currently rumblings about a devaluation and increase in gas prices, but this will likely be too little, too late.
The Maduro government in 2015 hardly behaved as a model of democracy—Antonio Ledezma was jailed, Leopoldo López was sentenced, the CNE once again showed itself incapable of ensuring a fair campaign, and the year ended with the Tribunal Supremo de Justicia suspending the elections of three opposition deputies. But for all that, 2015 did not represent a significant deterioration from 2014, and the December vote came off clean and was recognized, despite opposition bluster that the government would never allow itself to lose an election.
The current situation, then, is within the lines I traced out a year ago, but is actually much worse. In my analysis of the economy a year ago, the key problem was Venezuela’s foreign exchange chaos. Over the long term it increasingly made Venezuela dependent on imports as local industry could not compete with cheap goods from abroad. Since 2013, even with solid oil revenue, foreign exchange distortions were causing a shortage of dollars for imports of finished goods and inputs for domestic production.
However, with the price of oil now below $30 a barrel, Venezuela will now have a shortage of dollars even if it gets ahold of its foreign exchange chaos and raises gasoline and electricity prices. At current prices Venezuela’s oil income in 2016 will be around $24 billion—with $14 billion in debt service—that would leave approximately $10 billion to pay for imports. In 2015 Venezuela imported approximately $32 billion in goods, which was already a drop from the previous year and provided a context of severe scarcities and hardship (see Juan Nagel’s analysis here). This year will be dramatically worse. It is not clear how the government will cover this deficit. The government so far has refused to go to multi-lateral agencies and China, in the midst of its own economic problems, seems leery of lending more.
And President Maduro will confront this crisis with even less political capital than he had last year. So far there are no signs of outright defections within Chavismo—other than in the voting population. However, since December it is noticeable that certain sectors seem to be less willing to tow the line.
Last week Attorney General Luisa Ortega went to the National Assembly and provided homicide statistics for the first time in years. In the process she called attention to the involvement of police in crime and the ready availability of guns—both implicit criticisms of the government’s attempts at police reform and gun control. Similar signs of independence can be detected in Defense Minister Padrino López’s role since election day, which has largely been institutionalist, rather than partisan.
After a rocky first week the opposition seems to have settled into a holding pattern, addressing small and moderate issues of governance, while letting the Maduro government stew in its own juices. Behind the scenes there is an emerging consensus in the opposition that they will push for an end to Maduro´s presidency this year—even Henrique Capriles is now on board. The real debate is on how to go about it: through a recall referendum, a constitutional amendment to reduce Maduro’s term, by calling a constitutional assembly, or pushing Maduro to resign.
However, everything is on the table for radicalized sectors and an attempt at an undemocratic transition could come from either side.
The situation is fraught with dangers and it is not clear which international actors and institutions might be able to facilitate or mediate in a crisis. The Organization of American States does not have credibility with Chavismo. The Union of Southern Nations (Unasur) probably does seem to have the institutional strength to be effective. And the Carter Center pulled out of Venezuela in 2015.
That leaves the United Nations and the Vatican. The latter could be especially effective but is probably deterred by differences with the Venezuelan Church Hierarchy. The UN Secretary General could conceivably name a Special Envoy in a crisis. However, there has been no public discussion of such a possibility so far.
In sum, it is hard to imagine the current political equilibrium surviving 2016. All attention needs to be focused on ensuring that Venezuela’s looming economic and political crises take democratic and institutional paths. p>