As Venezuela slides deeper into de­pres­sion, Maduro and the op­po­si­tion don’t move an inch

▶ Venezuela’s pres­i­dent is part of the coun­try’s prob­lem, but the op­po­si­tion can’t get rid of him ▶ “We’re at the doorstep of the abyss, a catas­tro­phe”

Bloomberg Businessweek (North America) - - Contents - An­drew Rosati

As Gov­er­nor Henri Fal­cón takes his morn­ing jog through Bar­quisimeto, the cap­i­tal of Lara state in Venezuela’s farm­ing heart­land, the scene is bleak. It’s not dawn, and the stores don’t open un­til 8 a.m., yet hun­dreds are lin­ing up to buy food. Even af­ter day­break, win­dows will re­main dark be­cause of rolling blackouts; govern­ment ser­vices have col­lapsed; and hospi­tals are so crowded that the sick share beds.

Fal­cón is a rar­ity in a deeply po­lar­ized coun­try: a lawyer and for­mer mil­i­tary man who broke ranks with the late Hugo Chávez yet re­mains in power as part of the op­po­si­tion. Three months ago, the op­po­nents of Chávez’s suc­ces­sor, Ni­colás Maduro, won an over­whelm­ing vic­tory in leg­isla­tive elec­tions. The op­po­si­tion’s lead­ers de­cided to give Maduro six months be­fore they would try to oust him legally. As Fal­cón runs through the city, nod­ding to con­stituents, he pro­vides his anal­y­sis: Don’t ex­pect any­thing to change soon; the suf­fer­ing must get much worse be­fore the Maduro govern­ment re­leases its grip on power. “We’re at the doorstep of the abyss, a catas­tro­phe in the coun­try,” he says. “But we’re not fac­ing a crip­pled ad­ver­sary. It would be naive to think so.”

Since the elec­tions, the an­i­mos­ity be­tween Maduro and the op­po­si­tion has grown so bit­ter that the govern­ment spikes the bills drafted by the op­po­si­tion congress while of­fer­ing lit­tle in the way of al­ter­na­tives. Venezuela con­tin­ues to slide deeper into eco­nomic de­pres­sion.

Over the last month, op­po­si­tion par­ties have been de­bat­ing how to force Maduro out as soon as is legally pos­si­ble. They may try to re­move him by amend­ing the con­sti­tu­tion to shorten the length of the pres­i­dent’s term in of­fice from six years to four. They may re­write the con­sti­tu­tion en­tirely, which could force the pres­i­dent to step down while a new char­ter is be­ing drafted. A re­call ref­er­en­dum is an op­tion.

Maduro isn’t go­ing to go eas­ily. With firm con­trol over the oil in­dus­try— the only cash cow in the eco­nom­i­cally mori­bund coun­try—he’s been able to main­tain his hold on cru­cial el­e­ments of pop­u­lar wel­fare pro­grams and has treated the mil­i­tary well, so it’s un­likely to dis­lodge him. He still pins the blame for Venezuela’s plight on an “eco­nomic war” be­ing waged against his coun­try by the U.S., as well as his lo­cal op­po­nents, an ar­gu­ment that ap­peals to loyal Chávis­tas. “Venezuela is fac­ing an in­ter­na­tional fi­nan­cial block­ade,” Maduro told TV view­ers in mid-fe­bru­ary while un­veil­ing some eco­nomic re­forms, al­though there is no such block­ade.

Op­po­si­tion lead­ers, for all their prom­ises of a new day, in­sist the govern­ment take re­spon­si­bil­ity for the coun­try’s near-bank­ruptcy and the fail­ure of its eco­nomic model, some­thing Maduro is un­likely to do. “Po­lit­i­cally, the coun­try is frozen,” says Car­los Romero, a political sci­en­tist at the Cen­tral Univer­sity of Venezuela. “Eco­nom­i­cally, the govern­ment doesn’t want to as­sume the costs of ad­just­ments, yet nei­ther does the op­po­si­tion.” The ad­just­ments are painful, un­pop­u­lar struc­tural re­forms.

With bil­lions of dol­lars in govern­ment bonds com­ing due this year, Maduro has made some changes. He de­val­ued the cur­rency and hiked the price of gaso­line more than 60-fold—it still costs just pen­nies to fill up a tank. He’s try­ing to lease large stretches of rich oil and min­eral de­posits to Cana­dian, Rus­sian, and other for­eign in­vestors. But years of mis­man­age­ment and a drop of more

than 70 per­cent in the price of oil mean those mea­sures will do lit­tle more than ex­tend his govern­ment’s lease, say skep­tics. “It gives the govern­ment breath­ing room to avoid a de­fault, but it’s not enough to avoid eco­nomic cri­sis,” says Venezue­lan econ­o­mist Ale­jan­dro Grisanti, for­merly with Bar­clays Cap­i­tal. The In­ter­na­tional Mon­e­tary Fund ex­pects in­fla­tion to sur­pass 700 per­cent and the econ­omy to shrink for the third straight year.

One of the is­sues fac­ing Maduro is that the other reme­dies to the cri­sis— loos­en­ing state con­trols, rolling back sub­si­dies, and re­turn­ing hun­dreds of busi­nesses and tracts of pri­vate land seized by Chávez—aren’t part of the govern­ment’s strat­egy. Temir Por­ras, a for­mer top aide to Maduro, poses the dilemma of any left­ist regime this way: “How do I face a sit­u­a­tion like this one with­out em­ploy­ing so­cially re­gres­sive poli­cies?” As a re­sult, “they have been par­a­lyzed,” says Por­ras, who re­mains a mem­ber of Maduro’s party.

The pres­i­dent has barely ac­knowl­edged his elec­toral de­feat in De­cem­ber, ced­ing lit­tle ground to the op­po­si­tion. He’s used the courts to side­step congress’s de­ci­sions and vowed to block the op­po­si­tion’s cen­tral ini­tia­tives, such as giv­ing deeds to pub­lic hous­ing res­i­dents and grant­ing amnesty to dozens of jailed politi­cians and ac­tivists. At the same time he’s gone through three econ­omy czars in three months, tur­moil that hasn’t helped reignite growth. One for­mer Maduro as­so­ciate says the pres­i­dent is no longer the de­ci­sive leader he once was and that he’s be­ing pres­sured by ad­vis­ers with con­flict­ing views of what to do.

For its part, the op­po­si­tion has no uni­fy­ing agenda be­yond un­seat­ing Maduro. “Venezue­lans’ hope for an im­me­di­ate change in govern­ment is, in prac­tice, an il­lu­sion,” says Jose Vi­cente Haro, a lawyer and head of the Venezue­lan Con­sti­tu­tional Law As­so­ci­a­tion. Bar­ring a res­ig­na­tion by Maduro, some be­lieve a break in the political stale­mate will oc­cur only af­ter greater eco­nomic and so­cial de­te­ri­o­ra­tion. “Any other op­tion only be­comes avail­able when we’re in a sit­u­a­tion that is far worse than what we are in now,” says Mar­garita López Maya, a his­to­rian at the Cen­tral Univer­sity of Venezuela.

Gov­er­nor Fal­cón, who’s par­tic­i­pated in un­suc­cess­ful meet­ings among govern­ment, op­po­si­tion, and busi­ness lead­ers, says he still be­lieves in di­a­logue. “There is no other path; the other is con­fronta­tion, an­ar­chy.”

The bot­tom line Pres­i­dent Maduro is de­ter­mined to cling to power but must out­wit op­po­si­tion law­mak­ers to do so.

Five Months?

Two Weeks?

One Year?

10 Days!?

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