Here, Laura Sharp and Georgina Wright assess the ongoing social, economic and political situation in Venezuela to explore the likelihood of the country experiencing a complete societal shutdown
On the morning of the 30th April, it seemed as though a transition of power may be underway in Venezuela. Juan Guaidó, the country’s self-declared and internationally-backed interim president, released a video from a Caracas military airbase claiming he had the support of the army and calling for the public to take to the streets. Rumours also surfaced that incumbent President Nicolás Maduro was getting ready to leave the country.
However, just a few hours later, it appeared that Guaidó had not garnered the support needed to take control, and Maduro made an appearance on state television declaring he had successfully crushed an attempted coup.
Now, it seems that Guaidó has missed his opportunity. Maduro has since started legal proceedings arresting individuals involved in the attempted coup; at least 15 people have been apprehended by the authorities so far. On 20th May, Maduro proposed expedited elections for the opposition-controlled National Assembly, despite international condemnation for such a proposition; it is likely that Maduro will go ahead with this plan.
Negotiations between the government and the opposition held in Barbados, and mediated by Norway, have been occurring intermittently since the end of May. In a severe blow to the opposition, some of Guaidó’s aides based in Colombia are in the middle of corruption allegations, with at least one formal request to investigate the case While some areas of the political stalemate have improved for citizens, like the reopening of land borders between Venezuela and Colombia, the situation remains dire, with no end or resolution in sight.
Since Guaidó assumed the position of interim president on 23rd January, he has been recognized by the United States, Canada, a number of Latin American neighbours, as well as the majority of European nations.
Despite the legal clauses in the constitution that Guaidó has used to claim the interim presidency, Maduro denies his legitimacy. Maduro has also retained the backing of a number of international powers, including China and Russia – both of whom vetoed a UN Security Council resolution calling for new presidential elections.
In the last six months, support for both Maduro and Guaidó has grown and, while tensions have escalated, no significant changes have come about in this international game of tug-of-war.
The symbolism of the Chavista regime has meant that public support still remains for President Maduro despite the crisis. It originally stood for ordinary people taking the power back off the bourgeoisie elite, directing the profits from the country’s considerable natural resources into social care, education, public housing, all for the benefit of the Venezuelan people. US sanctions, imposed in recent years designed to increase economic pressure on Maduro, have done little to destabilise his government or reduce his military backing. Instead, the sanctions have fuelled Maduro’s propaganda, allowing him to blame the US for the country’s troubles, rather than his government’s mismanagement.
According to Maduro, the US and its colonialist allies have created the poverty, lack of basic goods, electricity and water; businesses have left and jobs have been lost because the US conspires to destabilise the country for its own gain. Naturally, in this narrative, Guaidó is positioned as an imperialist puppet whose ascension to power would mean the fall of Venezuela and the rise of the US.
The fact that Guaidó has international support, especially from the US, and has not ruled out the acceptance of US military involvement, has only appeared to solidify Maduro’s backing within the military, his supporters in government and his anti-US allies. Despite Guaidó’s assertion that US military intervention is an option, it is for these reasons that the US is unlikely to resort to such measures as it would legitimise the fears that Maduro and his government have spread.
After decades of unsustainable policies, and now in the midst of a still worsening economic crisis that has seen unprecedented levels of inflation, Venezuela is looking at a total societal crash. The IMF have stated inflation may rise to 10 million % by the end of 2019. The ongoing mass exodus from the country is considered the largest refugee crisis ever recorded in the Americas region, and the loss of a skilled labour force has contributed to the ongoing issues in every industry.
Lack of maintenance, investment and manpower at the hydro-electric dam that provides the majority of electricity and power to the country has caused significant countrywide blackouts. There is a widespread lack of public services and the government has enforced the rationing of basic goods. The strategy of placing military officials into high ranking positions may have kept the government in charge, but it has removed the expertise required to develop the country’s industries.
Food scarcity been an issue since the government introduced price controls. Whilst the currency devalued, the price of bread and other products was artificially maintained, driving basic goods out of reach of those on an average income. Approximately 93% of Venezuelans are reported to have limited, or no access to sufficient amounts of food and water.
The government’s efforts to introduce a new cryptocurrency, the Petro, in 2018 in an attempt to negate the effects of rising inflation and to help circumvent international sanctions, ultimately failed in holding up the economy.
Despite the influx of international aid from the Red Cross, China, Russia and Cuba, the ongoing issues are so systemic that aid is not a lasting solution. Current reports suggest there is no activity in the oil fields and less than 10% of the country’s oil factories are operational. The lack of available fuel has resulted in queues at petrol stations reaching up to at least three days. Between the early 2000’s and March 2019, the state-owned oil and natural gas company, PDVSA, decreased its daily crude oil production by 72%, despite sitting on top of the largest natural reserves of oil in the world.
Venezuela’s overreliance on imports, along with its failure to invest oil revenue appropriately and diversify its economy, has made it vulnerable to external economic shocks, like the fall of the global oil industry in 2007/8. Increasingly restrictive sanctions imposed on the country by the international community have further undermined the government’s ability to reinvigorate the economy; a continuous decline in foreign investment has left the country isolated and unable to effectively operate.
The current influx of aid will likely help improve some aspects of the operating environment in the immediate-to-short term, but is not a long-lasting solution; operational issues will persist and worsen over time as a lack of radical policy changes will see the continued haemorrhaging of the economy. The ongoing political crisis will likely be dragged out over the coming year at least, as pro-Maduro foreign governments continue to financially prop up his administration.
These influxes will not be enough to circumvent the ongoing crisis, yet it will be enough for Maduro to maintain power for the foreseeable future. An introduction or adoption of a new currency is unlikely to alleviate the current operational difficulties or help stem rising inflation; previous attempts, including the Petro, have resulted in failure. The government’s aversion to adopting the USD will mean it is left without many options in terms of currency adaptations. While there is the potential for adopting the Euro, a currency board goes against the government’s socialist ideals.
As the operational, security and economic environments are inexorably linked to the political situation, there is little end in sight. While Maduro maintains military support, Guaidó or any other opposition figure is unlikely to achieve significant changes. The ongoing corruption allegations involving Guaidó’s representatives is a significant blow to his reputation and has cost him, losing some sympathy and support as a result.
While Guaidó and Maduro continue to face off, the future of Venezuela remains bleak, as shortages and sanctions will continue to predominantly impact the citizens rather than the members of the opposition or government.
Laura Sharp
Regional Security Coordinator
Georgina Wright
Global Threat Analyst for Americas
