Foreign Policy: The last days of Nicolas Maduro

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http://foreignpolicy.com/2016/02/22/the-clock-is-ticking-for-maduro/

Venezuela faces a slow-moving economic disaster that could spell political doom for the embattled president.

CVenezuelan President Nicolás Maduro warned his countrymen that the economic crisis they’ve been suffering through for months could last through 2017. He spoke not long after the supreme court approved his declaration of economic emergency, justifying his need for special powers.

What many doubt, however, is whether Maduro himself will be in power to witness an economic turnaround, as the pressures mount for him to step down or be pushed aside. “Maduro is facing a crisis encompassing economic, political, social and cultural factors,” said Caracas-based political analyst Dimitris Pantoulas. “It’s a perfect storm.”

And the president seems at a loss. A former bus driver who rose to become the country’s foreign minister and then vice president before succeeding the late Hugo Chávez in 2013, Maduro is beset by infighting within his own cabinet and divisions within his United Socialist Party of Venezuela (PSUV) that have left him scrambling to survive politically.

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Maduro also faces a revitalized opposition calling for his resignation, soaring crime, a possible debt default, and now, water and power rationingexacerbated by El Nino. “The government is at the helm of a sinking ship, refusing to change course, and the opposition is content to stand by and let it happen,” says David Smilde, a sociology professor at Tulane University who has studied Venezuela for over 20 years.

Even though the president raised domestic gasoline prices 60-fold on Feb. 17 while devaluing the country’s currency by 37 percent, he also raised the country’s minimum wage and pledged to revise prices on goods and services set by the government. But he forecast no easing of government control over the economy, hinting that it would only increase. Those measures “will do nothing to resolve Venezuela’s problems,” Luis Oliveros, an economist at the Central University in Caracas, said in an interview. “They will cause more inflation, and more distortions.”

Maduro has only himself to blame. For the past two years, he has promised to overhaul his government’s economic policies to deal with crushing shortages that have turned toilet paper and hand soap into luxuries, and soaring inflation that has given Venezuela the dubious honor of boasting the world’s highest inflation rate.

It all could have turned out differently. On March 15 of last year, the outgoing assembly, where the PSUV held a majority, granted Maduro the power to rule by decree, effectively allowing him to implement new laws without congressional approval. But Maduro failed to enact any economic changes, fearful of the political repercussions that a currency devaluation or cutbacks in social spending would unleash. That inaction led voters to punish Maduro and his party in December, when the opposition won a crushing victory in legislative elections, giving them control of the National Assembly for the first time in nearly 17 years.

Hoping to blunt opposition initiatives, Maduro asked the new assembly to grant him emergency powers to right the economy. Its members refused, but their decision was overturned last week by the Supreme Court, where PSUV partisans hold a majority. That body ruled that Maduro didn’t need legislative approval to declare an emergency. And so emergency it is.

Maduro now has 60 days to take steps to right the economy. Oliveros and others maintain that the only way to resolve the country’s economic woes is to dismantle state control over prices, foreign exchange rates, and to cut subsidies and social spending, all of which Maduro refuses. Instead, he seems to opt for greater state control.

“We have to regain this country and remake its production, distribution, and retail systems,” Maduro said in a televised address on Feb. 12, arguing that greater government control was essential to blunt an “economic war” allegedly being waged against his government by the country’s business elite, and exiles in Miami and Spain.

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Almost everyone agrees that Venezuela, which has been unable to develop what are the world’s largest oil reserves, is in deep trouble. Economists forecast that inflation could top 700 percent this year, and that the economy could shrink by an additional 8 percent after last year’s 10 percent contraction.

The country’s currency, the strong bolivar, now trades at more than 1,045 to the dollar on the black market, in stark contrast to the official exchange rate of 10 bolivars to the dollar. Production of crude — which accounts for about 95 percent of the country’s hard currency revenue — continues to fall, and the state oil company is slashing investments to save funds. And staring the country in the face is more than $13 billion in debt payments this year that have raised fears of a default that would cut Venezuela off from capital markets.

Angela Munoz, a 52-year-old housewife in the town of El Consejo, has had enough of Maduro and his promises. She wakes up at 4 a.m. every morning to be among the first in line outside her neighborhood supermarket in hopes of buying hard-to-find items like corn meal, flour, laundry detergent, or coffee. She often wakes up to find the water to her apartment has been cut off, thanks to Venezuela’s ongoing drought.

After spending her day looking for food, she hurries home before 6 p.m. to avoid the thugs who live in her neighborhood. She and her neighbors only have police protection until late afternoon, when the security forces withdraw. The police claim that they can’t defend themselves, let alone the community, against better-armed gangs.

Munoz can no longer find medicine for her 75-year-old mother, who suffers from hypertension and diabetes. Now, she fears that the government has done nothing to confront an outbreak of the Zika virus in her town. Her husband can’t use his motorcycle because he can’t find spare parts.

“Just when I think life can’t get any worse, it does,” Munoz moaned. “I had hoped things would get better when the opposition won control of the assembly. I thought that Maduro would have to work with them to find solutions. It’s obvious that he only wants to stay in power, and we have to suffer the consequences until he is replaced.”

Venezuela’s opposition coalition, the Democratic Unity Round (MUD), has set a deadline of six months to force Maduro peacefully from office, either by a recall referendum or constitutional amendment that would shorten his term, which is currently due to end in 2019. “There is a huge majority who want change,” opposition leader and Miranda State Governor Henrique Capriles Radonski warned on Feb. 17. “This is a crisis that is accelerating each day and the government doesn’t want to do anything to change it. Our only option is to change the government.” Capriles, who lost narrowly to Maduro in a special election in 2013, says the opposition should pursue both routes — the amendment and the recall, both — to ensure Maduro’s removal.

But the MUD has moved carefully, especially after the Supreme Court ruled that three opposition legislators couldn’t take their seats, while it studied allegations of voter fraud.

Those three lawmakers would have given the opposition a two-thirds majority, sufficient to rewrite laws, replace ministers, and recall Maduro. The court hasn’t said when it will make a final ruling on the trio. In the meantime, they are waiting to see what the court rules, and may have to run again in a special election.

While the court dithers, the assembly has been concentrating on smaller projects: granting property rights to recipients of government housing, raising pensions and benefits, and freeing political prisoners, while pressing the government to advance its economic proposals. The opposition is letting “the government stew in its own juices,” Smilde said. “The opposition is essentially letting the government spend what political capital it has resisting change, in order to push for an end to Maduro’s presidency.”

The fear of a social explosion may result in an internal coup against Maduro, as PSUV activists and the military high command seek to protect their positions and the riches they have accumulated under 17 years of chávismo, the social, political, and economic movement created by Chavez that sought to redistribute the country’s oil wealth but according to the government’s dictates. “Maduro may be offered up as a sacrificial lamb, [replaced by a] new leader put in place by the PSUV,” Yorde said. “A new government then might try to work with the opposition in a unity government.”

Whatever happens, change can’t happen too soon for Munoz.“I can’t imagine any changes being worse than what we have right now,” she said. “It’s time to turn the page.”