Venezuela: What’s Next? Venezuela is again in the news. It has become an annual event. As Nicolás Maduro, Hugo Chávez’s handpicked successor, clings to power, the true dictatorial nature of the regime is finally revealed.
Most English language analyses of the current situation in Venezuela start by taking news reports at face value, ignoring a valid saying about politics in Latin America: “What you see is never what’s really going on.” This is particularly true when applied to savvy Leninists like those ruling in Cuba and Venezuela.
To understand current events in Caracas, and to analyze the scenarios likely to develop in a country once considered amongst the richest in the world, some myths about the Chavista regime need to be debunked.
The first myth is Hugo Chávez’s supposed enormous popular support.
When Hugo Chavez Was Elected
People were celebrated on the Streets! He built Million-new Homes:For Poor in One year! He had 80% popularity!
— Euro Man & Activist (@DeyanWonder) May 9, 2015
Yes, it is true he was first elected to power through free and fair elections in 1998. It is also true that the base of his support were the poorest Venezuelans, harmed by the disastrous policies of Chávez’s predecessors in the 1990’s. However, Chávez’s popular support at its climax was never higher than those of an average successful politician anywhere else on the planet.
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Chávez initially won the presidency with 54% of the vote. That was the high point of his popularity. For subsequent elections, he perfected a system of voter intimidation and manipulation of voter rolls, but even then he was never able to reduce the opposition’s support below an average of 40 to 45 percent of the total vote. In truth, Chávez lost the support of most Venezuelans long before his death.
During his initial, successful run for president, Chávez was asked point blank in several TV interviews whether he was a communist; his reply was purposefully (and sarcastically) identical to the one given by Fidel Castro to Princeton University students during his visit to the USA in 1959: “I am a humanist.”
Years later, on consolidating total power in his own hands, Chávez again emulated Fidel and confessed to being “a convinced follower of Marxist-Leninist ideology.”
The myth remains among many in American academia that Chávez was simply another Latin American populist in the mold of Juan Domingo Perón. He was not. He was a convinced Marxist who could quote entire passages from Lenin.
Hugo Chavez’s economic miracle https://t.co/WugzicNWcg Often marginalized as a radical, his brand of socialism achieved real economic gains
— Mark J. Perry (@Mark_J_Perry) March 27, 2017
During his fourteen-year rule in Venezuela, Chávez followed a strategy of introducing socialism in stages. The first stage entailed obtaining total control of all institutions of the Venezuelan state.
Thus, during the first four years of his presidency, he concentrated his efforts in changing the constitution, packing the Supreme Court with his cronies, installing soviet-style political commissars in army units, and changing the national identity card and the electoral system to ensure his reelection through manipulation of voter rolls.
During this first stage, Chávez was not interested in antagonizing the private sector or the business community. He had enough on his plate, and knew he could not tackle all enemies at once. Just as Hitler’s final destruction of the Jewish middle class during Kristallnacht did not occur until five years after his ascension to power in Germany, in Venezuela, Chávez reassured the business community that he was not really interested in their demise. They were enemies he would eliminate later.
Throughout this period “Chavismo” seemed very similar to Argentina’s “Peronismo.”
In September, 2001, Chávez began his offensive for the Second Stage of the Process for the Revolution, as Chávez called his march toward a totalitarian state.
That month he openly broke with the United States by calling the American bombing of Afghan targets “an act of terrorism equal to 9/11.” He then proceeded to pass 49 laws directed against the private sector.
These laws eliminated private participation in the oil business, allowed for confiscation without payment of private lands, suspended constitutional guarantees for business owners, and established “military security zones” in major metropolitan areas. This measure was a de facto confiscation of prime real estate in Venezuela’s major cities.
At the same time, Chávez launched an all-out attack against the country’s independent labor unions, persecuting and even imprisoning several prominent leaders.
By the end of 2004, Chávez had embarked in an unstoppable march to acquire the “commanding heights” of the Venezuelan economy, having destroyed the independent labor movement (its leaders were mostly imprisoned or fled into exile) and controlling most of the mass media outlets in the country.
Between 2008 and 2009, Chávez entered the Third Stage of The Process. He nationalized the holdings of international corporations in all sectors considered essential by his Cuban advisers: telecommunications, mining, steel, construction materials, oil and oil services, energy generation, distribution and transmission, gas, agricultural services, and even glass manufacturing companies.
The twin myths of Chávez’s enormous popularity and lack of ideology protected his image internationally. With a friendly press blind to the true nature of the regime, a modern day communist dictator was widely accepted as a legitimate ruler.
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By the time of his death in 2013, Chávez had achieved most of what he set out to do. A mediocre opposition totally lacking a strategic vision posed no problems. Moreover, as Chávez himself boasted several times, he had “infiltrated them to the core.”
His aim was never to turn Venezuela into another Cuba economically. Chávez knew well that he needed the private sector to keep goods on the shelves and to avoid Venezuela becoming economically irrelevant in the way Cuba has become.
— Cadena Agramonte (@cadenagramonte) March 28, 2017
His relation to the Castro brothers was one of a comrade in arms and colleague. He needed the Cubans to provide security and repression expertise, and they needed him to keep the Cuban people fed. Chávez’s aim was to supplant Fidel as the new leader of the International Left, and he knew he needed an economically strong Venezuela to do so.
Chávez’s brand of socialism was carefully modeled after those of Islamic Socialist dictatorships, like Gadddafi’s Libya. Totalitarian control of the “commanding heights” of the economy with the private sector allowed to function within strict parameters.
On Chávez’s death things changed in Venezuela. Maduro inherited absolute power, controlling all levers of the state, a muzzled or nationalized press, and armed forces that had become the leader’s Praetorian Guard.
Lacking Chávez’s brain-power and charisma, however, Maduro became completely dependent on Cuban advice. The relationship changed; Havana became an imperial capital and Caracas merely the viceroy’s seat of power.
Chávez passed away before the destruction of Venezuela’s oil industry caused by his policies became evident. Maduro compounded the problem by delegating economic planning to those closest to Havana, thus causing the complete collapse of the entire economy, and becoming unbelievably unpopular in the process.
Where Chávez needed to simply skim a few votes here and there to turn a 4 to 5 point electoral loss into a victory, Maduro would have to perform a miracle to win given his deep unpopularity. He knows there is no scenario under which he or the Chavista PSUV party could claim an electoral victory.
Maduro obtained his post for two reasons: unquestionable personal loyalty to Hugo Chávez, and Raúl Castro’s conviction that he was the most likely Chavista leader to keep receiving instructions from Havana. Unfortunately for Maduro, he was far from being the most powerful Chavista leader domestically in Venezuela. Thus, Maduro has been shackled from two sides.
— PanAm Post (@PanAmPost) March 30, 2017
On the one hand, he must bribe and cajole the corrupt generals in Venezuela’s army, turning a blind eye to their involvement in drug trafficking and turning over to them, for their profit, the control of Venezuela’s food imports and the management of foreign exchange allocations.
On the other hand, he is completely dependent on Cuba’s advice and support, which brings Venezuela’s economy ever closer to the Cuban model, compounding its collapse and making it impossible to recover.
Thus, we arrive at the current predicament. The Venezuelan constitution has various escape clauses from a failed and unpopular government. A recall referendum is an established right, included in the text of the constitution drafted by Hugo Chávez to diminish the fears that he’d become president for life when he proposed, and obtained, the elimination of term limits. The dates at which other elections must be held— gubernatorial, municipal and presidential— are literally set in stone and cannot be legally changed.
Having lost control of the National Assembly, Venezuela’s congress, in the last election which the regime allowed, Maduro has used a rubber-stamp Supreme Court, presided by a convicted felon, to annul any possibility of elections, of any kind, for the time being.
More recently, Maduro used the rubber-stamp Supreme Court to effectively close the National Assembly. The Court abrogated the Assembly’s legislative powers. It is evident that Maduro is intent on clinging to power.
If he were to allow elections and try to use Chávez’s old tactics, the fraud would be all too evident, weakening him further. Elections are out of the question, and he is egged on by two groups that, although not allied, have the same interests: the narco-generals in the Venezuelan army and the Cuban government. Elections in Venezuela would endanger the corrupt generals, and Cuba would risk famine after losing its Venezuelan lifeline.
If the international community and the Venezuelan opposition do not devise an effective strategy together, the only thing we can expect is Venezuela to slide further into rogue state status.
Venezuela’s oil production will continue to slide and, given Maduro’s dependence on the advice of hard core Cuban-trained Marxists, like Chavez’s son in-law, a Cambridge educated radical who until recently served as vice-president, the Venezuelan economy will continue its unstoppable downturn, breaking all records for a country not at war.
A strategy for producing a change in Venezuela needs to concentrate on three areas:
- A. Recognizing Cuba’s involvement in the country and making the Castro regime pay a price for its intervention.
- B. Making sure that the loyalty to the regime of military and civilian leaders who do not benefit directly from drug trade is extremely costly, and:
- C. Keeping the pressure on Maduro domestically so that leftist propaganda cannot help him recover his image internationally.
It is in this manner that Venezuela may have some hope of returning to democracy, with the international community’s continued efforts in securing free elections.
By Yigal Chazan Argentina's economy is finally showing signs of recovery after last year's recession, but the improvements have yet to be felt by ordinary Argentinians whose patience is wearing thin. Although President Mauricio Macri's business-friendly reforms have been welcomed by investors, foreign direct investment critical for job creation has been slow in coming. Macri supporters’ euphoria at his surprise election victory in November 2015 has dampened as a spate of labour unrest over job losses and pay has hit the headlines. His popularity is dipping, with many Argentinians beginning to question his policies. The President’s reform programme will be subjected to further scrutiny in mid-term Congressional elections in October. Since the legislature dominated by the Peronist opposition, his centre-right governing coalition, Cambiemos, needs to start delivering better economic news. After twelve years of protectionism and free-spending populism under the leadership of the late Nestor Kirchner and more recently his wife, Cristina Fernández de Kirchner, the country’s finances were in a parlous state when Macri, a former businessman and scion of a wealthy family, came to office. With the country facing a balance of payments crisis, Macri immediately set about addressing his predecessors’ isolationism and much-criticised stewardship of the economy. He improved relations with trading partners and foreign investors – and began tackling some of the country’s persistent economic problems, in particular the high fiscal deficit, which last year stood at 4.6 per cent of GDP. Read More: Macri Freezes Hiring in Executive Branch to Stop Government Spending Read More: Despite Setbacks, Macri Is Leading Argentina on Upward Path Macri slashed export taxes and removed capital and currency controls, leading to a 30 per cent devaluation of the peso. He also resolved a long-running dispute with US creditors, facilitating a return to international bond markets after a fifteen-year absence, and cut generous subsidies for basic services. At the same time, the Central Bank’s independence and the integrity of the state statistics institute, INDEC, which had published questionable data for years, were restored. Investor confidence in the new administration was underlined last April by a $16.5 billion bond sale, an emerging market record. In October, MercoPress, a regional news agency, reported the country’s foreign reserves had exceeded $40 billion for the first time in three and half years, largely due to government bond issues and loans to the Central Bank, with grain exports, fuelled by the devaluation of the peso, also contributing to the rise. But the country has found it hard to secure foreign direct investment (FDI). The government says $4 billion dollars of FDI flowed into the country in 2016, and hopes the figure will at least double this year, mainly through auctions of renewable and non-renewable energy projects. Yet this is just a fraction of the $33 billion of foreign investment announcements made in 2016. According to Reuters, executives from international companies attending a Buenos Aires business forum in September commended Macri’s attempts to open up the economy, but many said they wanted to see improved infrastructure together with more flexible labour laws and other reforms before investing. The government is counting on FDI to help stimulate the economy, which appears to be recovering, albeit slowly, after falling into recession last year. The IMF is forecasting nearly 3 per cent growth in 2017, as Macri’s reforms begin to have more positive impact. Already there are signs of improvement. Inflation – 40 per cent last year – has been slowing, with the Central Bank targeting a rate of between 12-17 per cent this year. Unemployment dropped slightly to 7.6 per cent in the fourth quarter of 2016. Tax collection last year was nearly 35 per cent up on the previous twelve months – in January it was reported that a tax amnesty programme had so far repatriated more than $80 billion of Argentinian assets held abroad. Reflecting the improving economic conditions, Moody's raised the country's credit rating from stable to positive in early March. Read More: Argentina Unions, Activists March against President Macri's Austerity Read More: Argentina: Opposition Demands Macri's Impeachment But the apparent upturn has yet to be felt by ordinary people, concerned about unemployment and salaries. In September the government revealed that 120,000 jobs had been lost since the start of the year. Those in work complain their spending power has been squeezed by inflation and the withdrawal of subsidies. Social and labour unrest, the bane of Argentinian administrations, may undermine Macri’s governing coalition and unnerve investors. In early March tens of thousands of members of the largest umbrella trade union, the CGT, marched through Buenos Aires in a protest against austerity measures and job cuts. It came as a two-day teachers’ strike over pay delayed the start of the new school year. A one-day national action was held on April 6, the first general strike since Macri took office. In the run-up to the October elections, the growing hardships seem to be shaking Argentinians’ faith in Macri. In March, his popularity stood at 40.2 per cent, a four point drop over the previous two months. The Peronist opposition, which has faced corruption allegations and internal disputes, will draw strength from the fall in Macri’s approval rating and the rising labour tensions. The President, whose coalition lacks a legislative majority in Congress, has relied on moderate opposition factions to help get his reforms through. But his political rivals may unite to frustrate attempts to pass market-friendly measures as elections draw nearer. Macri has managed to strike deals with some unions to lower labour costs, but his negotiation skills will be further tested if industrial action widens. While the President is under pressure to begin delivering tangible economic benefits, he risks unsettling investors if he eases off a commitment to reducing the fiscal deficit. A $26 billion infrastructure spending programme – to upgrade airports, roads and railways – along with the revival of the agricultural sector is likely to create more jobs, but whether this will give Macri a pre-election boost is unclear. Although his governing coalition seems unlikely to win a majority in the upcoming elections, it will need to perform strongly in order to forge ahead with the reform programme. *Yigal Chazan is an Associate at Alaco, a London-based business intelligence consultancy.