By Andrés Serbin and Andrei Serbin Pont*
Hugo Chávez / Photo credit: ¡Que comunismo! / Foter / CC BY-NC-SA
Chávez’s legacy for Venezuela goes well beyond the Bolivarian government he left in Nicolás Maduro’s hands. Three conflicts overshadow the country’s future and contribute to many uncertainties:
- The first, and most urgent, is the standoff between the two main factions of the ruling PSUV over how to overcome the current economic crisis, characterized by the IMF as “difficult and probably unsustainable.” The pragmatists focus on making currency controls more flexible, and the ideologues are oriented toward increasing state control over the economy.
- The internal party conflict between President Maduro and his supporters, committed to building the “socialismo del siglo XXI,” on the one hand, and the pragmatic sector of the governmental party (pragmatic in the sense of ensuring their businesses operate without interruption) led by the President of the General Assembly, former army officer Diosdado Cabello, with the support of high ranking military and businessmen who benefited from the “revolutionary” process through legal and illegal business.
- The conflict between the PSUV, wielding the power of the government, and the opposition, which it accuses of being an “enemy of the revolution” linked to the “external enemies” (basically the United States) who want to derail the revolutionary process.
The dire state of the economy is aggravating each of these conflicts. By the end of September, according to government data, inflation rates hit 4.4 percent per month, and rose to 38.7 percent in 2013 so far. The opposition estimates an annual inflation rate of 49.4 percent—the highest since 1997. According to the 2012 UN Economic Commission for Latin America and the Caribbean (ECLAC) report, an increasing number of Venezuelans are living under the poverty line – with a 29.9 percent increase in the poverty rate last year – with income no longer enough to fulfill basic needs. Shortages of food and other necessities are severe; the depreciation of the Bolívar has accelerated in the currency black market, and the Central Bank is printing paper currency in an attempt to cope with the financial deficit. Within this context, the struggle between the pragmatic and the ideological fronts of the PSUV only contributes to the chaos.
Caracas’s international relations are also a factor in the internal tensions and are fueling concerns within the armed forces, according to NGOs and others with good contacts in the military. The economic crisis has affected the government’s ability to continue its “petro diplomacy” – diminishing its influence – and the opposition has continued persistent accusations of inadequate management of the relationship with Guyana and the claim over the Essequibo, contested territory along their common border. In addition, a recent incident involving a maritime exploration ship of Panamanian flag with a U.S. crew detained by the Venezuelan Navy in waters under dispute with Guyana aggravated the current national and international political scenario. The government usually resorts to nationalist appeals, but criticism of its handling of these problems is likely to grow.
The core issue in all of these situations continues to be the potential scenario of a social outbreak driven by the shortages, rising inflation, the broad sense of insecurity, and perceptions of blatant corruption in government. These frustrations appear to cut across all sectors of Venezuelan society regardless of ideological identity. Given the historical reluctance of the armed forces to intervene (particularly since the experience of the “Caracazo” of 1989), most observers still wonder when and if a social explosion will move them to action. The economic and social crises, the internal tensions in the government, and the polarization with the opposition, along with the possibilities of an international incident, may add up to enough to move the military, perhaps with the support of several state governors, to act, but determining that breaking point – the Venezuela analyst’s greatest challenge – remains elusive.
* Andrés Serbin and Andrei Serbin Pontare members of the analysis team of the Coordinadora Regional de Investigaciones Económicas y Sociales (CRIES), a Latin-American think tank.
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Raphael Lall (@Raphviva)
/ October 27, 2013This is an interesting story but sadly, it’s inaccurate.The venezuelan economy grew by over 5% last year and should grow this year as it already grew last quarter.Venezuela’s poverty rate at 27% makes it one of the lowest in Latin America.University education is free.UNESCO shows Venezuela has the fifth highest rate of university enrolment in the world.There is large chinese and Brazilian investment in Venezuela.There are huge infrastructure developments, e.g. large subways in Maracaibo and Valencia, large bridge they’re building over lake maracaibo.However, Mexican statistics show there are over 50 million Mexicans living in Mexico,maybe it’s Mexico and colombia, the United States’ allies will collapse????????????
vuelvancaras
/ October 27, 2013The authors state that “The opposition estimates an annual inflation rate of 49.4 percent.” This is actually the official inflation rate for September 2012-September 2013, from the Venezuelan Central Bank – not an opposition estimate. It’s also a sign that the authors are not familiar with the basic economic statistics of the country that they are writing about – in this case, one that was reported in all of the major news outlets in the Western Hemisphere a couple of weeks ago.
Much worse, they assert that Venezuela had “a 29.9 percent increase in the poverty rate last year.” In fact, Venezuela’s household poverty rate declined by 20 percent last year, almost certainly the largest decline in poverty in the Americas. (The authors cite the United Nations Economic Commission for Latin America by CouponDropDown\\022 “”> and the Caribbean, but ECLAC does not have figures for last year, and ECLAC uses the same household survey data as the Venezuelan government, so it will show the same result in poverty when it analyzes this data. The World Bank has already posted the 2012 poverty data for Venezuela, showing the sharp decline in poverty for the year.) this is from venzuela analysis
Yesica
/ October 29, 2013An excellent and thorough analysis of the current Venezuelan situation. To clarify on some criticisms brought up by commentators. The Venezuelan opposition has been announcing inflation rates in the high forties for months now. Numbers that now happen to coincide with Venezuela´s Central Bank. Regarding poverty, ECLAC´s report published in November 2012, clearly indicates a rise in the poverty rate in three Latin American countries, including Venezuela. In the case of Venezuela, the rate of poverty increased from 2010 to 2011 to reach 29, 5%. The 2013 report, is yet to be published.
While some economic indicators may be of value when analyzing the situation, we must not forget that Venezuela is almost completely dependent on oil exports and imports of any other types of goods. At the same time, it is suffering from massive shortages, and therefore, rationing imposed by the government including an attempt to implement a “rationing card”. With the oil barrel above 100$, why does Venezuela continue to find itself in fiscal and trade deficit? With expansion of the university system, why is it that a university professor makes half as much as an officer in the armed forces? Or that the 2014 military budget doubles the university level education budget for the same period? If development has been one of the great accomplishments in Bolivarian Venezuela, why is Venezuela ranked amongst the 10 most corrupt countries in the world according to the Corruption Risk Index 2014? Those and a long list of similar questions raise serious doubts about the sustainability of the current regime.
Joe Sammut
/ November 4, 2013This is a really sloppy piece, I’m surprised that the American University Latin American Studies department doesn’t fact check before it publishes – it definitely does not give a good impression of the academic standards at the department and university.
Firstly ECLAC have not released their data for 2012. To say that the poverty rate increased last year and to cite ECLAC is therefore incorrect.
Secondly, even if that was just a mistake the poverty rate did not increase by 29.9%, which is a huge increase. In fact it registered a small increase of 1.7 percentage points (which is around a 6% increase) from 27.8% to 29.5% from 2010 to 2011.
CEPAL draws its data from the same household surveys as the Venezuelan INE and their poverty rates closely track each other (they just use a slightly different deflator – actually the deflator that ECLAC uses tends to show a poverty rate lower than Venezuelan official statistics). Consequently, when ECLAC get around to releasing their data this year it will show a similar drop to that shown in the already released data from the Venezuelan INE, which shows a massive drop in the poverty rate of around 20%. Effectively 1.6 million people were lifted out of poverty last year in Venezuela (http://www.ine.gov.ve/index.php?option=com_content&view=category&id=104&Itemid=45#). This is probably due to the impact of two new social programs that provide cash transfers to parents in poverty and pensions to poor elderly people.
This is probably the biggest drop in poverty rates in the Americas last year. Only two other countries grew more than Venezuela last year: Peru and Panama. Peru has released 2012 poverty estimates, which only show a modest reduction in the poverty rate. Panama has not released any poverty data yet but it received similarly high levels of growth accompanied by an extremely small reduction in poverty the year before and in the absence of any new major poverty reduction policies it is unlikely that its data for 2012 will be substantially different. All in all it is major achievement of any government to achieve such a big reduction and it reveals the one sided and rhetorical nature of this article, which refuses to recognize any of the positive changes that are occurring in Venezuela.
The claims as to divisions within the PSUV are oft repeated, but in this article as in any other opposition article, they are never sourced. Of course, in any government there are divisions (I am British and for much of the 2000s there were considerably more public conflicts between the Prime Minister Tony Blair and his Chancellor). However, there is little to no evidence that there are conflicts within the party to the hysterical levels implied in this piece.
The final paragraph is also disgusting as it practically justifies a coup. It also fails to mention that rather than showing a reluctance to intervene historically, the Venezuelan army did actually stage a coup in 2002, which fortunately fell after only a few days due to the high levels of popular mobilization in favor of the democratically elected government. Given that standards of living have improved in almost every indicator, it is likely that were there to be another coup, it would meet a similar popular response.
LIly
/ November 6, 2013Looks like not every one agrees with this article. http://www.cepr.net/index.php/blogs/the-americas-blog/aula-blog-on-venezuela-gets-it-wrong