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Venezuela: Inching Toward Negotiations?

By Fulton Armstrong

A group of Venezuelans protest against International Contact Group for Venezuela. The Venezuelan flag is held in the background as a protester holding a young child looks on.

Community of Venezuelans protest against International Contact Group for Venezuela / https://www.shutterstock.com/image-photo/montevideo-uruguay-february-8-2019-community-1307825104?src=qNES6S7x3QlbnYg-a1h2wg-1-0 / Shutterstock

As Venezuelan National Assembly President Juan Guaidó reiterates his welcome to U.S. military intervention, his international supporters – rejecting a military solution – are moving toward promoting a negotiated settlement that would include President Maduro or, in one scenario, a chavista he designates. Guaidó publicly stated this past weekend that he has directed his representative in Washington to meet with the U.S. Southern Command, whose top officer recently said “we’re on the balls of our feet and ready to go,” to discuss “cooperation.” Although the 50-plus countries that recognized Guaidó’s claim as “interim president” in January have not abandoned him, press reports indicate that they are increasingly looking at alternatives to his strategy of instigating the Venezuelan military to overthrow Maduro and, failing that, asking Washington to do so.

  • The failure of Guaidó’s attempted coup in Operación Libertad, on April 30 – after other stalled initiatives over humanitarian aid at the Tienditas Bridge in February and numerous street mobilizations – has dispirited foreign supporters who joined Guaidó’s cause almost four months ago with the expectation that he would replace Maduro within days. Leaders in Latin America and the European Union have repeatedly expressed concerns about senior U.S. officials’ assertion that “all options,” including military action, are under consideration. (Secretary of State Pompeo last week repeated that the United States “will do what’s required.”)

These shifts give momentum to diplomatic initiatives to start and monitor a negotiated internal settlement. Advocates of negotiations, such as Spanish Foreign Minister Josep Borrell, who last week said the United States was acting “like cowboys,” have begun to push harder.

  • On May 3, the “Lima Group,” including 12 Latin American countries and Canada, called for the first time for broader consultations on initiatives undertaken by the International Contact Group (the ICG, consisting of eight EU countries plus Uruguay, Costa Rica, and Ecuador) and, over the objections of Guaidó’s representative at their meeting, called for dialogue with Cuba to explore ways of ending the crisis. The ICG, meeting on May 7 with the important participation of the Vatican and Lima Group hardliner Chile, agreed to send a “high-level political delegation” to Caracas to discuss “concrete options” with both sides. Soon after, Canadian Prime Minister Justin Trudeau called his Cuban counterpart, President Miguel Díaz-Canel, to urge Havana’s help. (Cuba’s position remains that it would gladly participate if Maduro requested it.)
  • Federica Mogherini, the EU’s chief of foreign affairs, has kept up criticism of Maduro, condemning the arrest last week of National Assembly Vice President Zambrano, but press reports indicate that she’s maneuvering the 28-nation community away from absolute support for Guaidó and toward an inclusive negotiation process that produces a “political solution and early elections.” She has softened her previous demand of Maduro’s departure as a precondition.

The United States still firmly rejects any negotiated settlement, steadfastly repeating that Maduro and the “occupation forces” – Cuba and Russia – must leave Venezuela immediately. But, even if starting a negotiation does not ensure a good settlement, most of the international community is reaching the conclusion that sanctions, such as those that are worsening humanitarian conditions in the country by the day, are increasingly unlikely to produce the desired regime change and stable outcome. Anyone watching Venezuela over the years knows that both the opposition and Maduro (the latter more frequently) have thrown wrenches into past negotiations in belief that they would win a war of attrition. Advocates of a return to negotiations are under no illusion that talks this time will be easy. The U.S. sanctions will soon begin to bite harder, but Guaidó’s stumbles have convinced many that humanitarian suffering does not translate into regime change – and they may even think that now is time to begin using the leverage of sanctions and at least try to get a process going. There are few guarantees in world affairs, of course, but pragmatists seem to be betting that the probability of rescuing Venezuela from an even deeper abyss is greater with negotiations than with more sanctions and rhetoric about military attack.

May 13, 2019

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Venezuela: Washington Trying to Tighten the Noose

By Eric Hershberg

Two side by side images of Venezuela's territory comparing the electrical grid on March 7 and March 12, after six days of blackout

Satellite images of Venezuela. Left image taken on March 7, 2019; right image taken on March 12, 2019 during a blackout / Wikimedia Commons / Creative Commons

As Venezuelan President Nicolás Maduro completes 11 weeks in office since Washington and dozens of other countries recognized National Assembly President Juan Guaidó as “interim president,” the Trump Administration is ratcheting up the pressure. U.S. officials’ rhetoric and actions against both Venezuela and Cuba, which the State Department says is “propping up the former [Maduro] regime,” are escalating. A “senior official” told reporters last Friday that new sanctions would “tighten the noose of financial strangulation of Maduro and his cronies,” while U.S. Vice President Pence, speaking in Houston, reiterated that “all options are on the table.” Pence further focused U.S. regime-change policy on Cuba, citing Guaidó’s wife as the source of evidence that “the only way [Maduro] clings to power is with the help he receives from Communist Cuba.” Pence also said six U.S. businessmen arrested on corruption charges last year “are being held hostage by the Maduro regime,” suggesting another pretext for aggressive action.

  • Last Friday, the U.S. Treasury Department designated 34 vessels owned by PDVSA and two owned by non-Venezuelan companies for sanctions. Treasury Secretary Steven Mnuchin said the move was to block Venezuelan oil exports and cut off supplies to Cuba under the two countries’ “oil-for-repression schemes.”.
  • Press reports on Venezuela’s oil shipments have varied, but Thomson Reuters specialists have reported that Venezuelan oil shipments, after a 40 percent drop in February, remained basically steady in March despite the crisis and electricity disruptions at oil facilities. PDVSA was shipping almost 1 million barrels a day in March, with the bulk going to India, China, and Russia. Reuters calculated that some 65,000 barrels a day went to Cuba.

Electricity blackouts and resulting water shortages have continued for three weeks. While conceivably the result of serious neglect of infrastructural maintenance by Maduro’s Administration, the outages have all the markings of covert sabotage operations. Venezuela has suffered from short power outages many times in recent years, but the latest blackouts have been by far the most extensive, longest, and most damaging. U.S. officials have denied any U.S. role, direct or indirect, in the blackouts. On March 8, Special Representative Elliott Abrams said, “So the United States did not cause those [electricity] problems, the international community did not; the regime caused those problems.”

The U.S. sanctions and related operations are having an impact, but Washington’s initial estimations of Maduro’s strength and the timeline for his collapse were not realistic. Meanwhile, denials of involvement in the blackouts are hard to take at face value. The phrase “all options” surely includes covert action. Turning out the lights is a common disruption tactic, and extraordinary neglect in system maintenance makes the power grid a particularly tempting target in Venezuela. Sabotage and disinformation operations have long been core components of American covert operations in the hemisphere. They were essential tools in successful efforts to depose Guatemalan President Arbenz in 1954 and Chilean President Allende in 1973. The CIA has also formed armed groups, such as the Bay of Pigs force in 1961 and the Nicaraguan Contras in the 1980s (where CIA also mined Corinto harbor). These historical precedents may provide some indications of next steps in the administration’s campaign to bring about regime change in Caracas.

April 11, 2019

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From Washington to Brussels and Montevideo: No Common Plan for Venezuela

By Stefano Palestini Céspedes*

Photograph of the EU High Representative for Foreign Affairs

EU High Representative for Foreign Affairs at the International Contact Group Meeting in Montevideo, Uruguay / EFE / Presidency of Uruguay / Creative Commons

A common feature of international efforts to deal with the years-long political crisis in Venezuela has been an inability to come up with a common approach – which, despite many countries’ agreement that it’s time for Nicolás Maduro to go, continues to hamper effective solutions. Three different and partly contradictory international approaches have emerged.

  • Regime change, supported by the United States, the Secretary General of the OAS, and the 13 Grupo de Lima states (without Mexico). It assumes that there is no exit from the political crisis without the immediate ousting of Maduro and his cronies. All international actions are “on the table,” including coercion through threatened military action, coercion through sanctions (implemented), international recognition of a parallel interim president (implemented), financial support to Maduro’s opposition (implemented), and delivery of humanitarian aid (being attempted).
  • Mediation with conditions, launched in Montevideo last Thursday by the Grupo de Contacto. Backed by member states of the EU, the EU High Representative for Foreign Affairs, Uruguay, Ecuador, and Costa Rica, it proposes that the solution to the political crisis must be through peaceful means, namely national dialogue with international mediation. It imposes, though, a condition for dialogue and mediation to start: immediate presidential elections.
  • Mediation without conditions, sponsored by Mexico, Bolivia, Uruguay, and the Caribbean Community (CARICOM). The so-called Montevideo Mechanism also assumes that the crisis can be overcome only through a national dialogue, with international mediation and monitoring, but it does not impose any conditions on any of the parties before undertaking the dialogue and mediation.

All three strategies entail problems and challenges, although the first sets a precedent that by far is the most problematic. It establishes regime-change, including military intervention by internal or foreign forces, as a legitimate international action to solve political crises. In contrast to what OAS Secretary General Luis Almagro has held in conferences at think-tanks, most experts assess that regime-change violates international law and, in particular, Inter-American Law. From an international perspective, such an action might be justifiable only under the strict observation of the criteria put forward by the UN Responsibility to Protect doctrine, which do not apply to the Venezuelan crisis as severe as it may be. The UN Secretary General has expressed his concern with the regime-change strategy, and some governments at the Lima Group also showed uneasiness with the military option at a summit in Ottawa on February 4. A main criticism is that it endangers civilians’ lives by making them potential targets in a confrontation, and it curtails any other alternative course of diplomatic action.

  • The second and third strategies could be the way forward, but they compete with each other, nullifying their potential leverage over the parties in conflict. The “Montevideo Mechanism” was launched by Mexico and Uruguay less than 24 hours before European representatives landed in Montevideo to discuss the Contact Group’s mission. That timing and Twitter politics suggest a leadership struggle between Mexico and the EU that undermines what should have been a common alternative plan. The apparent split has allowed Maduro to reject the EU-sponsored Contact Group and hold out for the “Montevideo Mechanism”. Guaidó has rejected both and suggested that the states supporting national dialogue and mediation are not “on the right side of history.”

International actors’ inability to agree on a common plan severely hampers diplomatic efforts – and plays into the U.S.-led push for regime change by non-diplomatic means. For the Venezuela crisis to have a resolution that sets positive precedents, international actors will need to abide by common international norms, including Inter-American Law, and set aside political interests and ideological visions that preclude the emergence of a unified, effective front that forces Venezuelans to get serious about ending a crisis.  Failing that, the opposition’s preference for military-style regime change and Maduro’s preference for buying time through unconditional negotiations allow them to suck international actors into their family feud – and only delay an end to the crisis.

February 12, 2019

* Stefano Palestini Céspedes is an Assistant Professor at the Institute of Political Science, Catholic University of Chile.

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Venezuela: A Test of U.S. Hegemony in Latin America

By Eric Hershberg

Lima Group members standing at a podium

Lima Group members in Torre Tagle in Perú / Flickr / Creative Commons

The showdown in Venezuela reflects an extraordinary attempt by the United States government to resurrect hegemonic power in Latin America.  From the mid-19th century to the dawn of the 21st, it was common for Washington to directly overthrow Latin American governments or to bolster clients seeking transitions to dictatorship or democracy.  But recent years had witnessed a clear decline in U.S. hegemony.  As Latin America appeared to have escaped Washington’s imperial reach, many of us were persuaded of the finality of the Obama administration’s recognition that the era of the Monroe Doctrine had ended.  We were dismissive, perhaps excessively, of the assertion of Trump administration officials and advisors that the infamous Doctrine could somehow be revived.

Yet the dynamics of the Venezuelan confrontation result from an unprecedented, Washington-forged hemispheric coalition – of the genuinely willing – trying to force a regime transition.  Traditionally, Washington conducted such interventions on its own, opposed by most of Latin America.  Yet today not only the 12 members of the Lima Group but also Canada and several EU governments are on board with the administration’s boldly assertive intervention in Venezuela’s political crisis.  Russia’s and China’s support for incumbent President Nicolás Maduro underscores that what is at stake is the enduring relevance of the Monroe Doctrine, which almost two hundred years ago unilaterally established an American veto over extra-regional engagement with nominally sovereign countries “in its own backyard.”

For champions of the Trump administration’s policy, asserting hegemony – after the Obama administration had declared it “dead” – is an end in itself.  Rejecting the Monroe Doctrine did not provoke a crescendo of acceptance from much of the foreign policy establishment in Washington, and abandoning that stance has been a core aspiration of right-wing foreign policy networks that have taken over the Executive Branch.  Countless statements over the years by the presumed architect of the present intervention – de facto Secretary of State for Latin America Senator Marco Rubio – reflect how an enduring hatred for the Cuban Revolution, and movements inspired by it such as Chavismo and the ALBA alliance, fuels antagonism toward intra- or extra-regional engagement that call into question U.S. authority.  Russian and Chinese interest in sustaining Chavismo thus reinforce Washington’s determination to eradicate it.

  • Venezuela today is an ideal target for a US-sponsored intervention to bring about regime change and reassert American hegemony in Latin America. The dictatorship is increasingly vicious, and Maduro’s claim to legitimacy is entirely fraudulent.  Moreover, Maduro’s government has so wrecked the economy that desperate millions are fleeing the country, creating an urgent humanitarian crisis that overwhelms neighboring countries already unable to provide for the basic needs of their own populations, making them more amenable to an interventionist exit.
  • Venezuela’s opposition has been long hindered by incompetence and racked by competing personal ambitions. With its most assertive leaders imprisoned, under house arrest, or in exile, it has proven incapable on its own of bringing about Maduro’s removal, either peacefully through his rigged institutions or through uprisings in the streets.  Absent an internal path toward regime transition, conditions were ripe for Washington to coax regional partners to back a daring strategy of intervention.  To have any prospects for success, the venture required that the domestic opposition finally unify – or at least acquiesce in –the anointment as Interim President of Juan Guaidó, a young political unknown whose ties with right-wing patrons are not as well known.  That unification, presumably, was made possible by recognition that only with external support could internal resistance succeed, and only with a unified or quiescent opposition would the international partners take the aggressive stance that they did.

Just as the opening to Cuba was the signature achievement of the Obama administration with regard to Latin America, the effort to overthrow the Venezuelan government appears destined to be the signature act of the Trump administration.  The support of almost all of Latin America for it will have consequences far beyond the fate of the incompetent dictator clinging to power in Caracas.  If their gambit succeeds, Senator Rubio and National Security Advisor John Bolton could move on next to Nicaragua and then perhaps to the king’s crown in Havana. 

  • Those tempted to attribute this to abhorrence of violators of democratic norms would do well to consider the administration’s supportive stance toward increasingly authoritarian regimes in Honduras and Guatemala. Those cases, and the recognition that much of the opposition leadership wants to restore Venezuela to “what it used to be” (i.e., before Chavez tried with considerable popular support to forever end what Venezuela used to be), underscore the ideological drivers of U.S. policy today.  While Washington may have embarked on a course that can finally extricate Venezuela from Chavista misrule, the history of American influence over the region does not bode well for what a return to U.S. hegemony in Latin America could bring.  Surely that point is not lost on leaders of countries such as Mexico and Uruguay.  If the coming weeks bring a continuing stalemate between the Venezuelan regime and opposition, perhaps their good offices could catalyze a negotiated path to free elections and to a resulting regime that would not be Made in USA.

 

January 31, 2019

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Venezuela: When Will the Military Flip?

By Fulton Armstrong

venezuelan military marching

A military exercise in Caracas, Venezuela. / Cancilleria del Ecuador / Flickr / Creative Commons

Venezuelan leader Juan Guaidó and his backers, including the Trump administration, are increasingly focused on swaying the country’s security forces to switch allegiance from Nicolás Maduro to the National Assembly President.  Guaidó has appealed to the military to support his efforts to “restore constitutional order” and is pushing through the legislature a law giving amnesty to cooperating officers for certain crimes committed since President Chávez took office in early 1999.  U.S. officials, apparently to shake up the armed forces, continue to say that “all options are on the table”; National Security Advisor John Bolton held a notepad at a press briefing referring to “5,000 troops to Colombia.”  Maduro, for his part, continues to orchestrate loyalty pledges from senior officers and preside over military exercises.

  • Several small units of the military have flipped, and Maduro’s military attaché in Washington – serving there for a number of years to get medical treatment – has declared loyalty to Guaidó. The vast majority of the officer corps, however, still maintain an appearance of commitment to Maduro.

The most common explanation for the military’s apparent loyalty cited by Maduro’s opponents is that the high command has been bought off by opportunities to engage in corruption.  Other factors, however, may better explain why the institution has stuck with him this long.

  • Ideological reasons? Most available information suggests that Madurismo – with its gross, incompetent mismanagement of the economy, corruption, and thuggery – is not attractive to the officer corps.  But they appear to know that Chavismo has deep roots; that the elites, including the more hardline opposition, don’t understand the significance of change since 1999; and that efforts to return to the pre-Chávez era would be destabilizing and bloody.
  • Financial reasons? Although historically and perennially corrupt, senior officers arguably have been able to do more corruption under Maduro than under another regime.  That said, in their heart of hearts, they probably know a lot of their activities will continue under any government.
  • Distrust of the opposition? The military traditionally has communicated better with opposition moderates, such as Henrique Capriles, and in recent years has shown no trust in the faction that Guaidó comes from and its leader, Leopoldo López.  Information is very limited, of course, but many officers may believe that this group’s obsession with overthrowing Maduro and its no-negotiation stance has contributed to the crisis.  Senior officers’ confidence in Maduro’s ability to hold the country together seems to have evaporated, but the opposition have not presented a viable, comprehensive alternative.
  • Concern about the López-Guaidó faction’s ties with Colombia and the U.S.? Good information is elusive, but senior officers’ posture suggests that they see Bogotá’s strategic objective to keep Venezuela weak and Washington’s objective to purge the country of Chavismo and themselves.
  • Concern that the “international community” will not give them a fair deal? Distrust of Washington seems obvious, but – within their logic – senior officers almost certainly are suspicious of OAS Secretary General Luis Almagro, the Lima Group, Brazilian President Jair Bolsonaro, and others as intolerant and biased.
  • Belief that, in the face of total chaos and widespread bloodshed, they can force a last-minute peaceful solution onto Maduro? Senior officers presumably have good enough intelligence to know when and how to intervene – and persuade Maduro to accept a peaceful solution and fly into exile.  The bigger problem at this point is that they do not see a viable alternative to sticking it out.
  • Fear that Maduro’s people have deeply penetrated officer ranks, and their lives will be at stake if they move against him? As the scope of the crisis grows and the credibility of Maduro’s power begins to slip, this would appear now to be less important.  Officers talk among themselves more than outsiders think.

The Venezuelan military’s threshold for intervening against civilian governments of any stripe has always been high, amplified by the embarrassment of the reversed coup against Chávez in 2002.  None of the factors that, on balance, still appear to favor sticking with Maduro is unmovable.  Distrust of the United States, OAS, and the Lima Group – the outside forces that legitimized Guaidó’s claim to power – leave the military with no reliable allies; Cuban, Russian, and Chinese friends can provide no solace.  A credible negotiation proposal from someone like Mexican and Uruguayan Presidents López Obrador and Vázquez, especially if backed by Pope Francis, could conceivably give them a credible direction in which to push Maduro.  But at this moment – subject to rapid change – the balance still argues in favor of the military fearing a new course.

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by clalsstaff on January 29, 2019  •  Permalink
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Venezuela: Is Guaidó the Knight in Shining Armor?

By Fulton Armstrong

Guaidó and Maduro image

Guaido and Maduro / Wikimedia Commons

The OAS, United States, and a number of Latin American governments are pinning high hopes that newly inaugurated National Assembly President Juan Guaidó will lead Venezuela out of its crisis and “back to democracy,” but the opposition needs much more than foreign support to achieve its goal of ousting President Nicolás Maduro.  The 35-year-old Guaidó, an engineer with eight years of political experience, proclaimed last Friday that “we will oust Maduro and his gang from power” and that he had the right to call new Presidential elections and to serve as Interim President while they are prepared.  He called on the military, which has shown some small fissures but so far appears to remain overwhelmingly loyal to President Nicolás Maduro, to “assume its responsibility … and remove the usurper [Maduro].”  He is organizing a national march on January 23 that, according to observers, he hopes will show the military the strength of his support.  (Maduro’s party, the PSUV, has announced its own demonstration that day.)

  • International reaction came fast and strong. OAS Secretary General Luis Almagro, who calls the Maduro government a “narco-dictadura,” immediately started referring to Guaidó in Tweets and public statements as “interim president” of the republic.  Brazilian President Jair Bolsonaro’s son sent a congratulatory message also recognizing Guaidó in that capacity.  The dozen predominantly conservative governments speaking as the Grupo de Lima have declared Maduro illegitimate and embraced Guaidó’s leadership if not the title.  President Trump’s National Security Advisor, John Bolton, praised the leader’s “courageous decision” to challenge the Maduro government without explicitly recognizing him as Interim President.

Inside Venezuela, reactions to Guaidó’s power play reflected longstanding political alignments.

  • Maduro, who refers to Guaidó as un muchacho, has ridiculed his statements as a “Twitter coup,” and his political machine has followed with the usual attacks. Maduro has reiterated his call for negotiations with leaders of the opposition.  He has distanced himself from the embarrassing arrest of Guaidó last Sunday, claiming that it was made possible by “the corrupt and traitorous cooperation of a group of officials” in his intelligence service, SEBIN.
  • Guaidó’s party, Voluntad Popular (VP), is solidly behind him. Its founder, Leopoldo López, who is under house arrest, has led the charge in his defense, and their key allies – including María Corina Machado (Súmate), former Attorney General Luisa Ortega Díaz, and many leading Venezuelans in the United States – are supporting him too.
  • The party’s splits with opposition moderates remain deep, however. Henrique Capriles (Primero Justicia) issued a scathing critique of Guaidó’s strategy.  He accused VP of sponsoring violence that will use “the people of Venezuela as cannon fodder,” and he has called them “saboteurs” blocking serious talks and feeding the people unrealistic expectations.”  Other moderates have also recoiled from Guaidó’s approach and are reportedly bewildered by the OAS Secretary General and others’ support for direct confrontation.

As the political class engages in yet another cycle of struggles, the military, once again, is seen as the ultimate arbiter that all sides want to influence.  Maduro’s punishment of seemingly disloyal officers recently has probably been a double-edged sword – feeding resentment while instilling discipline – but unhappiness with Maduro does not translate into support for the opposition.  There appears to be no love between the military and the Voluntad Popular leadership, whose confrontational tactics almost certainly concern the military and whose political program and popular base remain unclear.  Despite deep corruption in the officer corps, moreover, most officers probably see themselves as nationalists and might chafe at the idea of the OAS or regional governments trying to be the kingmakers.  Strange things can always happen, but celebration of the Interim President seems premature and even counterproductive.

 January 17, 2019

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South America: Venezuela Humanitarian Crisis Roiling Region

By Michael McCarthy*

A line of Venezuelan migrants at a Colombian border checkpoint.

Venezuelan migrants at a Colombian border checkpoint. / Colombia Reports / Wikimedia

The humanitarian crisis driven by both Venezuela’s increasingly dire economic situation and political repression is taxing all of northern South America, with no remedy in sight.  In what UN High Commissioner for Refugees officials call “one of the largest mass-population movements in Latin American history,” an estimated 2.3 million Venezuelans – about 7 percent of the country’s population – have poured out of the country since 2014.  According to UNHCR, more than half of them suffer from malnutrition, and a significant percentage suffer from diseases, such as diphtheria and measles, previously thought to be under control.  The crisis is posing economic and security challenges to neighboring countries:

  • Colombia has seen the greatest flow. About one million refugees have crossed the border since 2015, but arrivals have peaked – reaching about 5,000 per day – as the Venezuelan economy hits new lows.  Venezuelans’ fears that Colombia’s new president, Iván Duque, will close the border have driven part of the surge, but Venezuelan President Nicolás Maduro’s recent policy announcements – including a fórmula mágica that includes controlling inflation by lopping five zeros off current prices – are main drivers, according to most observers.
  • Ecuador received more Venezuelans in the first half of 2018 than in all of 2017 (340,000 to 287,000). Confronted with severe disruptions in border communities, Quito has declared a month-long “emergency” in four border provinces and has sent doctors and other personnel to help mitigate the impact of the arrival of several thousand Venezuelans a day.  Ecuador has announced that it is now denying entry to persons without passports.  Quito last week called for a regional summit on the crisis in mid-September.
  • Peru is the largest refugee hosting country in the Americas, but it has now begun to demand official documentation.
  • Brazil has taken in several tens of thousands of Venezuelans, but the influx is provoking local tensions. A regional judge closed the border – a decision overturned by the Supreme Court – and locals in the border city of Pacaraima took matters into their own hands vigilante-style, burning down a tent city and chasing about 1,200 Venezuelans back across the border.  Argentina and Uruguay, which last granted residency to 31,000 and 2,500 Venezuelans, are beginning to feel pressure to slow the flow.
  • Guyana is also upset because Venezuelans claiming Guyanese citizenship are arriving with claims to properties held by others since at least the 1980s. As the International Court of Justice takes up Georgetown’s case on its decades-old border dispute with Venezuela, the refugees’ arrival is an unwelcome distraction.

The United States and European Union have offered assistance, mostly to Colombia.

  • Earlier this month, Washington announced it would give Colombia an additional US$9 million in aid to provide water, sanitation, hygiene and some medications to Venezuelan migrants – bringing the overall U.S. commitment to over US$46 million over the past two years. USAID has cast the aid as supporting a “regional response” to the problem, but Washington’s closest ally, Colombia, will receive the overwhelming share.  U.S. Defense Secretary Mattis has announced he’s sending a hospital ship, the USNS Comfort, to Colombia and “possibly other destinations” to help.
  • In June, the EU committed €35.1 million (US$40.2 million), mostly for “emergency aid and medium-term development assistance” for people remaining in Venezuela and for neighboring countries affected by the crisis, and the EU Commission promised it would mobilize its migration and asylum program to provide help for migrants.

Assistance from the U.S. and EU, as well as any future help from multilateral development banks, is crucial but, ultimately, these interventions are palliatives.  Durable solutions will have to come from within Venezuela and from regional initiatives.  The summit proposed by Ecuador will produce little without strong leadership that at the moment appears absent.  The Organization of American States seems fatigued by the issue, and its Secretary General’s personalization of the struggle against Maduro over the past year has left him few options as well. UNASUR has been severely weakened – most recently by Colombian President Duque’s announcement of his country’s definitive withdrawal from the group – and its interlocutors from past efforts to find a solution in Venezuela have refrained from public comment.  The leadership of UN refugee specialists is critical, but the Security Council is very divided over the Venezuela crisis and the Secretary General has failed to gain traction with efforts to take a more active political role to address the Venezuelan crisis.  With Maduro’s fórmula mágica for resolving Venezuela’s economic challenges having next to no possibility of helping, the hemisphere should not be surprised that the flow of refugees will surely continue.

August 28, 2018

* Michael McCarthy is a Research Fellow with the Center for Latin American & Latino Studies.  He publishes Caracas Wire, a newsletter on Venezuela and South America.

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Venezuela: Maduro’s Ploy Backfires

By Michael McCarthy*

Maduro and the Venezuelan flag

Venezuelan President Nicolás Maduro. / President of Russia / Flickr / Creative Commons

Almost a month after Nicolás Maduro held a snap presidential vote to strengthen his political power, the ploy appears to have largely backfired and left him weaker.  The dynamics underlying the years-long crisis have not fundamentally shifted, but the deepening impact of the economic implosion on the oil industry poses a threat to vital state interests and regime stability.  Maduro’s crisis management will face another major stress test.

  • Even the government’s own dubious figures on voter turnout – 46 percent – were too low to give the election credibility, limiting Maduro’s ability to claim a strong mandate. Criticism of the government’s efforts to sway voters by distributing food, medications, and other necessities at polling places was intense.  All but a few loyal friends in the international community have been reluctant to congratulate Maduro.  China and Russia accepted the vote count, but Beijing appeared particularly cooler than in the past, while Ecuador and Uruguay issued statements aimed at depolarizing the situation.  The OAS General Assembly lacked the 24-vote threshold necessary to invoke the Inter-American Democratic Charter to suspend Venezuela’s participation in the regional body, but the Dominican Republic’s shift away from its previous support for Maduro must have been a blow.
  • Maduro’s victory is further overshadowed by the fact that as much as 85 percent of the pro-government vote went to the party of Diosdado Cabello, who leads a competing faction under the flag of the Partido Socialista Unido (PSUV), while Maduro’s Movimiento Somos Venezuela got only 5 percent. Longtime observers argue that a battle between Maduro and Cabello, an original member of the Chávez 4F movement that staged a failed coup in 1992, is heating up.  The PSUV will hold a party congress on July 28 – Chávez’s birthday – that promises to serve as venue for Cabello to pursue his leadership ambitions.

Maduro’s weakness appears to have motivated several actions he’s taken since the election.  Most observers believe that he directed a raft of prisoner releases to improve his sagging image, pacify the situation, and set the stage for dialogue.  He reportedly wanted to reshuffle his cabinet to shore up unity, but internal political difficulties apparently have delayed it temporarily.

  • He also released a U.S. national, Joshua Holt, who had been under arrest since 2016 on trumped up charges of espionage and conspiracy to undermine the constitution. Maduro’s goal may have been to disarm U.S. criticism and open a line of communication, but the day after the election he also expelled the U.S. Chargé d’Affaires and his deputy.  The U.S. State Department wasted no time in reciprocating by expelling two Venezuelan diplomats, and later, in the wake of the Holt release, it underlined that policy toward Venezuela “remains unchanged.”

More U.S. sanctions may be imposed, but Maduro’s self-destructive rule is doing his government even more harm.  A combination of increasing hyperinflation and a potential record drop in month-to-month oil production from May-June suggest a rapidly worsening economy.  Press reports suggest state oil company PDVSA will soon announce that it cannot honor its monthly production obligations with a number of key partners – a major blow for a government dependent on oil for 95 percent of its income.  After calling for a boycott of the May 20 vote, the traditional opposition breathed a collective sigh of relief that a majority of voters stayed home, but this does not give them the win they need to regain public trust.  Continually bleak prognoses once again stir speculation that the military will step in.  Yet it is not so simple.  The military seems to operate more according to informal networks and personality-driven hierarchies, creating divisions that make it hard for groups to credibly act in the name of the armed forces.  So far, senior officials seem to have determined that loyalties to a dysfunctional regime do not yet sufficiently threaten business and institutional interests for them to take action.

 June 14, 2018

* Michael McCarthy is a Research Fellow with the Center for Latin American & Latino Studies.  He publishes Caracas Wire, a newsletter on Venezuela and South America.

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by clalsstaff on June 14, 2018  •  Permalink
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Posted by clalsstaff on June 14, 2018

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Lima Group: Committed to Democratic Principles?

By Nicolás Comini*

Group of men and women stand at a podium

Government officials from different Latin American countries met in August 2017 to sign the “Lima Declaration,” establishing the Lima Group. / Ministerio de Relaciones Exteriores, Perú / Flickr / Creative Commons

The “Lima Group” – an informal alliance of 12 Latin American countries created to observe the sensitive situation in Venezuela – has shown that its defense of democracy in the hemisphere is inconsistent.  Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Honduras, Mexico, Panama, Paraguay, and Peru have on at least a handful of occasions condemned Venezuelan President Nicolás Maduro for stoking political violence, holding political prisoners, committing electoral fraud, and engaging in other abuses, justifying their positions as based on ethics, morals, and good practices.

The reactions of the Lima Group and its leading members to the situation in Honduras since that country’s presidential election in November, however, suggests that the values they espouse do not have universal application.  After OAS Secretary General Luis Almagro declared that the election lacked credibility and called for new elections, some countries’ pro-democracy fervor faded.

  • Argentine President Mauricio Macri’s administration quickly recognized Honduran President Juan Orlando Hernández’s victory and officially declared its “disposition to continue working for the development of closer ties of friendship and more cooperation between the two nations.” The Brazilian foreign ministry expressed its “commitment to maintain and strengthen the ties of friendship and cooperation that traditionally have united both countries.”  In Mexico, President Enrique Peña Nieto’s government quickly recognized Hernández as well, calling on “Honduran society to support dialogue in order to preserve peace and democratic stability in that sister nation.”

The discrepancies between the group’s rhetoric and actions appear to be rooted in various reasons.

  • Political alignments take precedence over values. Honduran President Hernández has been active in the group’s (and indirectly the OAS’) efforts on Venezuela.  Honduras is a member of the Lima Group, and Hernández is perceived by conservative governments as an ally to contain the spread of the left.  The risk of massive Venezuelan population displacement, with profound potential consequences for neighboring countries, contrasts with the situation in Honduras.  With the region entering a new election cycle, moreover, incumbents’ lack of support for Almagro’s position signals that they do not want the OAS messing around in their own electoral processes.
  • These governments also see Hernández as a strategic United States ally in Central America in combating drug trafficking, transnational criminal networks, money laundering, and irregular migration. Many of the governments may also refrain from criticizing the belief that Tegucigalpa benefits from the presence of 1 million Hondurans in the United States (more than half of whom the State Department says “are believed to be undocumented”).  In addition, Honduras was one of the eight countries that supported President Donald Trump’s rejection of the UN General Assembly Resolution asking nations not to locate diplomatic missions in Jerusalem.

The crises in Venezuela and Honduras are indeed different, and the international community’s interests in them are naturally different.  Maduro’s and Hernández’s failings affect other countries’ political and economic equities in different ways.  Maduro’s undemocratic actions increase unpredictability in the management of oil and other sectors of foreign interest, whereas Hernández’s represent predictability, if not stability, in areas that Washington cares about and Buenos Aires, Brasilia, and the rest of Latin America do not.  But the high-sounding values at stake – democracy, institutionality, and rule of law – are the same in both countries.  While Venezuela’s population is three times the size of Honduras’ and its political crisis arguably three times more advanced, the moral responsibility – and moral authority – of the Lima Group or its member nations is many times greater in a small, vulnerable, poor country like Honduras.  Security forces have gunned down some three dozen oppositionists and protestors since the November election, and allegations of human rights violations have soared, but Latin America’s major democracies have been silent.

  • The failure to support the OAS’ call for new elections was not just a stab in the back of Secretary General Almagro; it revealed that their rhetoric about the OAS Democracy Charter – embodiment of democratic values they demand be respected in Venezuela – are not as universal as they say. When the Lima Group last Tuesday (with considerable justification) rejected the Venezuelan National Assembly’s call for an early presidential election, the Hernández government’s signature was there alongside the others.  If universal democratic values and principles are not for universal application – if even an informal grouping will not criticize a small actor with whom they do not have major equities at stake – their value is much diminished.

January 30, 2018

* Nicolás Comini is Director of the Bachelor and Master Programs in International Relations at the Universidad del Salvador (Buenos Aires) and Professor at the New York University-Buenos Aires.  He was Research Fellow at CLALS.

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by clalsstaff on January 30, 2018  •  Permalink
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Posted by clalsstaff on January 30, 2018

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Venezuela: Sliding into a Generalized Default

By Arturo C. Porzecanski*

Two bank bills in green and yellow

Venezuelan bonds from 1896. / icollector / Creative Commons

The Venezuelan government is now officially in default – per the leading credit-rating agencies (Fitch, Moody’s, and S&P) and the International Swaps and Derivatives Association (ISDA) – and seems to have no viable way out.  It has been three months since interest payments on various dollar-denominated bonds issued by the government and the state-owned oil company, PDVSA, have been late or not paid, with the total of coupons currently in arrears exceeding $1 billion.

  • In early November, President Nicolás Maduro announced that he would seek to restructure debt obligations, while suggesting the country would keep making payments during negotiations. As proof of his good intentions, he soon after paid a hefty $1.1 billion redemption payment on a PDVSA bond.  However, since a perfunctory meeting with some bondholders in mid-November, investors have not heard anything.
  • The government has blamed its precarious financial position on technical difficulties arising from financial sanctions imposed by the U.S. government – “the ongoing aggression, permanent sabotage, blockade, and financial persecution to which our people have been subjected” which “are in fact hurting the bondholders in international financial institutions.”

Once attempted, Venezuela’s debt restructuring – some $37 billion in government debt and $28 billion in PDVSA debt – could potentially become the world’s fourth largest, according to Moody’s.  A future restructuring could encompass $65 billion (plus interest arrears), compared to Greece in 2012 ($262 billion), Argentina in 2001 ($83 billion), and Russia in 1998 ($73 billion).

  • Restructuring negotiations with Venezuela will be difficult because the country owes at least another $65 billion to domestic bondholders, lenders from China and Russia, foreign airlines, banks and foreign suppliers, as well as foreign investors waiting to be compensated for nationalized properties. Another complication is that the validity of some debts could be challenged, especially by an eventual successor government, because not all received proper authorization (e.g., from the National Assembly).  Also, investors will be reluctant to grant meaningful debt relief unless the country’s capacity to honor the new obligations is substantially augmented, such as by taking drastic actions to revive the crumbling oil industry.  Finally, current U.S. sanctions would need to be relaxed to enable American investors to take possession of new government bonds from Venezuela incorporating the agreed-upon concessions (e.g., on maturity and coupons), in exchange for retiring the existing bonds – as per standard practice in debt restructurings.
  • An outbreak of disruptive litigation against Venezuela is a significant risk because the indentures of outstanding bonds specify that any disputes that arise are to be settled by U.S. rather than Venezuelan or international courts. Impatient creditors with favorable court judgments could make it difficult for Venezuela to keep repatriating oil export earnings home.  As the Argentina-related litigation and arbitration saga demonstrated, it is possible, though not easy or quick, for private investors to collect from a deadbeat government.

Maduro’s widening default is but the latest casualty of his and Hugo Chavez’s maladministration of the economy and public finances.  Government revenues relative to GDP are now less than half their level in 2013-14, while government spending is still running well above the levels of four or five years ago.  As a result, the fiscal deficit is now a whopping 25 percent of GDP and is financed mainly by the Central Bank, feeding hyperinflation.  A drop in oil production to its lowest level in three decades – a mere 1.8 million barrels per day as of late 2017 – and lower world prices have caused oil export earnings to shrivel up from almost $95 billion in 2012 to less than $30 billion in 2017 – a $65 billion drop.  Not even a drastic cut in government dollar sales for import purposes, which has provoked an unprecedented $50 billion compression of imports (from $65 billion in 2012 to about $15 billion in 2017) has been able to offset the calamitous fall in exports.  The default is also rooted in Venezuela’s gradual loss of its ability to sell new bonds abroad to replace maturing obligations and to help cover the interest bill.  Without the benefit of raising any fresh bondholder financing during 2017, last year the government would have had to come up with $10 billion out of pocket in order to cover all debt-service obligations to bondholders.  The equivalent debt-service figures for this year and next are on the order of $9 billion each – realistically, a “Mission Impossible” absent much higher oil production and prices.  The Trump Administration’s sanctions, forbidding U.S.-based investors to purchase new Venezuelan government bonds from August 25 on, were just the last nail in the external financing coffin.

January 9, 2018

*Dr. Arturo C. Porzecanski is Distinguished Economist in Residence at American University and Director of the International Economic Relations Program at its School of International Service.

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