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Venezuela: Can Trump’s Coercive Diplomacy Help?

By Michael McCarthy*

A large auditorium-style room filled with people watching a speaker at the front

U.S. President Trump addresses the United Nations General Assembly on September 19, 2017. / John Gillespie / Flickr / Creative Commons

U.S. President Trump’s new rhetorical attacks and financial sanctions against the Venezuelan government suggest a shift toward coercive diplomacy aimed at achieving regime change, but U.S. power faces significant limits in the conflict-ridden country.  At the UN General Assembly on Tuesday, Trump called President Maduro an authoritarian and said “this situation is completely unacceptable and we cannot stand by and watch.”  Washington’s approach emphasizes sticks – sanctions against President Maduro, senior advisors, and threatened action against the oil sector – over carrots, while also voicing support for the opening of new mediated face-to-face talks between Maduro and the opposition.  A contact group of six Latin American and four European countries is promoting the talks, with the backing of UN Secretary General and the Vatican, to help avoid the worst-case scenario of open conflict.  Previous efforts to coordinate a multilateral coalition that simultaneously keeps the pressure on the government while opening negotiation avenues have failed – and agreeing on a roadmap is even more complex in view of the installation of the Constituent Assembly that stripped the elected, opposition-controlled National Assembly of its powers.

  • Trump’s new Executive Order directs financial sanctions that come close to directly threatening Maduro’s vital supports. It bans Caracas from issuing new debt in the United States and prohibits U.S.-based CITGO – a wholly owned subsidiary of the Venezuelan state oil company – from repatriating dividends to Caracas.  These measures will impose austerity on Maduro (who claims he will still make upcoming debt payments) and future actions are likely to try and undermine the government’s economic foundations.
  • In addition to installing the Constituent Assembly, Maduro seems to be pursuing a new regime-survival strategy in which he plays the role of a non-vengeful victim. Maduro criticized Trump’s sanctions and called him “the new Hitler” after the UN speech on Tuesday, but he’s also offered donations to aid post-Harvey recovery efforts in Houston and invoked John Lennon in a call for “giving peace a chance” in a New York Times ad earlier this month.  To regain a degree of credibility, Maduro will probably consider making elections for Governors slated for October 15 look competitive, but whether he has the political capital with his base to make bigger political or economic moves is unclear.  He may look to establish a new institutional equilibrium of dual legislatures, though it would hinge on removing the threat of retaliation against the opposition via the Constituent Assembly’s so-called “Truth Commission.”  He may also try to address massive fiscal imbalances by reforming the multi-tiered exchange rate, though this would be difficult as the system’s subsidized dollars help underwrite regime loyalty.

While the United States, Europeans, and Latin Americans are operating in loose formation – with Washington ratcheting up pressure while everyone else scrambles for negotiations – China and Russia are sticking to their strategic game.  As Maduro’s main financial backers, they are betting talks can stabilize the situation bit by bit.  They may kick in some more financial assistance if and when Maduro restores some stability by holding peaceful regional elections, delivering on the dialogue, and making large upcoming debt payments.  But while there is some basis for the geopolitical schadenfreude of Beijing and Moscow making it harder for Washington in Caracas, there are also signs that both have buyer’s remorse.  While they prefer Maduro stay afloat, they seem unlikely to extend loans that help stabilize the economy unconditionally.

None of the piecemeal actions that Maduro is apparently contemplating can defuse the political and social crisis, but a combination of steps may be enough to convince China and Russia to stay in the game.  Despite Trump’s statement that he was “not going to rule out a military option” in Venezuela, the Administration apparently is open to a policy of coercive diplomacy that includes genuine support for talks.  Trump attacked his predecessor for “leading from behind,” but figuring out how to sequence sticks and carrots in coordination with Latin American and European countries may require just that.  The bottom line is that the chance of a breakthrough on the biggest issues – the Constitutional road map and conditions for electoral participation – remain low, although some movement by both parties toward the middle seems realistic.  Despite the actions of outside actors, the situation is likely to remain poised over a knife-edge – without the catharsis of either peace or regime change.

September 21, 2017

* 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 September 21, 2017  •  Permalink
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Posted by clalsstaff on September 21, 2017

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OAS Secretary General’s Third Way Stumbles

By Stefano Palestini Céspedes*

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Luis Almagro, OAS Secretary General, at the first day of General Assembly in Cancún, June 2017. / Juan Manuel Herrera / OAS / Flickr / Creative Commons

OAS Secretary General Luis Almagro’s effort to drive the organization’s actions on Venezuela through international mobilization appears to have run its course without success during the recent General Assembly.  From the outset, Almagro faced the tough dilemma of what to do when OAS members did not want to fulfill their commitments and were reluctant to invoke the Inter-American Democratic Charter against the Venezuelan government.  As in most international organizations, the OAS Secretary General does not have strong authority to enforce its legal instruments and essentially had two options to cope with the dilemma:

  • To admit his lack of authority – and thereby signal to the world that the organization’s commitments, such as the Democratic Charter, are not credible. In the international system, there are plenty such non-credible and non-enforceable commitments, ranging from the EU Treaty (Article 7) to the Kyoto Protocol.
  • To use his limited powers to persuade member states from within – persuading national representatives to take action. This approach risks to be perceived from outside as inaction.  If persuasion succeeds and member states decide to enforce their commitments, the credit will most likely go to the member state playing the role of leader, and not to the institution.

Faced with Venezuelan President Maduro’s rejection of the OAS’s good offices and with member states’ preference to assign diplomatic leadership to UNASUR (over which Maduro had influence), Almagro chose a third way:  to drive OAS internal processes by pressing member states from outside via international public mobilization.  Through a series of actions in his own name – issuing reports, statements, and posts on social networks – Almagro called the attention of the international community and media to the OAS’s naming and shaming of Venezuela.  By doing so, he indirectly raised the cost of inaction of member states reluctant to take a strong stand.  Maduro’s increasingly undemocratic behavior, and the election of new governments in some key states, particularly Argentina and the United States, improved the odds of success.  Indeed, the OAS gave the Venezuela crisis unprecedented salience, and on April 3 the Permanent Council passed a resolution (approved by consensus but with only 17 states in the room) that, for the first time in OAS history, demonstrated that a democratically elected government could be condemned because of “unconstitutional alterations of the constitutional order.”  A core group of 14 countries – representing more than 90 percent of the hemisphere’s population – coalesced to back up the activist Secretary General.

  • The 47th General Assembly in Cancún was supposed to crown the strategy’s success by moving the OAS from a condemnation of Venezuela towards a common plan for engagement – specifically one embracing the anti-Maduro opposition’s demands. Venezuelan diplomats managed to convince some Caribbean states – dependent on Venezuela’s Petrocaribe program to withhold support of the resolution, causing the OAS-14’s plan to fail to achieve the two-thirds majority by only three votes.  (An alternative resolution put forward at the last minute by San Vicente also failed.)

Secretary General Almagro’s “third way” approach was risky, made under the assumption that the two traditional options would fail.  Reasonable observers can second-guess him, but there is little evidence that either of the other options would have fared any better.  The crisis in Venezuela is a hard case for the Inter-American Democratic Charter, and the OAS’s strict intergovernmentalism militates against decisive action.  Almagro’s public relations pressure from outside arguably worked with the larger states, but alienated the smaller.  A more cautious approach (as I argued here) perhaps would have helped to bring CARICOM states on board.  For now, what is clear is that the OAS will not play a major role in managing Venezuela’s democracy crisis – unless the already severe situation in the country shakes even the OAS fence sitters.  A pending question is whether the OAS might succeed in inventing a role for itself in post-crisis Venezuela.

June 30, 2017

* Stefano Palestini Céspedes is a former CLALS Research Fellow and Postdoctoral Fellow at the Department of Political and Social Sciences at the Freie Universität Berlin, where he specializes in international organizations and regional governance.

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by clalsstaff on June 30, 2017  •  Permalink
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Posted by clalsstaff on June 30, 2017

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Venezuela: Stalemate in a War of Attrition?

By Michael McCarthy*

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Members of Venezuela’s opposition march against President Maduro at a demonstration in April 2017. / A. Davey / Flickr / Creative Commons

The pace of provocation and counter-provocation in Venezuela has reached a new high, and there does not seem to be a stabilizing force that can induce a de-escalation.  It’s unclear if the country’s power struggle is experiencing a new cycle in its multi-year confrontation, or if two months of protests mark the start of a downward spiral that will plunge the country into even deeper crisis.  Neither the government nor opposition appears near the point of exhaustion that would make efforts at a meaningful negotiated settlement fruitful.  An examination of their agendas, moreover, paints a picture of an intractable conflict.

  • President Nicolás Maduro is in raw survival mode – perhaps driven by fear of disgrace as the man who lost the Chávez legacy entrusted to him – and is forcing a rewrite of the Constitution as he lurches toward outright dictatorship. He deeply resents that the opposition never acknowledged the legitimacy of his election, and he was shaken when jeered and egged at a public rally recently.  He has condoned violence by his party’s vigilantes and the Guardia Nacional, but almost certainly grasps its political cost, including within the government and military.  Faced with the certain prospect of persecution by an opposition-dominated government, he probably sees no incentive to negotiate his denouement.
  • The opposition remains heterogeneous and is united almost exclusively in the fervent belief that Maduro – through evil and incompetence – is destroying the country. Government repression and their own self-inflicted wounds have precluded development of a sophisticated strategic planning capacity.  Although opponents’ preferred option is to remove Maduro at the ballot box, some also apparently believe that ratcheting up the violence will force the military – reluctant to intervene – to lean on Maduro to depart.
  • The senior ranks of the military, compromised by corruption and narco-trafficking during the Chávez-Maduro era, show no signs of wavering, but discontent among field-grade officers at the Regional Commands – who will have to serve under a successor government – may become palpable during the military promotion season that formally concludes July 5. As the Guardia Nacional soils its reputation, the military wants to stay off the streets as long as possible.  There’s no evidence of sympathy with the opposition; their primary concern is avoiding being part of the bloodshed.  How the military would orchestrate a post-Maduro era is unknowable.
  • The country’s economic and financial crises have devastated oil production, making it impossible for Maduro to pump his way out of the crisis and increasing his reliance on foreign capital. Indebting itself further at an extremely high cost, the government bought some time by selling $2.8 billion in bonds to Goldman Sachs – through a counterparty – for $865 million in cash.
  • The sectores populares are highly agitated but lack leadership. The working class has largely fallen into poverty, now estimated at 80 percent nationally, and neighborhoods previously home to chavismo’s base have shown tolerance for the opposition and outright disdain for the ruling coalition, including knocking down statues of Hugo Chávez.

Neither the government nor opposition has yet shown concern that its resources and energy are nearing exhaustion – and the military, so far, is not prepared to tell one or the other to give up the struggle.  As long as both sides think that they can break the other, moreover, the prospects for either regime collapse or a mediated settlement seem unlikely, and it is hard to imagine the emergence of a stabilizing force that can mitigate conflict.  External forces may try to facilitate a resolution but are unlikely to succeed.  Brazil’s corruption scandals have removed it as a player; UNASUR’s failures have rendered it irrelevant; and Maduro preempted any final OAS censuring by announcing withdrawal from the organization (though his foreign minister will attend its General Assembly this month).  Washington continues to rely on sanctions – most recently freezing the assets of eight members of Venezuela’s Supreme Court – but seems reluctant to get more deeply involved, and given the turmoil that characterizes the Trump administration, it may in any event be incapable of doing so.  Absent the emergence of a viable formula within Venezuela to overcome the costly stalemate, the war of attrition between regime and opposition will likely continue without meaningful involvement of external actors.

June 5, 2017

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

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Venezuela- OAS: New Chapter in a Long Story

By Stefano Palestini Céspedes*

Special Meeting of the Permanent Council, April 3, 2017

On April 3, a special meeting of the OAS Permanent Council voted to condemn Venezuela’s action that allows the Tribunal Supremo de Justicia (TSJ) to take over the functions of the National Assembly. / Juan Manuel Herrera/ OAS / Flickr / Creative Commons

Venezuelan President Nicolás Maduro seems determined to validate critics’ claims that the separation of powers in Venezuela has been breached, thereby strengthening diplomatic efforts to force him to reverse course.  After the OAS Permanent Council met for two days to discuss Secretary General Almagro’s call for Caracas’ suspension, Venezuelan courts on March 29 authorized the Tribunal Supremo de Justicia (TSJ) to take over the functions of the National Assembly, and to limit the immunity of the members of the parliament.  The action reinvigorated an exhausted domestic opposition and further infuriated international observers.  Two days later, the TSJ overturned the two rulings after Maduro, casting himself as a mediator between competing constitutional powers, requested it.  These erratic actions signaled the worsening erosion of the rule of law as well as the divisions in the government and the Bolivarian movement.

  • The reversal did not take the edge off OAS General Secretary Almagro’s and others’ condemnation of the power grab as an autogolpe or “self-coup.” The Inter-American Democratic Charter was designed in 2001 precisely to provide the OAS with instruments to deter self-coups in the aftermath of those carried out by Alberto Fujimori (Peru) and Jorge Serrano (Guatemala) in the 1990s.

The TSJ decisions and Venezuela’s defiance didn’t put Almagro’s suspension efforts over the top, but the Permanent Council is now much more actively involved in the crisis.  Venezuela has isolated itself within the Permanent Council.  Speaking at the Council, its delegation severely criticized individual member states the day before the TSJ decisions.  Chile and Peru recalled their ambassadors for consultation after it.  Ecuador, an ally since the time of Hugo Chávez, distanced itself from Maduro.  On April 1, MERCOSUR invoked the Protocol of Ushuaia – the group’s democracy clause – against Venezuela, and it joined Colombia and Chile in a forceful public statement on behalf of UNASUR.  Mexico, historically a jealous guardian of the principle of non-intervention, has assumed the leadership in holding Venezuela accountable for its undemocratic practices.  As a result, the Permanent Council on April 3 approved a resolution condemning the TSJ decisions and committing to “undertake as necessary further diplomatic initiatives to foster the restoration of the democratic institutional system,” including convening a ministerial meeting.

Building a consensus for tougher action in the Permanent Council will be difficult, however.  Last week’s resolution was approved by 19 member states, but four abstained and 10 were absent.  Any proposal to suspend Venezuela will require two-thirds of the members’ affirmative votes.  Although there is still a long way to go to make the OAS part of the solution of the Venezuelan crisis, the General Secretary’s activism has set an important precedent in rallying a majority of states in the Americas to come together to discuss a member’s erosion of democratic principles and institutions – and to condemn the non-democratic actions of a democratically-elected government.  This is a first for the organization, and it is a big step toward fulfilling the original purpose of the drafters of the Inter-American Democratic Charter.

April 10, 2017

* Stefano Palestini Céspedes is a CLALS Fellow and Postdoctoral Fellow at the Department of Political and Social Sciences at the Freie Universität Berlin, where he specializes in international organizations and regional governance.

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by clalsstaff on April 10, 2017  •  Permalink
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Latin America: The Spirit of Constitutionalism under Attack

By Maxwell Cameron*

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A participant in a march in Venezuela holds up the country’s constitution. / TeleSURtv / Flickr / Creative Commons

Recent events in Paraguay and Venezuela raise yet again the issue of whether political leaders are capable of deliberating and acting in ways that show an appreciation for constitutional essentials, or whether they choose instead to perform their roles and offices in ways that continuously test constitutional principles and, over time, contribute to their erosion.  The principles of re-election and term limits are important in every presidential democracy, the product of historical circumstance.  In the case of Paraguay, a dictatorship under strongman Alfredo Stroessner from 1954 to 1989, sensitivity to the idea of a president serving for too long is strong.  Venezuela’s elimination of term limits a few years ago set a dangerous precedent.  Other constitutions limit incumbents to one term (Mexico, Paraguay) or two terms (United States, Colombia); in some constitutions, presidents cannot be re-elected immediately but can run later after a term has elapsed (Peru, Uruguay).

  • More important than the constitutionality of term limits is that the re-election issue be settled in a way that commands the assent of all parties – within a certain spirit of constitutionalism. Paraguayan President Horacio Cartes’s error was to think that he could change the constitution by means that violated this spirit, even if the public would arguably support a modification of the re-election rule if pursued in the right way.  (Since the fall of Stroessner, the Partido Colorado, the pillar of his rule, has won every election except in 2008, when Catholic priest Fernando Lugo was elected.  Lugo was deposed in 2012.)  The President of the Senate, Roberto Acevedo, opposed the change and was outraged by the way it was adopted: the Senate voted in a special session held behind closed doors.  In that session, 25 Senators approved the measure, bypassing the opposition Partido Liberal Radical Auténtico.

The showdown in Venezuela over President Maduro’s effort to shut down the congress was another undemocratic blunder.  A decision by the Tribunal Supremo de Justicia (TSJ), Venezuela’s supreme court, to arrogate legislative functions to itself or delegate them to other branches or agencies was unconstitutional.  (The TSJ has the power only to declare a law invalid or that another branch of government is operating outside the law.)  When the Fiscal General de la República, Venezuela’s equivalent of attorney general, Luisa Ortega Díaz argued that the TSJ’s decision was unconstitutional, she gave herself political cover by expressing loyalty to the Constitution of 1999 – the legitimacy of which has long been undermined by the fact that it is a document made to measure for chavismo.  As a result of this and significant domestic and international pressure, the government backed down – a rare event.  The attorney general’s insistence that the constitution not be violated indicates that a spirit of constitutionalism among chavistas is not completely dead, but it also shows that it remains a mechanism for coordinating the actions of agents within the government.  Her position also raises the possibility of a split between constitutionalists and hardline militarists within the regime.

Democracy is not just a system of rules.  It requires politicians to acknowledge and respect the essential constitutional agreements that have to underpin the struggle for power in a self-governing community.  The crises in Paraguay and Venezuela both forewarn of the dangers of excessive partisanship and the risks of playing fast and loose with constitutional rules.  Something similar seems to be playing out in Ecuador, where allegations of fraud have been made by the opposition.  If spurious, they are condemnable; if supported by evidence, they are deeply disturbing.  Either way, they reflect mistrust in institutions after a decade of rule by Rafael Correa (Likewise, U.S. Senate Republicans’ threats to use of the “nuclear option” to confirm Judge Gorsuch threatens to deepen the politicization of the U.S. Supreme Court.)  The cost of the failure of politicians and citizens to cultivate a spirit of constitutionalism is very heavy.  In Paraguay, it has resulted in deadly protests and resignations by top officials; in Venezuela it has taken the country to the brink of civil war; in Ecuador, there is a real prospect of debilitating governance problems as Lenín Moreno of Alianza PAIS takes office; and in the United States we are starting to see the kinds of governance problems that have long been associated with the “politicized states” (to use Douglas Chalmers’s phrase) of Latin America.

April 5, 2017

* Maxwell A. Cameron is Director of the Centre for the Study of Democratic Institutions at the University of British Columbia.

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OAS-Venezuela: Almagro Ups the Ante

By Stefano Palestini Céspedes*

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Luis Almagro, OAS Secretary General, met with Freddy Guevara, First Vice President of the National Assembly of Venezuela, in Washington, DC in early February 2017. / Juan Manuel Herrera, OAS / Flickr / Creative Commons

OAS Secretary General Luis Almagro’s second report on Venezuela, issued on March 14, reflects his personal commitment to enforce the principles enshrined in the Inter-American Democratic Charter, but risks getting ahead of the organization’s member states and could ultimately hurt the credibility of the charter and OAS.  The 73-page document states that the government of Venezuelan President Nicolás Maduro has become a “dictatorial regime” that violates “every article” of the Charter; concludes that all attempts at dialogue have failed; and essentially calls for the OAS to suspend Venezuela’s membership in accordance with the charter’s democracy clause.  Almagro said the UNASUR negotiation (supported by the Vatican) has failed to achieve any of its proposed objectives and has become “a tool for reinforcing the regime’s worst authoritarian features domestically and, externally, for not engaging in international condemnation and pressure.”

  • The report concludes with an ultimatum: If the government does not call for general elections, release all political prisoners, restore all laws it has annulled, and select a new electoral authority and a supreme tribunal in the next 30 days, Venezuela should be suspended from the OAS. Few observers believe Maduro could meet these conditions even if he wanted.

Almagro’s actions, including his forceful call for application of Article 21 of the Charter – the “democracy clause” – moves his office and the OAS into uncharted territory as it would be the first time it is applied against an elected government.  Article 21 was applied against the government in Honduras that came to power in a coup in June 2009, but the sanctions were initiated at the request of ousted President Zelaya and strongly supported by Latin American governments – including Hugo Chávez – and Washington.  To enforce Article 21 against an incumbent government, a strong consensus needs to be built.

The Secretary General’s showdown with President Maduro presents a test for the Charter and, ultimately, for the OAS, as it pushes the organization beyond its traditional institutional limits.  Any decision on suspension must be approved by a two-thirds majority of member states, whose delegates represent executive branches that traditionally have shied from intervening in each other’s affairs.  Some insiders also grumble that the Secretary General has fallen short in his consultation with the member states; instead he seems to take a partisan position such as by inviting Maduro’s opposition to OAS headquarters this week for a press conference.  If the members back Almagro’s call for suspension, he will have demonstrated that principled arguments can break even strong institutional barriers – moving OAS into a new phase.  In that case, the Secretary General together with the member states will need to come up with a post-suspension plan; only then will OAS become part of the solution to Venezuela’s crisis.  If member states do not support the Secretary General’s call, Almagro will be respected as a leader moved by convictions, but the OAS will probably move one step down towards irrelevance.

March 21, 2017

*  Stefano Palestini Céspedes is CLALS Fellow and Postdoctoral Fellow at the Department of Political and Social Sciences at the Freie Universität Berlin, where he specializes in international organizations and regional governance.

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by clalsstaff on March 21, 2017  •  Permalink
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Prospects Dim for Better U.S.-Venezuela Relations under Trump

By Timothy M. Gill*

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Venezuelan President Nicolás Maduro and U.S. President Trump’s nominee for Secretary of State, Rex Tillerson. Tillerson’s past dealings with Venezuela may lead to increased tensions between the two countries. / President of Russia website / Creative Commons / William Muñoz / Flickr / Creative Commons / Modified

U.S. President Donald Trump and his foreign policy team have expressed similar criticisms of the Venezuelan government and, while giving off contradictory policy signals, appear headed toward a policy focused on sanctions rather than continuing the dialogue that the Obama administration recently opened with its counterpart in Caracas.  As the U.S. Senate continues its confirmation hearings of Trump nominees, Latin America has featured very little in the discussion thus far, but passing mentions of the region suggest greater consensus among the Trump team than on other issues such as the threat of Russia and the Iran nuclear agreement.

  • In September, Trump expressed support for the Venezuelan opposition. He asserted that he will “stand in solidarity with all people oppressed in our hemisphere … [and] with the oppressed people of Venezuela yearning to be free.”  He blamed “the socialists” for running Venezuela “into the ground.”  He has also recently shown interest in the cases of Antonio Ledezma and Leopoldo López, two opposition leaders that respectively remain under house arrest and in a Venezuelan prison.
  • Several of Trump’s cabinet selections also seemingly harbor animosity toward the Venezuelan government. ExxonMobil CEO Rex Tillerson, nominated to be Secretary of State, concluded a case against the Venezuelan government in an international court in 2014 involving the expropriation of his company’s facilities.  Venezuelan President Maduro accused ExxonMobil of inciting conflict between Venezuela and Guyana when it announced that it would work with the Guyanese government to drill oil in an area that both countries claim.  General Michael Flynn, Trump’s pick for national security adviser, has included Venezuela (and Cuba) in the “enemy alliance” that the United States faces “in a global war.”  General John Kelly, Secretary of Homeland Security, has condemned the Venezuelan government for its alleged involvement in drug trafficking.

While the Trump team is obviously unhappy with Caracas, their statements so far shed little light on what they’ll concretely do differently from the Obama Administration.  Obama designated the Venezuelan government “an unusual and extraordinary threat” to the national security of the U.S. in 2015 and sanctioned a handful of state security leaders.  But there has also been renewed interest in recent months on the part of both governments to dialogue.  In late 2016, Maduro met with former U.S. Secretary of State John Kerry and Under Secretary Tom Shannon.  Despite disparaging Trump during the campaign season, Maduro extended his congratulations to him on November 9, and publicly reiterated his hope for better relations.  On January 16, Maduro stated that he was “surprised at the brutal hate campaign against Donald Trump,” and he welcomed the Trump administration, saying that Trump “won’t be worse than Obama.”

Aggressive rhetoric from Trump is a given, but his true position on Venezuela – as well as many other countries – is not entirely clear.  Businessman Trump undoubtedly grasps that strategic relations are founded on Venezuela’s role among the United States top five international suppliers of crude.  He has at times been dismissive of the concept of “democracy promotion,” which drives much of Washington’s advocacy in places like Venezuela.  He shows a penchant, however, for the sort of double-standard that most irks Latin America – criticizing Cuba and Venezuela’s political systems but praising Kazakhstan and Russia.  Moreover, he may be tempted to throw a sop to U.S. politicians who have led the effort to impose sanctions on the Venezuelan government.  During Tillerson’s confirmation hearing in the U.S. Senate, Senator Marco Rubio – with whom Trump had bitter exchanges during their party’s primaries last year – made criticisms suggesting continuing tensions, but Venezuela would be an easy issue for Trump to throw Rubio’s way as a peace offering to the lawmaker from Miami.  Indeed, while it’s far too early to make concrete predictions, it seems safe to say that Obama’s late-game efforts to reset the relationship with Venezuela will not continue under the new Administration – and we might expect Trump to more intensively target the Venezuelan government in the coming years.

January 23, 2017

*Timothy M. Gill is a post-doctoral fellow at the Center for Inter-American Policy Research at Tulane University.

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by clalsstaff on January 23, 2017  •  Permalink
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Venezuela: Running Out the Clock in 2016

By Michael McCarthy*

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A military exercise in Caracas, Venezuela. The Venezuelan military remains tolerant, if not actively supportive, of President Nicolás Maduro’s government. / Cancilleria del Ecuador / Flickr / Creative Commons

Despite continuing high tensions in Venezuela, neither President Nicolás Maduro nor the opposition appears likely to gain an upper hand in their years-long confrontation over the next couple months.  Venebarómetro polls buttress press reports and observers’ impressions that the opposition is slowly making gains, but support for the government – while extremely low – has stabilized.  A plan to reschedule 2017 debt owed by the national oil company will probably give the administration some breathing room, especially if oil prices continue to recover – a more likely scenario thanks to OPEC’s announced production cut agreement.
  • The very high turnout for the opposition’s Toma de Caracas demonstration on September 1, which mobilized hundreds of thousands of people, showed the depth of support for the anti-Maduro platform. The Electoral Tribunal’s announcement last week of onerous requirements on the opposition to schedule a referendum to recall Maduro (requiring, for example, the signatures of 20 percent of residents of all states, rather than nationally) rekindled opposition anger and unity.  A Venebarómetro poll earlier this month showed that 90 percent of Venezuelans view their overall situation negatively, and 71 percent support Maduro’s immediate resignation, but that only roughly 50 percent identify with the opposition.  The Mesa de Unidad opposition coalition is under great pressure to satisfy different constituencies – promoting street mobilization and pursuing dialogue at the same time – even when these initiatives seem at counter purposes.  Hamstrung by coalitional politics, anti-Maduro forces have not shown the cunning needed to force a course reversal from the Electoral Tribunal.
  • While Maduro’s popular support remains extremely low (22 percent), an internal party revolt against him appears unlikely. The government’s big push for a deal under which PDVSA creditors would swap debt coming due in 2017 for generous new 2020 bonds is making headway, according to the press.  Enhanced short-term liquidity may result in increased imports, a development which cannot come soon enough for a government that faces a restive population that has seen quality of life deteriorate dramatically during the crisis.

The common wisdom that the military is at least tolerant, if not actively supportive, of Maduro still stands.  Armed Forces chief Vladimir Padrino López showed an independent streak during last December’s Parliamentary election but this has not translated into a public rivalry with Maduro.  He moved into the spotlight when Maduro tasked the military with taking charge of food distribution, but he has since kept a lower profile.  Other senior commanders’ political leanings are even more difficult to discern.  Appealing to the military is a key element of the opposition’s current strategy, but there are still no signs of an increase in the institution’s willingness to press Maduro to step down or even change policies.

Maduro’s time-buying strategy looks likely to prevail for now.  His repressive tactics toward the opposition – keeping pressure on while occasionally offering negotiations, prisoner releases, and other gestures – are gaining the government time but failing to address any of the underlying causes of the ongoing crisis.  The debt swap is also a palliative that only delays the implementation of major reforms.  Popular unrest, political instability, and even violence are the factors that might conceivably persuade the military that its support and patience are misplaced.  However, with the world watching, most of the opposition leadership wants to play by constitutional rules.  Those who consider the chances of success justify the human price of further ramping up protests may see their hand strengthened if government obstructionism kills the referendum this year.  Few Venezuelans, moreover, view possible talks with the Vatican and the United States as likely to produce a breakthrough.  Even if the government alleviates the pain a bit to generate some Christmas cheer, the country will wake up with a terrible national hangover in 2017.

September 30, 2016

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

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by clalsstaff on September 30, 2016  •  Permalink
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Posted by clalsstaff on September 30, 2016

https://aulablog.net/2016/09/30/venezuela-running-out-the-clock-in-2016/

UNASUR and the Venezuelan Hot Potato

By Andrés Serbin and Andrei Serbin Pont*

Ernesto Samper UNASUR

Photo Credit: Carlos Rodríguez/ANDES/Flickr/Creative Commons

The Venezuelan crisis, which the hemisphere has turned to UNASUR to resolve, could break the South American organization and overshadow its past successes in regional mediation.  UNASUR was created in 2008, amid the proliferation of regional organizations such as ALBA that excluded the United States and Canada, as an inter-governmental mechanism to promote regional autonomy, conflict prevention and resolution, and the coordination of public policies, particularly regarding social issues, security, infrastructure, and energy.  It has been driven by individual presidents’ leadership and managed by high-ranking officials and, despite rhetoric to the contrary, has not shown deep commitment to greater civil society participation.  Among its important successes have been defusing internal conflicts in Bolivia and Ecuador, as well helping reduce tensions between Ecuador and Colombia, and between Colombia and Venezuela.  In years past, the group’s effectiveness raised questions about the OAS’s comparative ability to deal with regional conflicts.

In recent years, however, UNASUR has suffered decline.  As the commodities boom ended, regional economies were hit hard, and internal political factors started to change the political map, undermining leftist governments and enabling the election of center-right governments less committed to the UNASUR vision.  This coincided with the profound decline of Venezuela as it fell into the abyss of hyperinflation, debt, scarcity, criminality, and debilitating political instability.  The Venezuelan opposition’s achievement of a parliamentary majority last December, after 17 years of Chavista hegemony, brought no relief as the government reacted with an all-out effort to block it.  UNASUR, which first sought to foster a dialogue between the government and the opposition in 2013, has repeatedly failed to broker a solution.  In May 2016 the organization turned to three former heads of state – Spanish Prime Minister José Luis Rodríguez Zapatero, Dominican Lionel Fernández, and Panamanian Martín Torrijos – to attempt mediation again, to no avail so far.  The government continues to resist change, and the opposition, in addition to remaining firm in its demands of a recall vote to remove Maduro and the unconditional release of political prisoners, has shown persistent mistrust of UNASUR and its representatives, whom they perceive as allies of the government. Such suspicions may not be unfounded, considering Zapatero’s objections regarding the participation of some relevant opposition leaders in the dialogue process.

For the first time in its almost 10 years of existence, UNASUR faces potential failure in its attempt to solve a strategically important political crisis in the region.  To hold off an initiative by OAS Secretary General Almagro to enforce the Inter-American Democratic Charter against Venezuela, the OAS Assembly called on UNASUR and the former presidents to renew mediation efforts yet again last month, but neither Maduro nor the opposition has budged from their fundamental positions.  The situation is, again, stalled.  Indeed, in the context of declarations, extraordinary sessions, initiatives and trips, the commitment to end the crisis in Venezuela still appears quite limited among OAS members, including UNASUR.  Governments supporting dialogue seem most eager to avoid risking valuable political capital both in the domestic and the international spheres.  Neither UNASUR nor the OAS is prepared to handle the Venezuelan hot potato, and both stand to lose credibility for this failure.  But UNASUR’s general lack of leadership and direction in recent years suggests that failure in this crisis, with implications beyond Venezuela’s borders, would be potentially fatal to the organization.  UNASUR, with previous achievements in social, political and regional matters, must now prove that it is still a viable regional mechanism, able to deal collectively with the political turbulence of a changing regional landscape.

July 6, 2016

* Andrés Serbin and Andrei Serbin Pont are members of the analysis team of the Coordinadora Regional de Investigaciones Económicas y Sociales (CRIES), a Latin-American think tank.

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by clalsstaff on July 6, 2016  •  Permalink
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Posted by clalsstaff on July 6, 2016

https://aulablog.net/2016/07/06/unasur-and-the-venezuelan-hot-potato/

Venezuela: Trying to Stay Afloat

By Michael McCarthy* and Fulton Armstrong

Venezuela Oil Maduro

Photo Credit: Democracy Chronicles and Charles Henry (modified) / Flickr / Creative Commons

Venezuelan President Nicolás Maduro continues to receive increasingly bleak economic news, and his modestly positive policy responses seem unlikely to help.  Oil revenues dropped 293 percent from 2014 (US$37 billion) to 2015 (US$12.5 billion).  The value of oil exports, which account for 95 percent of the country’s export earnings, has dropped to a 30-year low ($30 a barrel), accelerating a recession, paralyzing shortages, and soaring inflation.  The Central Bank reported that inflation reached 180.9 percent in 2015, and that the GDP contracted for the second consecutive year (5.7 percent).  Maduro blamed an “imperialist strategy in a petroleum war” aimed at destroying OPEC.  He also asserted that Venezuela suffered from an “international financial blockade” that – by obstructing the country’s efforts to refinance its debt – was intended to force it “to its knees” and to “take over” its wealth.

Several days after celebrating a Supreme Court decision reaffirming his authority to declare an “economic emergency,” which the opposition challenged last month, Maduro this week announced several modest economic measures aimed at stemming the slide.

  • He ordered a 60-fold increase in gasoline prices – dramatic-sounding but preserving Venezuelan gas (about US$0.23 per gallon at the black-market exchange rate) as one of the cheapest in the world – but the decision is significant as the first increase in about 20 years. An increase in 1989 triggered riots – the famous Caracazo that most analysts cite as the beginning of the end of the old order that Hugo Chavez toppled definitively when elected President in 1998.  In allusion to this past, Maduro said he “hoped people on the streets would understand.”  (Caracas-based consultancy Ecoanalítica estimates that the existing fuel subsidy costs the Venezuelan government US$12 billion a year.)
  • Maduro also announced a 37 percent devaluation of the bolívar – from 6.3 to 10 to the U.S. dollar – for official exchange rates used for the essential goods like food and medicine. The bolívar trades at about 1,000 to one on the black market, but the decreased subsidy implicit of the official rate for necessities is nonetheless significant.
  • Venezuela’s proposal for an OPEC freeze in oil production, in hopes of driving oil prices back up, drew supportive remarks from Qatar, the United Arab Emirates, Russia, Saudi Arabia, and even Iran, but the scheme has lacked traction. Industry observers said one reason is that Tehran is eager to increase exports to regain market share as sanctions against it are lifted.
  • Maduro replaced economic czar Luis Salas – known as a hardline leftist – just five weeks after appointing him, and appointed in his place a more business-friendly economist, Miguel Pérez Abad, who had been serving as Minister of Commerce. Pérez Abad, whose appointment the President of the Venezuelan Chamber of Commerce described as a “friendly sign,” has publicly (and accurately) said that Venezuela must simplify its byzantine exchange rate system.
  • These changes come amid Maduro’s increasingly frank self-criticism about state corruption. He recently described a government food distribution company as “rotten” while calling for a restructuring of state-run food import and distribution outlets.

In a four-hour speech replete with foul language and insults against opposition leaders, the President argued that the measures are “a necessary action to balance things,” and he said, “I take responsibility for it.”  But his measures are piecemeal at best.  As opposition leaders have pointed out, he has not explained how he is going to pay Venezuela’s debt, obtain the foreign exchange to import sufficient amounts of basic goods, and guarantee food for the people.  With US$10 billion in bond payments coming due this year, the country has no clear path for avoiding default.  However painful for the population and politically costly for the government, measures such as gasoline price increases will have little impact.  The government wanted the opposition to share some of the costs for economic policy changes, but opposition politicians say that the gas price increase and devaluation are too little, too late. Most believe economic revival depends on dismantling the entire chavista system.  They are once again talking about removing Maduro through a referendum or other means – with one leader, Henrique Capriles, openly calling for a presidential recall, and another, Henry Ramos, the President of the National Assembly, calling for a constitutional amendment to cut the presidential term from six to four years.  The government’s measures suggest a welcome change from Maduro’s previous strategy of buying time through diversionary tactics.  However, the economic measures are likely to fail and, moreover, they increase the chances political temperatures will surge once again.

February 19, 2016

* Michael McCarthy is a Research Fellow with the Center for Latin American & Latino Studies.

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by clalsstaff on February 19, 2016  •  Permalink
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Posted by clalsstaff on February 19, 2016

https://aulablog.net/2016/02/19/venezuela-trying-to-stay-afloat/

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