All posts tagged Chavismo

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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by clalsstaff on January 9, 2018  •  Permalink
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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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by clalsstaff on June 5, 2017  •  Permalink
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Latin America: The Spirit of Constitutionalism under Attack

By Maxwell Cameron*

Venezuela constitition

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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by clalsstaff on April 5, 2017  •  Permalink
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Posted by clalsstaff on April 5, 2017

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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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Venezuela: Implications of the Opposition’s Landslide Victory

By Michael McCarthy*

Venezuela Elections 2015

Photo Credits: Nicolas Raymond and 2 dvx ve (modified) / Flickr and Wikimedia Commons, respectively / Creative Commons

Venezuela is just beginning to feel the shock waves of the opposition’s landslide victory and humbling defeat of President Nicolás Maduro’s PSUV.  Riding a wave of discontent with the Maduro government’s management of the economy and political repression, the opposition Mesa de Unidad (MUD) coalition won at least 112 seats in the 167-seat parliament, giving it a commanding two-thirds majority.  The MUD won the popular vote 56-41.  The political scenarios are wide open.  Some preliminary analytical judgments follow:

  • Maduro has accepted the election results, but serious questions remain whether he and his advisors will engage in the give-and-take necessary to make divided government work. He is restructuring his cabinet and has called on supporters to “relaunch” the Bolivarian Revolution.  He says he will strenuously oppose any amnesty law for imprisoned opposition members – a top MUD priority – and that he will “go to combat” if the opposition tries to remove him from office.
  • Despite its historic achievement, the opposition will face challenges to build sustainable unity. The MUD is a heterogeneous electoral alliance, and the hardline and moderate factions are likely to disagree about strategy – whether the time is ripe for pressing for Maduro’s resignation or for cultivating support from disaffected chavistas.
    • The opposition faces the challenge of demonstrating a commitment to what they have criticized most about chavismo – democratic inclusion.  If they want to put Venezuela back together, for example, the MUD will have to decide how to provide PSUV officials guarantees of political inclusion.
    • Passing an amnesty law for political prisoners and addressing the dire economic situation are high on the MUD’s unified agenda – and probably will remain part of a consensus platform.
    • Less clear is how aggressively the opposition will push its agenda from the National Assembly.  Most in the MUD are more closely aligned with the moderate strategy of former presidential candidate Henrique Capriles, but others will want to push harder.  They may try to remove chavista-appointed Supreme Court judges likely to oppose Constitutional changes that would curtail Maduro’s powers.
    • The forced resignation of Guatemalan President Pérez Molina and the recent opening of an impeachment process against Brazilian President Dilma Rousseff may embolden similar initiatives in Venezuela.
  • The country’s tarnished election system functioned better than many critics had predicted. The 74 percent voter turnout was eight points higher than the last legislative elections.  Reports of violence and irregularities were few.  The Armed Forces provided effective security at the polls, and behaved in a manner that suggests an interest in defending their institutional reputation.  The National Electoral Council (CNE) disappointed many by issuing an unprecedented call for voting centers to remain open even if there were no voters in line, and for delaying reporting the final results, but the voting process was clean enough.
  • Outside Venezuela, chavismo’s loss may be a setback from some leftists – but a relief for most others. Maduro’s defeat is a potential liberation from the albatross that the disastrous Venezuelan regime has become.  For most left-leaning leaders, chavismo had become a deeply flawed project that has, for several years, been toxic.
  • For anti-chavistas outside Venezuela (including some in Washington), the election results indicate that the way to overcome the catastrophe over which Maduro presided was not to threaten the regime with sanctions and encourage extremists in the opposition, but instead to push for the election to take place, with the most safeguards possible. There is precedent for Latin American dictatorships falling in elections that they put on the agenda and then could not stop.
  • Although Maduro’s saber-rattling along the Colombian and Guyanese borders failed to divert attention from his internal mess, his rhetoric of resistance to yielding power suggests the international community should keep an eye on him in case he tries again.
  • The Venezuelan victors should also understand the anxiety of their neighbors over the future of Petrocaribe and other initiatives. Venezuela under Chavez did an enormous service to the region by subsidizing oil in ways that helping governments achieve important social advances.  Long before Chavez, Venezuela used its oil wealth to support allies.  Such assistance is as important now as it has been for decades.

December 9, 2015

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

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What Does Macri’s Victory Mean for Latin America’s Left Turns?

By Eric Hershberg and Fulton Armstrong

South America right

Photo Credits: Douglas Fernandes and _Butte_ / Flickr / Creative Commons

Argentine President-elect Mauricio Macri’s actions since his historic victory last week indicate a rightward shift in domestic and foreign policy that some observers are tempted to proclaim as part of a broader Latin American trend.  He has reiterated promises of broad economic reforms and appointed a cabinet – including former JP Morgan executive and ex-Central Bank chief Alfonso Prat-Gay as his finance minister – to implement them.  He has further pledged to reverse outgoing President Fernández de Kirchner’s protectionist trade policies.  (During the campaign, advocates of unbound capitalism cheered when he named Ayn Rand’s “The Fountainhead” as one of his favorite books.)  Macri has named Susana Malcorra, a senior aide to UN Secretary General Ban Ki-moon with strong diplomatic credentials, to be his foreign minister and, for starters, directed her to reverse policies he judged to coddle Venezuela. The President-elect, who takes office on December 10, is speaking with the confidence of a President elected with more than a 3-point margin over Kirchnerista candidate Daniel Scioli and with control over more than the 91 seats (one third of the total 257 seats) that his Cambiemos coalition won in the lower house of Congress.  (His party is the first, however, to control simultaneously the Province of Buenos Aires, the City of Buenos Aires, and presidency.)

The temptation in some quarters to declare Macri’s victory as the beginning of the end for Latin America’s “Left Turns” is understandable but nonetheless premature.  To be sure, the Argentine electoral results coincide with other major setbacks for various currents of the Latin American left:  The Chavista project in Venezuela is crashing; Brazilian President Rousseff and her party are mired in a corruption morass and economic crisis whose combined effects may cut short her time in office; President Correa, facing a dire economic situation in Ecuador, is increasingly talking about abandoning efforts to run yet again in 2017.  Chilean President Bachelet’s low popularity and declining public support for the Vázquez government in Uruguay may be additional signs that the prospects for the “pink tide” are very much in doubt.

But in Argentina and beyond, the jury is still out.  Through no action of its own, the South American left enjoyed the multiple benefits of the decade-long commodity boom that began in 2003.  Just as its electoral successes did not indicate wholesale shifts to the left in the region – indeed political scientists have long questioned whether the evidence supports claims of a leftward shift in popular preferences – today’s parallel crises may reflect the end of of the boom rather than a rejection of left-leaning governments.  Many of the policies advanced by various currents of the “pink tide” may remain highly popular, even while they are no longer affordable.  Another tempting explanation is that Latin Americans are rejecting leaders who they perceive as corrupt, irrespective of their placement on the left-right spectrum.  In Argentina, notably, Macri hasn’t rejected the Kirchneristas’ redistributive agenda but has instead emphasized the confusing, corrupt way it has been pursued for the past 12 years.  (Never before has an Argentine rightist portrayed eliminating poverty as a core priority.)  It may well be that voters understand economic slowdowns and dysfunction as a product of corruption rather than the fallout from declines in historically high commodity prices.

Regardless of the underlying drivers of electoral change and public disillusion with incumbents, it’s fair to ask if the left’s current travails and the right’s resurgence will open the way toward more accountable political leadership, whatever its ideological proclivities, or just signal an alternation of power.  Like Macri in Argentina, a new cohort of Latin American leaders will have to prove that they are more than outsiders drawing on sentiment to throw out the incumbent rascals.  The question is whether they pursue policies that make democracy more transparent, expand meaningful political participation, and sustain the social gains that have been achieved by the pink tide governments that now appear to be on the ropes.

December 2, 2015

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by clalsstaff on December 2, 2015  •  Permalink
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Posted by clalsstaff on December 2, 2015

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Venezuelan Elections: Economic Crisis Turns Up the Heat on Chavismo

By Michael M. McCarthy*

A faded legacy. Photo Credit: Julio César Mesa / Flickr / Creative Commons

A faded legacy for Chavismo? Photo Credit: Julio César Mesa / Flickr / Creative Commons

Twenty-four long months since their country’s last national election, Venezuelans head back to the polls to elect a new National Assembly on December 6 in a tense political climate – with no promise that the government will respect the opposition’s near-certain victory.  All 167 seats in the unicameral body will be up for grabs in a race polarized between Chavismo’s pro government coalition and the Mesa de Unidad Democrática opposition coalition.  Thanks largely to a rapidly deteriorating economy, the government’s approval rating decreased from 50 percent in 2013 to 20 percent in September, according to the national Venebarómetro poll.  A range of polls in September indicated the MUD is poised to win either a simple or “qualified” (60 percent) majority.  Observers generally agree that the main measure of success for Chavismo is preventing the MUD from obtaining a two-thirds majority, and that blocking a qualified majority would be a major triumph.

For ordinary Venezuelans the campaign is overshadowed by the massive economic crisis.  Skyrocketing inflation, severe shortages of basic goods and services, and reduced social assistance programs are contributing to tensions on the street, where the campaign is not as present as in years past.  Nevertheless, heavy turnout is still expected – 66 percent of eligible voters participated in the last National Assembly elections in 2010, and pollsters report a strong intention to vote.

  • The MUD has shaped its campaign around leveraging the vote as a mechanism for punishing economic mismanagement and restoring some institutional balance to a political system that barely reflects opposition voices at the national level. Skepticism of the National Electoral Board, which rejected the MUD’s request for international electoral observation by the OAS, EU or UN, has increased.  Slashes to budgetary support for opposition governors and mayors, while the government channels funds to unelected parallel state and municipal authorities, make supporters wonder whether a victory will be fully respected.
  • The government refreshed its slate of candidates by promoting generational and gender diversity, but stalwarts, including current National Assembly leader Diosdado Cabello, remain prominent. The party is distributing last-minute pork to mobilize voters, and it’s working the system’s rural bias – each department is automatically allocated three deputies – where strong government presence gives it a strategic advantage.  Strikingly, the Chávez legacy has become a liability for President Maduro because the former President was much more charismatic and economic conditions were considerably better during his tenure.

The Maduro administration seems to have run out of diversionary moves after exaggerated external threats from Colombia and Guyana faded.  It is also on the defensive after the Rousseff administration, Maduro’s most powerful diplomatic partner, expressed unhappiness about Caracas’s opposition to its choice of a Brazilian political heavyweight to lead UNASUR’s “electoral accompaniment mission.”  The President has also been set on back on his heels by intensified international criticism of the trial and conviction of opposition leader Leopoldo López, who, according to a state attorney who worked the case, was sent to jail for 14 years on fraudulent charges.  Regardless of the outcome on December 6, the direction of the country is highly uncertain.  Maduro has said he’ll accept the results “whatever they are,” but he has also said “we have to win, by whatever means possible” (como sea and cualquier manera), and that if the opposition wins “I will not hand over the revolution” but rather “proceed to govern with the people in a civic-military union.”  In the next couple weeks, the government may still try to throw the opposition off course, but the MUD does not seem interested in renewing street protests – more violence is unlikely to advance its objectives. Neither do its leaders seem confident that a renewal of talks on rebuilding democratic institutions will help.

November 9, 2015

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

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Maduro Cites Security to Suspend Rights on the Border

By Michael M. McCarthy*

Photo Credit: Globovisión / Flickr / Creative Commons

Photo Credit: Globovisión / Flickr / Creative Commons

The Maduro government’s closure of a key border crossing into Colombia and declaration of a state of emergency in nearby towns mark not only a low in relations with Colombia but also in efforts to manipulate the playing field ahead of legislative elections slated for December 6.  President Maduro blamed Colombian “paramilitaries” for an August 19 firefight in which three Venezuelan soldiers were wounded.  He announced the deployment in the area of the “Operations for the Liberation and Protection of the People” (OLP), which are heavily armed military and police units specially created to force out alleged paramilitaries, and security forces swept through the area forcibly deporting more than a thousand undocumented Colombians.  Last week, the pro-government coalition of the Venezuelan National Assembly called for expanding the emergency measures to two other important border states.  The two countries’ foreign ministers met on August 26 for what Colombian Minister Holguin called a “positive, frank and realistic” exchange, but there was no agreement to reopen the border.

Maduro’s objectives seem to go far beyond stemming border violence.  Two reputable polls put his popularity in the lower 20s and project the opposition as likely to win a Congressional majority in the December 6 legislative elections.  His Chavista political movement is bleeding supporters amid a mounting economic crisis. Skyrocketing inflation and acute shortages of basic goods and services have created daily hardships for the popular sectors that once served as Chavismo’s base.  The opposition coalition Mesa de Unidad Democrática called the state of emergency a diversionary tactic – “to cause a situation of intense conflict and internal confusion” – and claimed that the maneuvering shows Maduro fears the election and may suspend it.  The state of emergency in Táchira, which is a renewable in 60 days, restricts the right to public assembly and gives Maduro powers to seize assets and limit the sale of basic goods and services.  The value of the annual illegal border trade is estimated to have grown to roughly $5 billion.  The order may become a mechanism for intensifying government controls over industry, which Maduro regularly accuses of waging war against the government.

Maduro’s political objectives in declaring the state of exception are obvious – to reset the political agenda in line with a government narrative of external threats.  This security rationale appears greatly exaggerated, suggesting he’s more interested in scapegoating Colombia for the sorry state of affairs in Táchira than in sparking a diversionary armed conflict.  He also recently escalated an historic border dispute on his eastern flank with Guyana after Exxon discovered oil in Guyanese territory claimed by Venezuela.  So far, Maduro’s actions have not seemed to threaten the soft truce between Washington and Caracas, which has led to a toning down of mutual recriminations.  Over the weekend, the U.S. State Department issued a mild statement that noted “continuing concern about the situation along the border between Venezuela and Colombia,” although Washington did take him to task for the deportations.  The real implications of the emergency decree are internal to Venezuela. Maduro’s state of emergency not only raises human rights concerns in the affected territories; it suggests the specter that the government will resort to increasingly desperate measures to maintain control as its credibility, like the economy, collapses.

August 31, 2015

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

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by clalsstaff on August 31, 2015  •  Permalink
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The Venezuelan Opposition: Can the Center Hold?

By Michael M. McCarthy*

Leopoldo Lopez (R) being escorted by the National Guard after turning himself in on February 18, 2014. Photo Credit: Juan Barreto via Globovisión / Flickr / Creative Commons

Leopoldo Lopez (R) being escorted by the National Guard after turning himself in on February 18, 2014. Photo Credit: Juan Barreto via Globovisión / Flickr / Creative Commons

The leaked video of jailed Venezuelan opposition leader Leopoldo López declaring a hunger strike and calling for a renewal of street demonstrations this Saturday threatens to reopen splits within the Venezuelan political opposition.  With Venezuela experiencing an economic crisis – the bolívar lost a quarter of its value on the black market last week and shortages of basic goods plague daily life – the opposition, a disparate group of 29 political parties organized under the Mesa de Unidad Democrática (MUD), seems poised to score a pivotal victory in this year’s legislative election.  But López’s call to protests could renew divisions between those supportive of last year’s La Salida street demonstrations and the moderate camp, led by Governor Henrique Capriles, eager to punish the government at the polls for its poor management of the economy.

  • On May 17 the MUD held open primaries for 37 candidacies, and turnout (8 percent of all registered voters) exceeded expectations, despite very little media attention being devoted to the races. Capriles’s First Justice (PJ) and López’s Popular Will (VP) parties won 13 and 10 candidacies with 19.7 percent and 18.2 percent of the votes, respectively.  Regionally-based parties Democratic Action, strong in rural areas, and A New Time, strong in western Zulia state, performed well, with other small parties winning the remaining candidacies. The results consolidated the negotiating leverage of the PJ and VP as the MUD began internal talks about selecting the remainder of its candidates by consensus and campaign tactics – whether to use a tarjeta única ticket or let individual parties be listed on the ballot on voting day.  (The National Election Council has yet to announce the date.)

The López video, first leaked on government media outlets before going viral on social media late last Saturday, was forceful.  It emerged after news broke that López’s cellmate, VP politician Daniel Ceballos – the former mayor of San Cristobal, an epicenter of the street demonstrations last year – would be transferred to a public jail for common criminals where security guarantees are considerably weaker.  In the video, López mentions the U.S. investigation into chavista National Assembly President Diosdado Cabello for alleged involvement in narco-trafficking; condemns the “permanent repression of our rights”; and demands “the liberation of all political prisoners,” the “halt to persecution, repression, and censorship,” and the setting of an official date for the legislative elections, with OAS and European Union observers.  On Monday, a leader of López’s party endorsed his call for a rally on Saturday, and Lopez’s wife and spokeswoman declared that Venezuela is entering “a new stage of struggle.”

The country’s situation is palpably worse than a year ago, when López went to jail, but opening a new front is not what most of the opposition had in mind.  Capriles and the MUD have issued statements of support since the video leaked, and the MUD’s Executive Secretary Jesus “Chuo” Torrealba posted a call for unity on Twitter.  “Going to the elections divided is a loss,” he said.  “Going to the street divided is suicide.  Will we learn?”  Unanswered, however, is the question of the opposition’s ability to avoid becoming bogged down in a leadership struggle just as the campaign season kicks off.  Oppositionists had finally found a political middle ground based on prioritizing the elections – and the narrative of ordinary Venezuelans facing daily hardships to find food and other basic necessities.  However legitimate the opposition’s fury at the government’s repression and mismanagement, the call to the streets risks changing that narrative and diminishing prospects of opposition unity going into the election season. 

May 27, 2015

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

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Venezuela: Globovisión Doesn’t Show Strong Pro-Government Bias

By Mike Danielson, Michael McCarthy, and Paula Orlando*

Photo Credit: CLALS and Rodrigo Suarez / Flickr / Creative Commons

Photo Credit: CLALS and Rodrigo Suarez / Flickr / Creative Commons

A study conducted by CLALS has revealed that, contrary to popular perception in Venezuela, Globovisión – standard bearer in news television for the opposition’s political agenda until a May 2013 ownership change – does not exhibit a strong pro-government bias.  Our report, Bias or Neutrality? An Assessment of Television News Coverage in Venezuela by Globovisión, concludes that Globovisión’s framing of the issues has tended to be neutral, and that there was no significant bias in favor of the government or the opposition.  To examine the station’s performance during the first 15 months of new ownership (May 2013-August 2014) – the previous owners felt compelled to sell after mounting fines caused them to operate at a loss – the study examined content during four critical junctures: the 2013 municipal elections, street demonstrations in 2014, the international attempts to mediate Venezuela’s internal political crisis, and shortages of basic goods.  Using content analysis to examine coverage of government and opposition representatives, the favorability of the presentation and portrayal of prominent individuals and organizations, and the choice of issues and perspectives receiving coverage, the review concluded:

  • Non-partisan actors received most coverage (45.3 percent), and pro-government and pro-opposition partisans were equally likely to receive attention (28.4 and 26.3 percent, respectively).  Even in the instances that a small pro-opposition bias was found, pro-opposition voices received only slightly more visibility in terms of total on-air minutes – receiving 37.5 percent, while 33.6 percent went to pro-government partisans, and 28.9 percent went to nonpartisan actors.
  • Pro-opposition perspectives were favored in the periods focused on the municipal elections and street demonstrations, and coverage was more neutral when focused on the international dimensions of the crisis and the shortages of basic goods.
  • There was, however, a pro-government slant regarding story placement, as stories that were more favorable to the Administration of President Nicolás Maduro tended to “lead” as the first stories in a news broadcast.

Privately owned news media in Venezuela face numerous challenges to providing visibility and fair depiction to sharply different perspectives on enormously controversial events.  Although this report calls attention to the need to reassess the perception that Globovisión is strongly biased in favor of the government, notable holes in the channel’s news coverage suggest international concerns about press freedom issues in Venezuela remain justified.  For example, the case of jailed opposition leader Leopoldo López received less attention from Globovisión than from international outlets such as CNN en español or NTN24.  Additionally, footage of former presidential candidate and Governor of Miranda state Henrique Capriles was shown 11 times in the study’s sample, but Capriles was not an interview guest on any of the Globovisión programs.  President Maduro, on the other hand, appeared 42 times (beyond government-controlled network broadcasts called cadenas). In spite of Venezuela’s chronic political crisis and extremely difficult political circumstances and the related pressures on news media, Globovision coverage, on balance, was not significantly biased either in favor or against the government.

May 19, 2015

*Mike Danielson (Visiting Assistant Professor of International Affairs at George Washington University), Michael McCarthy, and Paula Orlando are CLALS fellows.  Click here to see their full report and here to see their interview with Voice of America.

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