CARACAS CONNECT: February 2015

Conflicts Widen and Deepen as the New Year Unfolds in Venezuela

Venezuelans entered 2015 bedeviled with several problems that have now been exacerbated by a new one: the collapse of global oil prices. Lines outside supermarkets and other stores have grown longer; but, more importantly, they have become more common in poor areas. Now, allegations of coup plotting and the arrest of a prominent opposition mayor have raised the specter of military government – or worse. National Assembly elections are scheduled for December, guaranteeing that the political temperature will grow hotter as the year progresses. Finally, optimism about improved relations with the United States has been shattered by the legislation in Congress to impose sanctions, President Obama’s willingness to embrace them, and Venezuela’s accusations of U.S. involvement in fomenting a coup.

Government Alleges Coup Attempt with US Complicity; Arrests Caracas Mayor

On Friday, February 20, President Nicolás Maduro spoke to Venezuelans for three hours and announced the detention of Antonio Ledezma, mayor of Caracas, on charges of abetting a coup. Maduro alleged that the coup had the active support of Washington. The week before, Ledezma had joined two opposition leaders, Maria Corina Machado and Leopoldo López (the latter now having spent one year in detention on charges of inciting violent protests in February 2014) in signing a call for a “National Transition Agreement.”

Ledezma, like Machado and López, participated in the 48-hour coup against President Hugo Chávez in 2002. He served as mayor of central Caracas during the massive urban riots, the Caracazo, of February 1988, after which thousands were killed by troops sent into poor neighborhoods by President Carlos Andrés Pérez. Pérez and Ledezma were both members of Acción Democrática (AD), the dominant party of the pre-Chávez era (1958-1998). Ledezma left AD in 1999 and founded the Fearless Peoples Alliance. In 2008, he was elected mayor of the key Caracas municipality of Libertador, after which the Chávez government transferred many of that office’s functions to a special administrative official responsible for the Caracas metropolitan area.

Seemingly a step toward peaceful negotiation, the call for a “transition agreement” actually represents a more extreme position because it still seeks the immediate removal of Maduro and the Bolivarian government. It poses problems for Henrique Capriles, the MUD’s presidential candidate in 2013 and 2014. MUD is the Spanish acronym for Mesa de la Unidad Democrática, or Democratic Unity Roundtable. Not that Capriles would not like to see Maduro exit the presidency; Capriles and others who did not sign the call have opted for a longer run strategy of talks and electoral competition.

A BBC report on the detention claimed that 33 of 76 opposition mayors in the country are facing trials on various charges of inciting or failing to control violent protests. The same report says that MUD leaders have called on people not take the “government’s bait” with large protests that could turn violent—a contrast to its reaction a year ago to the detention of López. Reports on the U.S. Spanish network Univisión gave wide coverage to protests, but even its reports referred to “hundreds” of protestors.

The arrest of Ledezma Thursday night for sedition followed by one week the detention of several Air Force generals who are alleged to have been plotting a coup. Maduro says that Ledezma is complicit in the recent plot and also in an earlier conspiracy, one year before, to sow chaos by assassinating López. The government claims that a U.S. embassy “advisor” had prepared the script to be used by the generals in announcing the coup. Maduro said he would release hours of videotape and other evidence to back up his claims.

The United States denied Maduro’s accusation of involvement. Various international human rights organizations expressed concerns about the detention. Capriles commented, “Does Maduro think that putting everyone in prison is going to get him 50 popularity points or that he’s going to win elections?”

UNASUR (the Union of South American Nations) cautiously responded to the detentions and claims of U.S. involvement, but in some ways suggesting more concern about Venezuela’s actions than in previous detentions of opposition figures. Its Secretary General, former Colombian President Ernesto Samper, announced the organization would meet in an extraordinary summit of foreign ministers to analyze the situation. The foreign ministers of Brazil, Colombia and Ecuador were preparing in advance to fly to Caracas to meet with Venezuelan officials. The Brazilian government pronounced itself concerned about the future of democracy. Samper in his announcement said he hoped the upcoming visit of ministers would help depolarize the country and perhaps lead to a national accord on a “social adjustment of the economy.”

Samper’s statement drew the ire of several activists on Aporrea.com, a web site with a very active forum, which generally reflects the perspective of the Bolivarian grassroots and Chavista left, who see an accord as a betrayal of revolutionary aims. The three member team is drawn from one country, Ecuador, highly sympathetic to the Venezuelan government; one, Brazil, from more moderate governments in the region; and one, Colombia, from the more conservative wing. Were UNASUR to adopt a more assertive role in championing an accord, it would put Maduro in a difficult situation between an organization (UNASUR) that the late Hugo Chávez took the lead in founding and Chavistas who see negotiation as dancing with the enemy.

Nicmer Evans, a prominent spokesperson for the Marea Socialista (Socialist Tide) faction of Chavismo, tweeted, “Ledezma, Leopoldo [López], etc. are part of this boomerang that has returned to smack us in the face,” arguing that the failure to prosecute those involved in the 2002 coup has led to impunity on their part today. But Evans also expressed some skepticism about the arrest of Ledezma. “Fueling suspicion is a distraction tactic from the huge currency devaluation we’ve had to withstand,” Nicmer Evans told the New York Times. “What’s not clear is the proof of wrongdoing in this case.”

Henry Ramos Allup, the leader of AD, had an especially interesting reaction on February 22 to Maduro’s statements about a coup. Allup carefully stated that the charge would be just another smokescreen for the government’s unpopularity, but also said any government would have to right to react against such plotting. The cagey AD leader also took note that historically such pronouncements and the government’s assurances of normality in Venezuela have meant that indeed the prospects of a coup were growing. Allup insisted that a coup attempt would be disastrous for all and that the opposition should concentrate on winning the December elections.

Political Developments, from 2014 to 2015

The latest crisis comes as Maduro struggles to regain his political footing after a year of deterioration in his approval ratings at home. One year ago, his fortunes seemed to be turning up. In December 2013, his Unified Socialist Party of Venezuela (PSUV) party took a large majority of municipal mayoral races (See Connect, Dec. 2013). The MUD, counting on victory, had sought to make the election a referendum on Maduro and his government. The result was a clear political defeat for the MUD leader, Henrique Capriles, who had narrowly lost the April 2013 election to Maduro.

However, Maduro failed to follow up the PSUV victory with solutions to the country’s pressing economic problems. His approval ratings were already plummeting when the price of oil, which accounted for 95 percent of the country’s export earnings, began its downward plunge from roughly $100 in June to less than $50 this month. From $96 in September 2014, the basket price for Venezuelan oil had fallen all the way to $38 by the end of January. It has recovered somewhat and hovered around $50 in February.

Fissures began to appear in the MUD and widened over 2014. Opportunism is part of the MUD’s problem. Recognizing Capriles’s vulnerability, López and Machado jumped on the opportunity to challenge Maduro by endorsing student protests that erupted over a number of issues, especially insecurity. Ledezma initially tried to carve out his own political space between Capriles and the two hardliners, but he has clearly now moved into alignment with them.

Machado and López took up the call for the immediate “salida” (exit) of Maduro. Their target was not only Maduro but also Capriles, who had swung back to a more moderate position after the MUD lost local elections decisively to the PSUV in December 2013. López was arrested and put on trial for inciting violence, posing yet another obstacle to a negotiated exit from the political crisis. While López did not explicitly endorse violence, neither did he forcibly condemn it. The demonstrations brought back memories of 2002, when opposition leaders organized mass marches and guarimbas (street barricades and other forms of violent protests) to provoke a 48-hour coup against the Chávez government.

More pragmatic opposition leaders, like Capriles and Allup, have continued to demand the release of López and some other politicians associated with his movement, as well as the dropping of charges against Machado in connection with allegations that she had participated in a conspiracy to assassinate Maduro. However, Capriles, perhaps recognizing the political cost he suffered as a result of violent opposition protests after the presidential election, and other MUD leaders began to criticize those who endorse organizing newguarimbas or street protests likely to include violence.

In October, the deeply-divided MUD elected a new coalition leader, Jesús Torrealba, in an attempt to bridge the gap between the two wings of opposition. Torrealba has had little success so far. Capriles has wavered between outspoken criticism of the extremists andendorsement of protests against shortages and detentions. In January, the MUD leadercalled for non-violent demonstrations, saying the economic crisis was creating “a perfect storm for changing the government.”

The deterioration of the economy (see below) has made constant headlines in the Venezuelan and international press. Extraordinary images of Venezuelans lined up for blocks to buy subsidized food stuffs suggest the depth of the crisis; but so far the “perfect storm” has failed to materialize. One political scientist sympathetic to the opposition thinks the dire economic circumstances may have dampened popular ardor for protesting. “At this moment of crisis the average Venezuelan is most concerned about other things — politics are not a priority,” says Carlos Romero of the Central University. “Perhaps as the crisis deepens, there will be another opportunity to mobilize the masses, until then we’re stuck in a state of inertia.”

One advantage for Maduro is the organizational capacity of the PSUV. The party may not be the seven-million member juggernaut that Chávez claimed to have built in 2007, but its base of one million militants far exceeds the size of any other party. Not even AD, the most experienced and national in scope of the opposition parties, can match the electoral machine that Chavismo can put in the field for elections.

The PSUV is not without internal tensions. The party in late 2014 experienced defections to the Marea Roja (“Red Tide,” a play off the “Pink Tide”), a coalition of grassroots activists and movement leaders. The group is relatively small but influential, many of its members drawn from intellectual circles and local activists who are well connected with each other in the aporrea.org. Marea is clearly disenchanted with Maduro, complaining that he is insufficiently committed to support the social missions and the full development of the communal state. (Such a state would see the transfer of resources and power away from state and municipal units to networks of communal councils). Marea voices also oppose possible economic moves, such as devaluation of the bolivar, which would fall heavily on the poorest sectors of society.

Maduro’s troubles were magnified by the defection of Lamsy Salazar, a military general who served in personal security positions for deceased President Hugo Chávez and Diosdado Cabello, head of the National Assembly and perhaps the second most powerful figure with the PSUV. International news media have alleged that Salazar is expected to testify in the U.S. that Cabello has been involved in drug trafficking. Maduro claimed that a campaign of economic and media subversion is underway. Returning in late January from a gathering of Latin American leaders at a summit of the Community of Latin American and Caribbean Stats (CELAC), Maduro also alleged that U.S. Vice President Joe Biden predicted there the overthrow of the Venezuelan government.

Renewing Electoral Authorities

Previous analyses by Connect have highlighted the importance of renewing the directorship of the National Electoral Council (CNE). Although the opposition, including Capriles, has often charged fraud, most independent observers, such as the Carter Center, have supported the CNE’s conduct of the actual balloting and count. It was the Election Day procedures and CNE automated procedures to register voters and candidates to which former President Jimmy Carter alluded in his frequently quoted affirmation, “As a matter of fact, of the 92 elections that we’ve monitored, I would say the election process in Venezuela is the best in the world.”

However, the Carter Center has been much more critical of the CNE’s oversight of campaign rules and regulations, especially what Venezuelans call “ventajismo,” similar to what political scientists call “abuse of incumbency.” Too often this criticism overlooks questionable opposition practices, such as limits on private campaign finance and political advertising. But the larger implication of criticism, from whichever side it comes, is that the CNE’s reputation has suffered, and its legitimacy will be put to a strenuous test as the December elections approach.

As David Smilde put it in his blog for the Washington Office on Latin America, “[G]iven the degree of polarization and conflict in Venezuela, the declining popularity of the Maduro government, legislative elections in 2015 and a likely recall attempt in 2016, the CNE is perhaps the single most important institution for keeping Venezuela within the space of democratic politics.” (Similar analyses were done by the Carter Center and the Andrés Bello Autonomous University.)

Finally, at the end of a year-long process, in December the National Assembly approved three members for the CNE board, including Tibisay Lucena, the sitting rector, for a third term (the last she can constitutionally serve). The vote was by a majority that fell short of the two-thirds majority required by the Constitution. Diosdado Cabello, president of the National Assembly (and often seen as a possible successor to President Maduro someday), asked the Supreme Court to declare the positions vacant and to appoint the three approved by the Assembly. The Court has the constitutional authority to do so but replaced one of the three Assembly candidates with Luis Emelio Rondón, a highly respected and experienced electoral expert seen by most observers as sympathetic to the opposition.

The five member board now has two members closely aligned with Chavismo, two others sympathetic but largely seen as committed to maintaining the integrity of the ballot, and one member similarly committed but sympathetic to the opposition.

The opposition was largely united in criticizing the appointments, but the outcome in some ways favors its fortunes, allowing it to pursue a two track strategy against Maduro and the PSUV. Given the mounting economic crisis and low approval ratings of Maduro, it could conceivably win control of the National Assembly in the December balloting, which could signal a campaign to recall Maduro in 2016. If it loses, it can question the outcome by challenging the legitimacy of the CNE, a claim that will be quickly echoed in much of the domestic and international media.

Economic situation

Oil prices have fallen from $130 to prices that this year are ranging from $40 to $60. Venezuela lives by oil exports. Over the last few years, oil earnings have been about 96 percent of export earnings, about 25 percent of GDP, and 45 percent of government revenues. All of this puts Venezuela’s impressive gains in human development (the HDI rosefrom 0.662 in 2000 to 0.748 in 2012) at risk. It also reduces room for the government to make macroeconomic adjustments with less pain for the poorest Venezuelans. Reserves were still robust at $19.4 billion, but the government faces a fiscal shortfall of approximately $26 million for 2015. Maduro warned that the budget would be cut and that sacrifices were on the horizon for all Venezuelans in the New Year. Estimates are that thecountry’s outstanding debt to China alone stood at about $20 billion. It is to be repaid in oil and over a flexible period of time, but that means less export earnings (and with lower prices, more oil to cover payments).

The mainstream media usually cited economic mismanagement as the sole factor for Venezuela’s shortages, dismissing claims of economic sabotage by the government. However, business sectors in Venezuela have a long history of resisting price controls by hoarding goods to exacerbate shortages. The government has produced images of hoarded goods in warehouses throughout the country. In fact, Venezuelan capitalists may have both economic and political incentives to withhold goods from the market, as this interesting debate among three Venezuela experts suggests.

The fall in oil prices, and with it the capacity to import, highlights the failure of both Maduro and his predecessor to achieve productivity in economic experimentation. The reality is that neither the micro-enterprises and cooperatives created in an effort to move toward a “solidarity” economy, nor the state-owned industries in the heavy industrial zone of Ciudad Guyana have been success stories. What is rarely reported, however, is the utter failure of private enterprises, despite significant subsidies, especially in access to preferential exchange rates, to produce. Typically, this is blamed on economic uncertainty or insecure property rights, but it has been a chronic problem in Venezuela since the mid-1970s.

The official exchange rate remains 6.3 bolivars (Bs) to the dollar, while the black market rate is 180:1. Importers gain access to a preferential rate (nearly double for some imports, and more in government auctions of dollars). Venezuelan capitalists get cheap dollars needed for imports, but they then seek to reap profits based on the black market rate. By law, profits are limited to 30 percent, and citizens have been encouraged by the government to report violations. Rafael Ramírez, the Minister of the Economy, claimed a year ago thatone in every three dollars has been stolen or misused.

Besides scarcity of basic goods, discontent has risen in the barrios (poor neighborhoods) over deterioration of social services. Macro-economic problems of inflation and signs of increasing poverty have put the government under pressure from moderates and international financial institutions to implement devaluation and fiscal cuts that may bring its left wing into the streets in protest if Maduro acts on devaluation.

The president would surely like to avoid devaluation before the December election. Inflation in 2014 was 64 percent, one of the highest rates in the world. Devaluation would almost certainly accelerate that tendency.

International Situation and Relations with the US

At a Mercosur summit meeting on December 17, Maduro praised Obama as “brave” for his announcement of moves to normalize relations with Cuba. Maduro said, “We must recognize the gesture of President Barack Obama, a brave and necessary gesture in history. He has taken a step, perhaps the most important one of his presidency.” For his part, Capriles commented, “It looks like Raul is cheating on Nicolas.”

The U.S. and Venezuela have still have not exchanged ambassadors, leaving the positions in each country vacant since 2008. While U.S. media guffaw at the charges, there is increasing evidence that former Colombian President Alvaro Uribe has mobilized his well-funded network of right wing supporters to support violent protests. In November, UNASUR asserted that Venezuela needs a “major social agreement” to right its economy and overcome political conflict – something, as noted above, it has repeated.

Earlier this year, under legislation passed in December, the Obama administration implemented sanctions against individuals allegedly responsible for repression of street protestors in early 2014. The bill requires authorization for certain exports from the U.S. to Venezuela and also attempts to impose that requirement on third party nations for goods with a certain proportion of U.S. content. (The latter clause has been a part of the US sanctions against Cubans and been widely condemned as a violation of international law.) It also authorizes the president to deny visas to Venezuelans deemed responsible for repression. UNASUR (the Union of South American Nations) condemned the US move.

What to Believe about Venezuela Today

The international media, and in particular the U.S. media, has largely abandoned perspective on Venezuela. Routinely now the country is depicted as authoritarian with less and less qualification. But some caution and skepticism is needed.

First, while Maduro’s charges of coup plotting and U.S. involvement may indeed be convenient as he attempts to rally supporters, they should not be simply dismissed. Just as we should not take Maduro’s claims at face value, so too should we be skeptical, given Washington’s long history of destabilization, especially against radical populist governments, and its role in the 2002 Venezuela coup.

Second, economic mismanagement and economic sabotage are not two mutually exclusive hypotheses about the sources of long lines.

Third, disapproval of Maduro does not automatically enhance the position of the opposition. As long as the people in the barrios do not join protests, the Maduro government will most likely not fall. But whether the Chavista base in the cities will turn out and vote for the PSUV in December, despite the party’s superior organization, is much more problematic.

Fourth, while the government may ultimately come up with hard evidence against Ledezma, concern about his arrest is not limited to the opposition, as concern expressed by Nicmer Evans indicates. “Criminalization of dissent,” as some commentators call it, is increasingly of concern to the left wing of Chavismo too.

Fifth, arrests of security personnel and talk of coups on the part of the government may rally supporters and some who waver, but it risks playing into the hands of those who would welcome a coup, simply by making it more plausible. This is what Ramos Allup realizes.

Sixth, whether through corruption or legitimate channels, and despite the revolutionary rhetoric, both Chávez and Maduro have passed along cheap dollars to a business elite that is accustomed to fat profits and has little incentive to produce. Toward the end of the Chávez administration, the government began borrowing money heavily (mostly from China) against future oil export earnings – just as Carlos Andrés Pérez did in the 1970s. One cannot help but think of Marx’s famous saying in the Eighteenth Brumaire of Louis Napoleon, “All great world-historic facts and personages appear, so to speak, twice… the first time as tragedy, the second time as farce.”