Caracas Connect: June 2014

Caracas Connect, May-June 2014 Report
By: Dr. Dan Hellinger
Most Venezuelans think Maduro will not finish his term in office, ending in 2019.
Talks aimed at ending the political crisis have faltered. Capriles is caught between extremists and moderates in the opposition.
UNASUR and the Vatican are trying to rejuvenate the talks; Colombian elections may complicate UNASUR’s task.
Venezuela’s government borrows to tamp down discontent over shortages; oil earnings are being stretched thin.
More protestors are arrested – are they peaceful demonstrators or violent provocateurs?

Crises, said political scientist Charles Hermann, are typically defined by three factors: threat, time, and surprise.  What we see in Venezuela is a gathering crisis characterized by high threat, a moderate but shrinking time to resolve it, and very little surprise. But, there is a large element of unpredictability due to the opaque nature of two key actors with influence: the Obama Administration and Venezuela’s military. The country’s political future is also clouded by divisions in both the government and opposition camps.

The basic elements of the crisis were spelled out in the February edition of Caracas Connect.  In the intervening three months, rifts between the government and opposition and within each side have deepened.  While the basic lines of conflict have not much changed, time to reach a political solution may run out.  Next year’s National Assembly elections may only inflame passions and further polarize the country without producing one.

Deepening Conflict, Talks Stalled

The sense of threat is very high to a number of actors, both individual and collective.  For President Nicolás Maduro, his ability to finish his term in 2019 is open to question.  For Henrique Capriles, after having come so close to winning the April 2013 presidential election against Maduro, his continued leadership of the opposition is also not assured.

On April 10, at the urging of the Union of South American Nations (UNASUR), the opposition Democratic Unity Roundtable (MUD), led by Capriles, and the government started talks on the crisis.  On May 13, the MUD broke off talks, demanding the release of all “political prisoners” and students arrested by the government on charges of inciting or carrying out acts of violence.

The talks showed little progress from the start, with signs of intransigence on both sides.  For example, the government showed little inclination to accede to opposition demands for an independent truth commission, which would replace the current investigation of the street deaths that occurred since the crisis began now being carried out by the Chavista-dominated National Assembly. On the other hand, Capriles has continued to refuse to recognize the outcome of last April’s presidential election and insisted on referring to President Maduro as “Nicolás” at the table.

Capriles does have some political stake in successful talks.  He must deal with the more militant sectors of the opposition who see any dialogue with the government as betrayal. They believe that they can provoke the military to oust Maduro with the blessing of Washington.  The most militant opposition politicians seek “la salida” or the “exit” (as they put it) of Maduro, but they also seem to want Capriles to exit the MUD leadership. Leopoldo López, the jailed former mayor of a middle class Caracas-area municipality, and María Corina Machado, a hard-line opponent of Hugo Chávez from the earliest days of his presidency, vigorously opposed any talks with the government

But, Capriles cannot simply walk away from talks without also drawing criticism from MUD politicians who are less confident that Maduro’s “exit” would resolve the country’s problems.  For these leaders, the radical calls for the resignation not just of Maduro but of the entire Chavista administration are unrealistic. Many have come to see the call to force Maduro’s resignation or incite a coup as a return to older, discredited tactics, without any clear plan of action or program for the country’s future.

The “exit” of Maduro alone would result in the elevation of the Vice President, Jorge Arreaza, Chávez’s son-in-law. Next in line is Diosdado Cabello, a former general who likely has strong support in the army and who has given no quarter to opposition legislators in his capacity as President of the National Assembly.  Hence, any “exit” by Maduro – via resignation, coup, or defeat in a recall reelection (which cannot take place legally until 2016) – would not necessarily mean the end of Chavismo, any more than the overthrow of Juan Perón in Argentina in 1955 put an end to Peronism.

Henri Falcón, the MUD governor of the important state of Lara, has been outspoken and directly critical of those who oppose talks and call for more street protests.  He went so far as to charge that they were deliberately sabotaging the talks. “Who really thinks that a civil war can solve economic problems?” he said, calling on Venezuelans to look next door at the consequences of a 50 year-long civil war in Colombia.

Maduro, too, must contend with divisions in his camp. Fissures are evident in his United Socialist Party (PSUV) of Venezuela, both among PSUV politicians and within the Chavista popular base. At the grassroots, there is growing discontent, with the feeling that the Bolivarian revolution has stalled out at the community level. While this may not directly threaten Maduro’s ability to stay in office, it saps his capacity to mobilize the Chavista base, something he needs for the PSUV to win National Assembly election next year, and, in the worst case, to defuse or discourage a military coup. Maduro would also need their support to fight off a recall effort in 2016.

The Chavista political scientist Nicmer Evans recently observed, “In one year, despite constant strafing by the opposition and transnational interests, President Maduro has managed to keep power [but only] by sacrificing the continuity of the legacy and project of Chávez. This sacrifice…has brought the consequence of a broad demobilization of Chavismo… which puts at risk the capacity of the government to respond in the street to destabilizing activities.”

Discontent in the Chavista base not only weakens Maduro versus the opposition, it also opens possibilities for challenges to his authority from within Chavismo. The process of choosing candidates for next year’s Assembly elections is fraught with uncertainty, as this will be the first time Hugo Chávez will not be present to resolve conflicts. The relative power of Maduro, Cabello, and others within the PSUV may be put to the test for the first time in the post-Chávez era.

The PSUV, though it won an overwhelming majority of seats in the National Assembly, barely defeated the MUD in the popular vote in the 2012 legislative elections. It should be no surprise that some politicians, most notably leaders of Acción Democrática, the largest single party in the MUD, smelling prospects of victory next year, want to keep the talks alive.

Deepening Social Divide

To the Venezuelan middle class, the protests are about more than economic conditions.  Shortages, inflation, electrical blackouts, and decreased ability to travel are direct signals that the mass consumption society available to middle class and wealthy Venezuelans could disappear. Perhaps nothing symbolizes this threat more than the decision of several international airlines to suspend or radically cut back flights to Venezuela because the government has failed through CADIVI (the institution that has sole authority over foreign exchange) to provide dollars needed to pay an estimated $3.9 billion worth of airline tickets.

To the grassroots activists who emerged from all kinds of social movements in the 1990s, the stakes are also high.  Older activists spent decades in the barrios (poor neighborhoods in the cities) participating in struggles to bring education, health care, and better services to their communities. They were often targets of police and security forces during the period of the deeply flawed electoral democracy that preceded Hugo Chávez’s ascent to the presidency in 1998.  The prospect of the regime’s total collapse opens new uncertainty in their lives.

Even after six months of both peaceful and violent opposition protests, there is little sign of the kind of mass response that came to Chávez’s rescue in the highly volatile political environment of 2002 to 2004.  In those years, Caracas was marked by massive demonstrations, with hundreds of thousands of people on the streets in opposition to or in support of Chávez. The recent opposition protests have brought tens of thousands of people into the streets, but demonstrations of comparable size have not materialized in support of the government.

The absence of Chavista masses in the street does not mean that the barrios have no stake or interest in the conflict. It most likely reflects discontent with the government’s overall performance and the inability of Maduro to provide consistent and credible leadership. Despite Maduro’s own background as a worker and union leader, he has failed to inspire confidence that he is capable of providing leadership.

In two recent conversations I have had with former high officials in the government whose sympathies still lie with Chavismo, the sense I received from them is that mistrust and uncertainty prevail in the ranks of government.  The uncertainty over Maduro’s future has resulted in a paralysis of the policy apparatus, delaying vital decisions on important economic and foreign policy matters. This situation should not be blamed entirely on Maduro; the situation is a legacy of Chávez’s own failures to prepare the Bolivarians for a future without him.

A recent poll by Datanalisis found that Venezuelans overwhelmingly think the country is “headed in the wrong direction.” This is probably about the only consensus about anything in the country these days. In fact, the most puzzling result in the poll is why 18.5% said they believe that things are going well. According to the poll, Maduro’s approval rating has fallen to 37%.  Hinterlaces, another polling firm, reported Maduro’s approval rating at 52%, but the findings of other polls aligned with the results of the Datanalisis survey.

Datanalisis’s finding that that three in five Venezuelans think Maduro will not complete his term, which is supposed to run through 2019, mostly reflects the country’s crisis. Only about half of the Chavistas think he will make it that far.  But even the Datanalisis report was not all good news for the opposition, especially for López and Corina Machado. It found that only 31.8% of respondents mainly blamed Maduro for the country’s problems, and 70% opposed removing him by force.

Also bad news for the opposition was Hinterlaces’ findings on opinion in middle class areas in the Caracas metropolitan area.  According to its pollsters, 73% of respondents in these neighborhoods reject the opposition tactic of street barricades.  Some of the worst violence, which has claimed 42 lives since February, occurred when security forces sought to dismantle barricades and were victims of snipers. Violence has also occurred when groups of motorcyclists (motos), apparently from the barrios, descended on the barricades or harassed opposition demonstrations.

Much of the media coverage has concentrated on the motos, but the barricades have also taken a toll on motorcyclists not at all connected with the (apparently) pro-government groups.  Several have been killed as a result of collisions with wire strung across streets by demonstrators.  The tactic was adopted on advice of retired General Ángel Vivas. On February 20, Vivas tweeted, “In order to neutralize criminal hordes on motorbikes, one must place nylon string or galvanized wire across the street, at a height of 1.2 meters.”  He also tweeted, “to render armored vehicles of the dictatorship useless, Molotov cocktails should be thrown under the motor, to burn belts and hoses, they become inoperative.”

Media reports in the U.S. began in April to recognize that many middle class residents in the east side of Caracas have tired of the disruption and violence associated with the protests.  Overall, however, the international media continues to frame the violence in Venezuela as the result mainly of what is labeled as government repression.

According to the New York Times correspondent William Neuman, the government arrested 243 people on May 8 in a wave of 3 a.m. raids on camps set up mostly in public squares, an act that was followed by additional street clashes. The opposition decried the break-up of the camps and cited the detentions as a reason to break off the talks. The government claims the camps were bases for blocking public access to plazas and roads and for political violence.

Steve Ellner, an American historian who has long resided in Venezuela, argues that the image conveyed by accounts like the Times’ is highly distorted. Many of the detained protestors (the overwhelming majority are not students) have been arrested on charges of violent crimes associated with the protests.

Ellner writes,

One of the most affected sectors has been the metro of Caracas. Metro stations in the eastern part of the city controlled by opposition mayors have been devastated (as well as the one in Parque Carabobo near the city’s center), 90 metro buses have been damaged, and 200 passengers have been injured. On May 13, metro workers marched to the Attorney General’s headquarters (which had also been heavily damaged by opposition protesters several months earlier) to demand a firm government response. The terrorist list also includes the killing of six national guardsmen and three policemen, the complete demolition of the campus of the military school UNEFA in the city of San Cristobal, the destruction of public buildings including the Housing Ministry, the burning of a truck that distributes gas of the state company PDVSA-Gas Comunal in the state of Táchira, as well as vehicles of the state food chain PDVAL, reported cases of attacks on 162 Cuban doctors who work for the state-sponsored Misión Sucre, and the list goes on and on.

Washington Edges toward Sanctions; South America Reacts with Criticism

Militarists in Washington’s policy community, allied with right-wing Republicans and hawkish Democrats in Congress, continue to press for sanctions, despite criticism from individuals like the Pope and united opposition from UNASUR.

The movement for sanctions reached its highest level when the U.S. Senate Foreign Relations Committee voted 13-2 to send to the Senate floor a bill that would authorize President Obama to freeze assets and prohibit visits by any current or former Venezuelan government official involved in “directing significant acts of violence or serious human rights abuses against persons associated with the anti-government protests in Venezuela.” It also authorized $15 million in “democracy assistance,” effectively opening a legal (under U.S., not international, law) channel to aid the opposition. Senator Bob Corker of Tennessee, the ranking Republican Member on Foreign Relations, Senator Tom Udall, Democrat of New Mexico, were the only votes in opposition. There were three abstentions. A similar bill was approved by the House Foreign Affairs Committee and approved by a voice vote in the House of Representatives on May 28.

Rather than outright oppose the Senate bill, the Obama Administration has simply said that it wants to give more time for talks and UNASUR mediation to work.  In Mexico on May 21, Secretary of State John Kerry went further. According to the Washington Post, Kerry said, “Our hope is that sanctions will not be necessary. Our hope is that we can move in the direction of reconciliation and a political path forward.” But, he noted the Congressional action and put responsibility entirely on Maduro and the government to prevent sanctions from being imposed. On May 27, fourteen Democratic legislators, led by Michigan representative John Conyers, wrote Obama, urging him to reject sanctions in the face of regional opposition. They also urged him to move forward with an exchange of ambassadors between the two countries.

Much of the bleeding in Venezuela is the result of self-inflicted wounds, but the U.S. has hardly had a “hands-off” approach to Venezuela.  The desire by Congress to pass legislation imposing sanctions on Venezuela in 2014 must be viewed in a broader historical context.  For example, a 2006 US embassy cable, released by WikiLeaks, lists the long-term strategy of the U.S. to divide the Chavista movement and support the opposition.  While some of the activities, such as support for organizations promoting the rights of people with disabilities, might seem laudable, the memo makes clear that the overall intent of the funds spent in Venezuela by the prior U.S. administration was to build opposition to the government and divide the Chavistas.

Maduro reacted predictably, terming the Senate committee vote “detestable.” More interesting was Assistant Secretary of State Roberta Jacobson’s warning that some MUD leaders feared sanctions would strengthen the government.  She found herself having to backtrack when the leaders denied they opposed sanctions, something that more likely represents their fear of alienating sectors of the opposition who have been critical of their entering into negotiations with many protesters still in detention.

The UNASUR mediation, and the possibility that Pope Francis might use his personal prestige to aid its efforts, certainly is a spot of light in a darkening atmosphere of crisis.  UNASUR has achieved some success in advancing a South American common agenda, bridging the ideological divide between conservatives, like Colombia’s President Juan Miguel Santos and former Chilean President Sebastian Piñera, and leftists, like Bolivia’s President Evo Morales and Brazil’s Dilma Rousseff. But, the prospects of UNASUR success might dim considerably if Oscar Ivan Zuluaga defeats incumbent Santos in the second round of Colombia’s presidential elections on June 15.  Zuluaga is the personal choice of former President Álvaro Uribe, who is a darling of Washington’s right-wing extremists, such as Otto Reich and Roger Noriega.

Uribe is an ultra-nationalist conservative who has worked closely with organizations devoted to overthrowing the Bolivarian government next door. Uribe denies any such intentions but has admitted that he “lacked time” while in office to invade Venezuelan territory in pursuit of left-wing guerrillas.

High Oil Prices, Yet Shortages: Why?

The conflict over compensation of airlines for tickets bought in the past illustrates the larger economic dilemma that the government faces; one created by a combination of poor management of the exchange rate system, monetary speculation, and survival strategies by both middle class Venezuelans and foreign visitors.

Most airline tickets over the years were purchased after customers bought tickets in bolivars obtained with dollars at the black market rate, while the airlines were entitled legally to compensation at the official rate.  While the government wants to pay at today’s rate of 11.5, the airlines are demanding compensation at the official rates prevailing when the tickets were sold. Even using the official 6.5 to one, the difference is enormous.  In effect, the government says, a ticket bought for $1,300 less than one year ago would draw $9,500 today.

(On May 26, 2014 the government reached an agreement and compensated four airlines, not including US companies and Alitalia, which are among those to whom it owes the most.)

It is one thing for the government to risk loss of commercial airline service, something disproportionately available to the middle class opposition, but the country’s high dependence on all kinds of imported goods and services means that it also must heavily import to provide goods for the subsidized markets that serve the poor. Venezuela’s government says that the country imports half of the food it consumes.

Most reports in the international media have cited falling production and discounted oil sales to members of PetroCaribe, Bolivarian Alternative for the Americas (ALBA) countries, and Cuba as the cause for the government’s foreign exchange problems.  In fact, these sales do cut heavily into the percentage of sales at the global benchmark prices (approximately $105 at this time), but most of these sales still generate significant profit at the typical cost of production, which can be as low as $5 per barrel and more typically hovers at $15-20.  An even heavier burden is the approximately 800,000 of the 2.9 million  barrels per day that are sold at a loss on the domestic market, much of it to fuel low-mileage cars owned by the middle class.

The government continues to borrow against future oil earnings, but mainly to import consumer goods; not to develop the economy, other than to meet obligations and pay for imports slated for expansion of oil production.  At 43% of its gross domestic product, the country’s total indebtedness remains at what most economists would agree is a manageable level.  The need to survive the political crisis is driving economic decisions, however, and there is no guarantee that prices will remain stable.

Ironically, just a few days after the sanctions vote in the Foreign Relations Committee, Venezuela’s government signed an agreement for a $2 billion loan from former Vice President Dick Cheney’s former company, Halliburton, and two other oil service companies in an effort to increase production.  PDVSA, the state oil company, also announced plans to enter into joint exploration for shale oil deposits in the Lake Maracaibo region with Brazil’s state-run Petrobras. The lake is the historical birthplace of Venezuela’s oil export industry, and over 90 years of intensive production have already left it heavily polluted, with irreversible damage to its unique ecosystem.

Could Maduro Fall?

A coup is not likely in the immediate future, but there are signs of unease in the ranks. Ominous and thinly veiled threats come from sectors of the military. On March 26, three Air Force generals were arrested on charges of plotting a coup. No one can really know what the consequences of a military coup would bring. Had it been led by the arrested generals, it would have to be a highly repressive regime intent on purging not just the political system, but the military itself of any vestiges of Chavismo.  But much of the military high command, especially in the army, has moved through the ranks and participated in the social missions launched by Chávez during his long period in office.  Some form of military populism could come from the ranks, but it, too, would certainly increase repression.

I see two worrisome scenarios:

1.      A lot of the danger signs of coup plotting are in the wind. One of them has to do with civilians “signaling” the military that they would welcome a coup; that the military has to do their “constitutional duty.” Another bad sign is the government disciplining some officers, even if they are a minority. The discipline may be merited, but the need to take action signals trouble in the ranks. Military politics are always opaque, but using the military to keep public order indicates trouble. Chavista sectors outside of Maduro’s control are taking matters into their own hands; that is a threat to the military’s “monopoly of violence.” The government is not entirely to blame for this state of affairs. Many in the opposition seem to think it in their interest to destabilize the situation. Despite widespread public disapproval of the barricades and violence, they are taking a toll on Maduro’s position.

2.      Rather than a coup, I think it more likely that the government limps into next year facing the Assembly elections. That is a perfect opportunity for the golpistas to further undermine the government’s stability. The entire situation is fraught with danger. The PSUV has to pick candidates, likely a divisive process. The inability to renew the National Electoral (CNE) board and legitimate it is a problem; the issue is not whether it will run fair elections, but whether a new council will be chosen and enjoy any degree of legitimacy. There may be sectors of the opposition who want to participate, but they will be under strong pressure not to do so. There could be more election-related violence than ever. In other words, things could get even worse in the medium term.

A military coup could lead to the kind of result that, as Governor Falcón has warned, incites civil war.


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