Is Venezuela’s simmering crisis about to boil over?

Is Venezuela’s simmering crisis about to boil over?

By Luke Vargas   
Opposition protesters prepare to march into Caracas, Venezuela on May 18, 2017. Twitter photo: Freddy Guevara
Opposition protesters prepare to march into Caracas, Venezuela on May 18, 2017. Twitter photo: Freddy Guevara

“Wake” is a weekly foreign policy broadcast produced by Talk Media News and hosted by Luke Vargas from our studio at U.N. Headquarters in New York.

The following is a complete transcript of Episode Six, “Is Venezuela’s Simmering Crisis About to Boil Over?”

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Luke Vargas: Venezuela has descended into chaos. Thousands have been marching in the streets for weeks to protest President Nicolás Maduro, whom them accuse of trampling on the constitution, using every means necessary to cling to power. All the while, inflation, unemployment, curfews and violence against protesters make life in Venezuela miserable and dangerous.

What is driving the crisis in Venezuela? Have we reached a tipping point?

We’re taking on those questions next, on Wake.

We’re coming to you today from U.N. Headquarters in New York. We have three experts joining us to talk about the situation in Venezuela.

But let’s start by going straight to the source, to Caracas, Venezuela tonight, where we’re joined by David Smilde, senior fellow at the Washington Office on Latin America.

David, welcome to the program.

David Smilde: Thanks for calling.

Luke Vargas: David, a big question here to bite off right at the start, but I don’t think there’s any better placed than you to answer it: explain how we got to this point. Break down the current crisis in Venezuela.

David Smilde: Well right now as we speak there are marches in the street. There was a march this morning that tried once again to march from the eastern part of the city to the center of the city to give a document to one of the government ministries, but the national guard never lets them get downtown, and they press them on the highway.

And so there’s tear gas, rubber bullets being fired and right now today there are people putting up barricades here close to where I am right now. Some kids took over a cement truck and have crossed that over the street. People are setting up barricades in parts of the city, which could be a new level of this conflict.

This is threatening to become something bigger, possibly a general strike. And all of this has happened in the past six weeks, but the trigger for this was the fact that the supreme court tried to grab the final power that the National Assembly had, and that was sort of a spark. I think it was not only that but the international response that came to that.

That move by the supreme court received international condemnation over the following 48 hours and that really emboldened the opposition, who suddenly felt that the world was watching.

An undated photo of recent protests in the Venezuelan capital, Caracas. Courtesy: Instagram @HCapriles

Luke Vargas: David you mentioned briefing the Supreme Court taking over the duties of the opposition-controlled legislature in March. And in fact  just today we’ve learned the U.S. has imposed sanctions on members of that court who helped Maduro pull off what some people have called a “self-coup.”

Beyond that – the supreme court briefly usurping parliament – walk us through who is in control of the various instruments of power in Venezuela right now.

David Smilde: A year and a half ago the opposition won the National Assembly. They won a large majority in the National Assembly. That was the first time that this Chavista government has ever faced a divided government.

Chavismo, the government of Nicolás Maduro, basically controls every other branch of the government, including the judicial branch – it controls the armed forces and of course controls the state oil company.

And so they have huge power, and basically what they’ve done is circumscribe the National Assembly, using the Supreme Court to basically annul all of the laws that it’s passed. It’s basically left it without function, so now the National Assembly is sort of like this meeting space and there are people who have titles, but they can’t really do anything.

That is a violation of basic democratic rights and that fits so nicely other things that are going on, like the postponement of the presidential recall referendum last fall and the postponement of regional elections.

So people feel like the situation here is ever worse, but they have no way to affect things because they don’t have the votes.

Luke Vargas: There are reports today of one opposition figure, Henrique Capriles, having his passport revoked at the airport in Caracas. He was, I guess, attempting to the fly to the U.S. to testify at the United Nations.

That’s obviously a blow for the opposition, but protesters have been in the streets without pause now for weeks. Maybe they don’t need those kinds of leaders to keep doing what they’re doing.

So beyond forcibly remaining in the streets, and I suppose, trying to overthrow the government, do they have other tools available to them?

David Smilde: Basically their tools are protests in the streets, street mobilization. That’s their domestic tool because indeed the National Assembly has basically been stripped of its power.

And the international community. Basically they’ve been trying to mobilize, and I think a lot of this continual protest, the purpose is to put the government under pressure and get the government to act undemocratically, to show its undemocratic nature and get the international community to respond.

And so those are the two things that they have. They really don’t have a whole lot of institutional power and it’s easy to forget that this is a dangerous situation because this is a government that has a lot of power but it doesn’t have much popularity and much popular support.

The opposition, on the other hand, has a lot of popular support but it doesn’t have much power. So it’s a very frustrating situation for people.

A view of the Security Council Chamber. UN Photo/Rick Bajornas
A view of the Security Council Chamber. UN Photo/Rick Bajornas

Luke Vargas: When we turn to the international response. We’ve just seen this week the U.S.  hold a U.N. Security Council briefing on Venezuela for the first time ever.

Let’s play a short clip of U.S. Ambassador Nikki Haley explaining why she asked for that meeting to be held:

What we attempted to do in this meeting today is about prevention. We’ve been down this road with Syria, with North Korea, with South Sudan with Burundi, with Burma. We’ve been down this road and rather [than] waiting for a serious situation where we have to have it in an open Security Council meeting, why not get in front of this? Why not try and stop a problem before it starts?

I think it’s pretty clear we’re far away from the U.N. sanctioning Venezuela or sending peacekeepers in, but Venezuela and its allies have talked about this U.N. meeting like it’s an aggression.

Here was Venezuelan Ambassador Rafael Ramírez Carreño outside the U.N. Security Council:

“Yes we have problem. We don’t deny that. We have problem. We’re trying to resolve. We have enough resources to help our own people. We are responsible for our own people. But that’s an internal issue, domestic issue. It does not mean…not allow that nobody from outside the country will intervene.”

So David, Venezuela wants everybody else to butt out, or at the very least, leave it to more friendly regional political bodies to mediate this crisis. We know Venezuela pulling out of the OAS, the Organization of American States. So who are the groups who could settle this crisis and what’s the chance they actually well?

David Smilde: Well right now, so far, the chance is not very good, in the sense that the Venezuelan government has not shown itself open to these groups.

The OAS has been trying and has used the process of the democratic charter, and now Venezuela is withdrawing from the OAS.

Venezuela has tried to get together a group of friends that will moderate dialogue, but of course they pick all countries that are allies, and the opposition is never going to agree to that.

There was a dialogue process already, there was one last October and November that was mediated by the Vatican. And basically what the government did is just ignored all of its commitments from that, so the opposition kind of felt that it got burned. It spent a lot of political capital on that, and it’s going to be really cautious in going back to dialogue.

I think the solution actually is dialogue, and some sort of group of friends, and some sort of institutional – I think the United Nations would be a good institution to get involved. So far we haven’t seen any real disposition on the part of the Maduro government to really accept some sort of proposal that comes from the outside.

They want to construct a dialogue proposal and they want to do it on their terms. And of course they would love to dialogue about everything – about conflict in the streets to the placement of street sewers to sporting events – they would love to do that as sort of a stalling technique, and the opposition understands that.

And so it’s a contentious thing. In the end that’s what has to happen, but I don’t see really that the two sides are close to coming to agreement on what such a dialogue would look like.

Luke Vargas: David, this is country that’s been in turmoil for a long time. But between 40 protesters being killed in the streets by security forces in recent weeks to what looks to be an acute humanitarian crisis, maybe this can’t be ignored. What are the regional implications of this crisis?

David Smilde: Well Venezuela actually has been for the past 60 years or so been an important democratic country. It’s been a real source of stability. It was democratic at the time that countries like Brazil, Argentina and Chile all became dictatorships in the 60’s and 70’s. And it has a long democratic tradition, which is important for the stability of this region. And having it turn into a dictatorship, which is something that could happen, it would be a very negative thing to have happen in the region.

It could also cause a refugee crisis. You know, there’s already been a huge number of refugees that have been growing exponentially, that are leaving Venezuela for Colombia and Brazil and the United States. That always causes serious problems that we’ve seen in the United States and Europe.

But I think beyond that there’s just an issue of human interests and human rights. Human rights are something that are not subject to national sovereignty, they’re something that go beyond nations and their governments, and it’s incumbent upon all people to protect the human rights of other human beings, and I think that’s probably the most basic, the most important motivation Americans should have to be interested in this issue

Luke Vargas: David, it seems like we’re always hearing that Venezuela is right on the verge of something major – that maybe the opposition will get a foothold. And yet, usually, nothing changes.

So is there anything about the situation now that makes you think this time is different?

David Smilde: There are a couple of things that are very different about the current situation.

Venezuela has had conflict for a long time, but it always had elections – elections that had some problems but were roughly within international standards.

Right now there are no elections. Two sets of elections have been postponed and now, not only that but the Maduro government is pushing for a constitutional referendum to rewrite the rules of the country so that this government that has 15 or 20 percent support now wants to rewrite the basic rules of governance in the country.

And so I think this is something of a point of no return for Venezuela, and I think that’s one of the reason that people are so persistent in the streets right now.

Luke Vargas: David Smilde, senior fellow at the Washington Office on Latin America, joining us tonight from Caracas, Venezuela. Thank you so much.

David Smilde: Thank you for your interest.


Luke Vargas: Let’s bring two new voices into the conversation. In London tonight is journalist Kajsa Norman, who’s just published a new book, “A Hero’s Curse: The Perpetual Liberation of Venezuela.” Kajsa, welcome.

Kajsa Norman: Thank you.

Luke Vargas: And in Santiago, Chile is Juan Nagel, Professor of Economics at Universidad de los Andes. Juan, welcome.

Juan Nagel: Thank you for having us.

Luke Vargas: Juan, we heard from David Smilde about the political desperation that’s being felt by the opposition in Venezuela – that they’re large in size, but they don’t have a lot of ways to right the ship as the economy collapses and millions of lives are affected.

Let’s focus at the Venezuelan economy for a moment. What are the most pressing economic concerns for Venezuela?

Juan Nagel: Venezuela is a case study of terrible governance of a petrostate. It’s main commodity of export is oil – it’s really the only thing that they export. And so the drop in oil prices has really affected it severely.

Now the problem is that the Venezuelan government has not adopted to the price in the drop of oil. You see that the price of oil has affected economies all over the world – Saudi Arabia, Russia, Iran – but the Venezuelan government has not implemented the measures to adapt to a new reality of lower oil prices, which are pretty much here to stay.

This has caused tremendous suffering in Venezuela. We see economic indicators of Venezuela that we rarely see outside of a country at war. For instance, the IMF is saying that last year the economy dropped by double-digits, and we see that the unemployment has hit about 21 percent and it’s expected to grow.

Really the self-inflicted wounds that the Venezuelan government has added to the country have made a bad situation much, much worse, and that’s why people are on the streets. In the face of this there’s a looming threat of a default on Venezuela’s foreign debt, which could rattle international markets significantly, because Venezuela right now has more than $100 billion of foreign debt that are in the hands of funds and pension funds all over the world.

And so this could have some severe effects on international financial markets as well.

The official exchange rate of the Venezuelan Bolivar has declined against the dollar for a decade. The Bolivar's "street value" is far weaker than the official exchange rate.
The official exchange rate of the Venezuelan Bolivar has declined against the dollar for a decade. The Bolivar’s “street value” is far weaker than the official exchange rate.

Luke Vargas: Last year I reported on a drought that hit Venezuela particularly hard. There is a river in the east, the Caroni River, and all of the reservoirs that it fed dried up and downstream, all of the hydroelectricity plants couldn’t generate power and there were nationwide blackouts for months.

Now maybe Maduro and past presidents should have diversified the energy sources for the country, but I think we could say weather is kind of an Act of God.

Separate this out for us Juan. What elements of this economic crisis are accidental or unavoidable, and which are the government’s own doing?

Juan Nagel: Well curiously enough the only thing that they really are doing is paying the foreign debt. That really is the main driver of economic policy at this point.

The Venezuelan government understands that a default on its foreign debt means that many of its oil assets and main of its oil wells could be confiscated in international markets and in international ports.

So the only lifeline that they have is to continue to service foreign debt at the expense of a massive drop in consumption inside the country. So basically the only dollars that are coming in thanks to the export of oil are being used to service the debt, and that is why we see so much scarcity and so much lack of basic goods, because this is a country that basically lives off of the things that it imports.

The Venezuelan government has not done anything to adjust the severe price distortions that are behind the dysfunctional economy that we are seeing. And they are basically at a standstill in terms of economic policy.

There’s one curious statement from one Venezuelan government official a few years ago who said, we can never get rid of price controls and currency controls because if we did that we would be overthrown.

Which suggests that severe distortions that are present in the Venezuelan economy that are the source of the massive recession that we’re seeing, they are basically keeping the powers at be happy and there are people that are benefitting from this. And the Venezuelan population at large is the one that’s suffering, bearing the brunt of those costs.

A Venezuelan government photo shows President Maduro attending the October 2016 unveiling a new statue of former president Hugo Chavez.
A Venezuelan government photo shows President Maduro attending the October 2016 unveiling a new statue of former president Hugo Chavez.

Luke Vargas: Alright, Kajsa. By all accounts it looks like President Maduro is a jam here. That doesn’t mean he won’t hang on and remain in power, but even as he’s backed into a corner he still says in his speeches that he’s necessary to remain to power because he will continue the revolutionary cause of the nation.

This kind of talk – about Maduro carrying on the torch of independence lit by Simon Bolivar in the early 1800’s – the term maybe isn’t’ a perfect fit, but this is sort of like claiming “divine right?” Which is Maduro trying to tap into when he keeps on appealing to the spirit of the revolution, even as his movement seems stuck?

Kajsa Norman: Just like Chavez, Maduro is the devoted follower of Simon Bolivar, the man who liberated Venezuela and also much of the Spanish-speaking Americas, and so he believes that he is continuing this economic and social liberation that Bolivar started.

And what I think makes Venezuela’s politics so fascinating is that there is this element of magical realism, almost like the literary tradition of the region has spilled over onto politics.

For example, after winning power, Chavez not only changed the name of the country to the Bolivarian Republic of Venezuela, he also named the constitution after Bolivar, he quoted and made references to him on a daily basis and in 2010 he even dug up Bolivar’s remains and that event was broadcast live to the nation and Chavez said he didn’t regard Bolivar as being dead. He compared him to a flash of lightning or a sacred fire, and he said that Bolivar was alive and would continue to live forever in the struggles for the fatherland.

And Maduro has sort of continued in that same position, only now it’s both Bolivar and Chavez are portrayed as spirits, who live in the wind and in the rain and in the hearts of each revolutionary.

Luke Vargas: Kajsa, there’s a quote from Simon Bolivar that you include in your book. Here’s the man who push out Spanish colonists and secured the independence of a number of countries around the northern pars of South America – what would be Venezuela, Colombia, Ecuador and Panama now – but at the end of his life, his big experiment of creating a unified Spanish American nation failed. And in 1830 he writes to the President of Ecuador and says “America is ungovernable.”

“The country is bound to fall into unimaginable chaos, after which it will pass into the hands of an indistinguishable string of tyrants of every color.”

Bolivar’s own words seem to spell out the ruin of Venezuela’s leaders, do they not?

Kajsa Norman: Well, one would think so. It’s funny that you mention that, because it doesn’t appear that any of the pessimism that Bolivar showed on his deathbed has carried through to subsequent leaders.

I think the cult of Bolivar continues to adapt to an ever-changing present, and you see new generations of leaders aspiring to the throne finding themselves compelled to walk that same hero’s path, searching for ways to mold Bolivar’s image to fit their own aspirations and trying to convince the public that they are the new, true Venezuelan hero come to set them free.

We see this within the opposition as well. For example, one of the more prominent leaders of the opposition, Leopoldo Lopez – who has been jailed since 2014 – he decided to hand himself over to the national guard in a very heroic fashion. He even had the Venezuelan flag draped around him like a superhero cape, and it doesn’t hurt that he’s distantly related to the liberator. I think the’s the great, great grand-nephew of Bolivar.

Leopolodo Lopez, clutching the Venezuelan flag, surrenders to police in February 2014. Courtesy:
Leopolodo Lopez, clutching the Venezuelan flag, surrenders to police in February 2014. Courtesy:

Luke Vargas: And finally, I asked this of David earlier and I’ll ask it of both of you.

Kajsa, where are we now? Is May of 2017 a “tipping point” for Venezuela, or are we going to be back here in a year having this exact same conversation?

Kajsa Norman: Well I’ve bene asked that question many times in the last few weeks, and the world watches what’s going on and wonders how much longer can this continue. But I mean, in 2014 the country lived a very similar situation – there were violent protests and many deaths. That went on for months – for three months at a high intensity, and for six months at a somewhat lower intensity – and then it just petered out and nothing came of it.

So it’s hard to say. It does appear that the opposition is more united this time in arguing for continued protests. On the other hand, I don’t believe that street demonstrations alone will change anything, but perhaps it will eventually spur factions within the military to intervene.

Luke Vargas: Juan, are we at a tipping point? Is the economic forecast so grim now that there’s no going back?

Juan Nagel: I think that there are several factors that have to be weighed in that are different now than they used to be two, three, four years ago. The economic crisis is really hitting home. It’s really hitting at the pockets and the stomachs of the armed forces.

The international community is reacting much more strongly at this point. Just today we saw the Russians starting to make statements about this. There was a conversation between Maduro and Vladimir Putin. That is not negligible, because the Russians have been bankrolling the Venezuelan oil industry for quite a while now. They are even partners in some of their ventures, even inside the United States.

This could be a tipping point, very well could be a tipping point.

Then again, we’ve seen this story play out before, where the Venezuelan government just hangs on and it receives a lifeline, whether in the sense of higher oil prices or some more financing, or simply exhaustion from the part of the opposition.

We have to keep in mind it’s been six weeks of protests and people get tired of doing this, and many many deaths. So there comes a point when people just get tired and want to go back to their normal lives, even if they’re difficulty and very extreme.

But there are several things that are different this time around. The determination of the opposition and the people in the streets are showing this time around make it seem like this is not going to go away very soon.

Luke Vargas: There you have it.

Juan, if this crisis is hitting the paychecks and the food supply of members of the army and police, I think history shows that allegiance can dry up very quickly, and political control sometimes doesn’t count for much. We’ll see if that’s the path for Venezuela.

From Santiago, Chile, Juan Nagel, thank you so much.

Juan Nagel: Thanks.

Luke Vargas: And from London, Kajsa Norma, thanks so much.

Kajsa Norman: Thanks for having me.

Luke Vargas: If you like what you just heard leave us a review on iTunes or follow the program on Twitter @WakeOnAir.

I’m Luke Vargas, signing off. Join us again next week on Wake.

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