Venezuela is Barreling Toward Collapse

Venezuela is teetering on the brink of becoming a failed state.

Political institutions lack legitimacy. The economy is in shambles; real GDP has shrunk by 30 percent since 2013 and the country is suffering from triple-digit inflation. The International Monetary Fund estimates the economy will contract an additional 7.4 percent this year. People are protesting on the street. Power outages are common. Looters roam the streets and the murder rate is now the highest in the world. Millions are starving and basic medical services are in short supply. Food imports have declined by 70 percent since 2014. Children are malnourished and three out of four Venezuelans lost an average of 19 pounds last year. Venezuelan refugees are escaping to Brazil and Colombia.

Venezuela was once Latin America’s richest nation. It used to produce food for export. Today, it maintains the largest energy reserves on the planet. Yet, the current situation is the catastrophic culmination of Venezuela’s years-long slide into kleptocratic authoritarian rule.

When Hugo Chavez was president, there was rampant corruption and mismanagement. However, due to high global commodity prices, in particular oil, the country was awash in cash—so much that it could afford to subsidize Cuba’s energy needs in exchange for international political prestige and the services of Cuban doctors in Venezuela. Chavez’s autocratic tendencies tore at the fabric of civil society; nevertheless, the government kept divisions in check by showering the long-neglected poorer classes with material benefits such as refrigerators. In return, the classes that benefited from wealth and resource redistribution largely remained and remain to this day intensely loyal to Hugo Chavez.

But Hugo Chavez is dead, and his handpicked successor, President Nicolas Maduro, never earned the loyalty of Chavez’s base. Mr. Maduro, a loopy individual who critics contend lacks Chavez’s charisma, may be in imminent danger of losing his authority. His administration, which came to power in a close election with many irregularities, has presided over economic, political, security, and social devastation.

President Nicolas Maduro’s term, which began in 2013, coincided with a drastic plunge in the price of oil, wrecking Venezuelan finances and exposing the failure of the Chavista regime to diversify the economy over the previous decade and a half. In 2013, the first large-scale anti-government protests erupted on his watch. The state cracked down and jailed political activists, most notably opposition leader Leopoldo Lopez. Last year, the opposition party won parliamentary elections and took the legislature.

In March, the Maduro-packed Supreme Court disbanded the aforementioned legislature. Faced with street resistance, the attorney general reinstated the authority of the legislature. Nevertheless, rather than submit to a new general election in 2019, President Maduro is now proposing to create a new assembly to rewrite the Venezuelan constitution. Confronted with autocratic power grabs, food shortages, and a humanitarian disaster, Venezuelans are revolting. Massive street protests are a matter of daily life. Approximately 40 people have been killed in political violence in the past six weeks.

On the international stage, Venezuela is increasingly isolated. Foreign business is leaving the country. General Motors, Coca-Cola, Mondelez, and Lufthansa are all taking losses in Venezuela or curtailing their exposure to the market by pulling out. China, the country’s main source of liquidity in recent years, is extending no additional credit to Venezuela.

The government in Caracas has begun proceedings to exit the Organization of American States, rather than wait to be expelled. Prominent commentators and policymakers, both inside and outside Venezuela, are openly speculating about the potential for a military coup to be followed by new elections and a civilian government.

The current political situation seems untenable. The present order is unlikely to endure. Something will give. A military coup may be in the offing, but there exist myriad other options. Officials in Maduro’s government, under pressure, may resign en masse and pave the way for a peaceful transfer of power. The country may also descend further into chaos and violence; or resistance may be quelled by even more forceful dictatorial rule.

The road ahead is less than clear.

ImageScenes from Las Mercedes, Caracas, Venezuela on February 27, 2014. (andresAzp, Flickr, Creative Commons)

Marco F. Moratilla works for New Magellan Venture Partners, LLC, a venture capital firm. He has experience at the National Security Archive and the U.S. House of Representatives. He holds an M.A. in international affairs from The George Washington University and a B.A. in political science from the University of California, San Diego. His work has appeared in International Affairs Review. A native Californian, he spent his formative years in Madrid, Spain.

One comment

Submit a comment

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s