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Venezuela: An Opportunity That Should Be Seized
Venezuela: An Opportunity That Should Be Seized
People line up to buy toilet paper at a supermarket in downtown Caracas, on 19 January 2015. REUTERS/Jorge Silva

Venezuela: Unnatural Disaster

Alongside Venezuela’s growing political tension, the collapse of the country’s economy and health care system are leading to an equally dangerous social crisis. To stave off a humanitarian disaster that could well turn today’s polarisation violent, Venezuela needs an emergency program, careful reform of price controls, political consensus, and international support.

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I. Overview

The accelerating deterioration of Venezuela’s political crisis is cause for growing concern. The collapse in 2014 of an incipient dialogue between government and opposition ushered in growing political instability. With legislative elections due in December, there are fears of renewed violence. But there is a less widely appreciated side of the drama. A sharp fall in real incomes, major shortages of essential foods, medicines and other basic goods and breakdown of the health service are elements of a looming social crisis. If not tackled decisively and soon, it will become a humanitarian disaster with a seismic impact on domestic politics and society, and on Venezuela’s neighbours. This situation results from poor policy choices, incompetence and corruption; however, its gravest consequences can still be avoided. This will not happen unless the political deadlock is overcome and a fresh consensus forged, which in turn requires strong engagement of foreign governments and multilateral bodies.

As the 12th largest oil producer in the world, with the largest reserves, and a beneficiary of the most sustained oil price boom in history, Venezuela ought to be well placed to ride out the recent collapse of the international price of crude. The oil boom, combined in the early years at least with the government’s redistribution policies, produced a significant decrease in poverty under the administration (1999-2013) of the late Hugo Chávez. The economy was showing signs of strain, however, well before the 50 per cent fall in prices at the end of 2014, a year in which GDP shrank by more than 4 per cent and inflation rose to 62 per cent. Expropriations of private land and businesses, stringent price and exchange controls and inefficient, often corruptly-run state enterprises undermined the nation’s production of basic goods and services. Having incurred massive debts, spent most of its international reserves and emptied a stabilisation fund set up for such contingencies, the government faces a critical shortage of hard currency and the prospect of triple-digit inflation this year and can no longer afford to make up domestic shortfalls of consumer goods with imports.

The impact has naturally been felt most keenly by the poor, who rely on increasingly scarce supplies of price-controlled food, medicines and other basic goods for which they must often queue for hours, with no guarantee of success. Those with ailments such as cancer, HIV-AIDS or cardiovascular disease can go months without medicines they require to survive. Hospitals and even private clinics cannot maintain stocks of medicines and other basic supplies, including spare parts to repair equipment. The hospital crisis is exacerbated by government failure to complete a rebuilding program begun in 2007 or fulfil promises to construct new facilities. Thousands of doctors and other medical personnel have resigned due to low wages and unsafe working conditions. Surgery waiting lists are growing, and staff vacancies go unfilled.

Some economists predict a sudden collapse in food consumption and widespread hunger, and public health specialists already say that some surveys are showing chronic malnutrition, although the country is not yet on the verge of famine. The collapse of the health service, however, can have pernicious short-term effects, including uncontrolled spread of communicable diseases and thousands of preventable deaths.

Aside from purely humanitarian concerns, Venezuela’s neighbours and the wider international community have pragmatic reasons for acting. If a solid institutional and social welfare framework can be restored through a negotiated settlement, and economic measures taken to deal with inflation and scarcity, a humanitarian crisis can be averted. If not, the collapse of the health and welfare infrastructure is likely to make political conflict harder to manage and could lead to a further erosion of democracy and an increasing likelihood of violence.

This in turn would have an impact beyond Venezuela’s borders. Potential risks include large-scale migration, the spread of disease and a wider foothold for organised crime. Without a change of economic policy, the country is heading for a chaotic foreign debt default, probably in 2016. An unstable Venezuela unable to meet its international commitments could destabilise other countries in the region, particularly Caribbean nations that have come to rely on subsidised energy from Caracas. It would also have a direct impact in Colombia, along a border already under multiple threats.

This briefing is the product of research conducted between April and July 2015, which included field trips to Zulia state and the greater Caracas area. Among a wide variety of sources consulted were many grassroots sympathisers of the government and several mid-ranking officials. Unfortunately, the ministers of food and health did not answer requests for interviews.

To forestall the severe consequences of a humanitarian crisis in Venezuela:

  • The government must acknowledge the problem. Concealing true statistics and harassing those who publish or demand access to data must cease.
     
  • Any political dialogue or agreement must prioritise concerted action to guarantee supplies of scarce goods, including medicines, medical supplies and basic foodstuffs, for the neediest, and a social safety net without partisan intervention or manipulation that incorporates as providers non-governmental actors, including the Catholic Church and humanitarian organisations.
     
  • The current unworkable system of price and exchange controls that fosters corruption, smuggling and the black market and fuels inflation and scarcity needs to be carefully dismantled and replaced with mechanisms that provide a safety net for the poor without stifling production.
     
  • The government should seek broad support for an emergency program that restores economic equilibrium and protects the most vulnerable from the consequences of the necessary adjustment, rather than blaming the opposition and foreign governments for an imaginary “economic war”.
     
  • The opposition should resist the temptation to score political points, acknowledge there is no painless solution and present a clear economic and social reform agenda.
     
  • Venezuela’s neighbours and the broader international community must abandon their reluctance to act, and explicitly press for restoration of the rule of law and of institutional checks and balances, beginning with close oversight of the December parliamentary elections.
     
  • They should also help alleviate the social costs of the current crisis by offering food and medical aid and helping Venezuela cope with and control existing epidemics and prevent future ones.

Caracas/Bogotá/Brussels, 30 July 2015

The president of the National Assembly, Jorge Rodriguez (C-top) swears in the new authorities of the National Electoral Council (CNE), during a special session at the National Assembly, in Caracas. 4 May 2021. Federico PARRA / AFP

Venezuela: An Opportunity That Should Be Seized

A series of gestures from Caracas suggests that President Nicolás Maduro’s government might be more willing to negotiate with rivals and enact partial reforms. Washington should respond in kind with phased sanctions relief and diplomatic gestures that can be reversed if Venezuela backslides.

On 4 May, Venezuela’s rubber-stamp parliament, the National Assembly, swore in a new electoral authority, two of whose five principal members are from the opposition. It was perhaps the most significant of a series of gestures by President Nicolás Maduro’s government over the past two weeks. While nothing suggests that Maduro is ready to make concessions that might threaten his grip on power, his recent moves do signal a willingness to negotiate and might provide a rare opportunity to temper a crisis that has brought the Venezuelan economy to its knees and caused Latin America’s worst humanitarian emergency. Reciprocal moves from foreign powers opposed to Maduro are necessary to ensure that this chance, however slim, is not missed. Washington is best placed to make comparably conciliatory moves by offering modest relief from the sanctions it has imposed and initiating low-profile diplomatic contacts to assess the odds of further progress.

These moves represent partial responses to demands laid down by the U.S.

Several other developments preceded the new election rectors’ appointment. The first came on 19 April, when Caracas finally signed a long-awaited agreement with the World Food Program, granting the agency access to the country to attend to the dire and growing child malnutrition crisis. The second occurred on 30 April, when the chavista government released six imprisoned oil executives from Venezuela’s Houston-based Citgo corporation – five of whom hold U.S. citizenship – into house arrest. A day later, the country’s chief prosecutor Tarek William Saab took a third step, announcing charges against low-ranking officials in three high-profile political killings for which the government had hitherto denied any responsibility. These moves represent partial responses to demands laid down by the U.S. and other external allies of the opposition movement led by former National Assembly chair Juan Guaidó, who since 2019 has asserted a claim to the “interim presidency” of the country.

The changes to Venezuela’s National Electoral Council, or CNE, by its Spanish acronym, were the most significant concession yet. Chavista domination of the CNE has been crucial to the government’s campaign to shut down any and all electoral threats. It ultimately led to the standoff with Guaidó and pushed many other opposition figures into exile. Opposition parties mostly boycotted parliamentary elections in early December 2020 – as they had the presidential contest in 2018 – and the small number that took part in the poll, some of them mere appendages of the government, obtained only twenty seats in a 277-seat Assembly. Even today, conditions for the opposition remain forbidding. Despite the new rectors, the electoral playing field remains deeply skewed in Maduro’s favour. Still, permitting a more balanced electoral authority marks a tentative step toward restoration of political competition.

For Maduro, greater opposition representation on the CNE could have benefits. First, this year’s elections, due in December, are local and regional, so there is less at stake for the president in any case. Moreover, he can sell the CNE deal to his own supporters as opposition recognition of government institutions and a strategy for reducing Venezuela’s international isolation. 

News of the reformed electoral board has divided opposition ranks. Even before Maduro announced the new CNE line-up, the alliance headed by Guaidó had rejected it as illegitimate. Its stance has not changed since, despite the two new opposition rectors’ strong credentials. (One is an experienced politician and former deputy chair of the Assembly; the other is a systems engineer whose role as an opposition elections expert was so important that the government jailed him for six months in 2017.) The opposition alliance maintains that the Guaidó-led parliament, a rump of which continues to meet, is the only body with the power to approve a new CNE. Guaidó himself, whom Washington recognises as the country’s legitimate president, blasted the appointment via Twitter, saying it would “drag the country toward a greater disaster”. 

Others take a different view. Notable among them is two-time presidential candidate Henrique Capriles, who, prior to the December elections, made fruitless efforts, with EU backing, to negotiate conditions that would allow his party to take part. Together with other opposition politicians, some of whom prefer for now to remain anonymous, Capriles rejects the “all-or-nothing” approach of Guaidó and his party, Voluntad Popular, which is led by the exiled Leopoldo López and has campaigned without success for Maduro’s immediate overthrow. Support for the new electoral board is also strong among regional and municipal politicians and party activists, especially those in opposition-held states and municipalities, who fear oblivion if the policy of boycotting elections is maintained. The issue threatens to fracture several parties, and could even lead to a formal split in the opposition coalition as a whole, which would also favour the government.

Venezuelan civil society is increasingly emerging as a significant, autonomous force.

Another important element in this complex equation is Venezuelan civil society, which is increasingly emerging as a significant, autonomous force, committed to a negotiated resolution of the country’s protracted political crisis. Four of the fifteen CNE members (the five principal rectors plus ten reserve members) appointed on 4 May were proposed by groups linked to the recently launched Foro Cívico, which brings together NGOs, trade unions, the main employers’ federation, professional syndicates, faith-based organisations and others. The Foro has played a role not only in the CNE negotiations but also in pushing for agreement between the government and opposition on importing COVID-19 vaccines, seeking economic reforms and setting up mechanisms for attending to the humanitarian emergency. Broadly speaking, the Foro leaders support a more conciliatory approach, along the lines of that promoted by Capriles, seeking areas where they can engage the government to alleviate ordinary Venezuelans’ suffering. 

Yet it is Washington’s response that is most keenly awaited. Under President Donald Trump the U.S. pursued a “maximum pressure” policy toward Venezuela, on the assumption that external action, particularly in the form of severe economic and financial sanctions and diplomatic isolation, would force the Maduro government to step down and accede to free elections. That approach failed. President Joe Biden came to office committed to a more pragmatic stance, but for various reasons related largely to the attention given to other pressing concerns – notably the pandemic and migrants at the southern U.S. border – little beyond the rhetoric has changed to date. Washington has demanded “concrete measures” from Maduro if it is to relax sanctions. It must now decide whether the gestures by Caracas merit a response in kind.

All the Venezuelan government’s steps thus far are political gambits; they are tentative and reversible; and, again, in themselves they do not create conditions for credible polls or in any way jeopardise Maduro’s hold on power. On the key question of election conditions, the opposition presence on the new CNE is only a start, albeit a promising one. Much more is needed. The government must legalise opposition parties, for example, most of which are barred from electoral participation and some of which have seen their names and assets transferred to minority, pro-government factions. The electoral authorities need to thoroughly audit voter lists. Most importantly, the Maduro government will also have to scale down its apparatus of state repression if it wishes to convince the U.S., the EU and its neighbours of its good faith.

Still, given the gridlock in Venezuela’s political standoff and the country’s appalling humanitarian suffering, outside powers should respond to and seek to encourage any signs of movement. Crisis Group has argued for the immediate and unconditional withdrawal of sanctions that inflict humanitarian harm alongside a phased lifting of other punitive measures in response to the gradual restoration of civil and political rights. The most obvious and pressing humanitarian need is for a restoration of permits to allow Venezuela to swap crude oil for diesel, of which there is a critical shortage. Diesel is vital, among other things, for food production and distribution. The U.S. could also consider steps like renewing licences and lifting sanctions that prohibit certain activities by U.S. and other foreign oil companies, with the understanding that these steps could be reversed if Caracas backtracks or fails to make further progress.

Also important is that Washington and Caracas set up channels of communication, either direct or through third parties, so that each can correctly interpret the other’s moves. Biden will pay a political cost for any easing of pressure on Maduro, with no likely immediate return. U.S. politicians are naturally – and perhaps increasingly – reluctant to incur the hostility of the Venezuela lobby in their country. The Maduro government will have to factor in that reality, just as Washington will need to take into account the difficulty the Venezuelan president may have in selling any rapprochement to his own coalition. Contact would allow each side to feel its way with more confidence.

The worst thing the U.S. could do now is to sit on its hands and await further concessions without any corresponding move on its part.

The worst thing the U.S. could do now is to sit on its hands and await further concessions without any corresponding move on its part. Such a course would strengthen the hand of those in the Venezuelan government who argue that however much they concede, Washington is interested only in getting rid of Maduro. It may well be that the Venezuelan president has no intention of going further, but the only way to find out is to engage in a process of gradual, reciprocal change. The ball is in Washington’s court.