Venezuela: the political stand-off fuelling an economic collapse

Venezuela: the political stand-off fuelling an economic collapse

The failure of Juan Guaidó to dislodge Nicolás Maduro from power has accelerated the economic implosion

The man backed by the western world to save Venezuela from dictatorship and economic ruin is running late.

A charismatic 36-year-old former student leader with more than a passing resemblance to Barack Obama, Juan Guaidó is rallying support in the rural Andean foothills, his progress slowed by enthusiastic crowds of supporters. Weary of two decades of Hugo Chávez’s Bolivarian Revolution, families line the streets to glimpse the man who is challenging Mr Chávez’s heir, President Nicolás Maduro.

As Mr Guaidó’s convoy of armoured SUVs approaches a square in the town of Valera, sirens blaring, the emotion rises. A lanky, white-shirted Guaidó descends from his car and fights his way through the crowd, aided by a phalanx of bodyguards sporting @juanguaido T-shirts.

“If I have to descend to hell to finish off this dictatorship, I will do it with the blessing of you all,” he bellows from the back of a pick-up truck. “Venezuela will be rescued, whatever the cost. I ask you to trust in the route we have set out . . . an end to the usurpation, a transition government and free elections.”

Minutes later, Mr Guaidó finishes his speech and his convoy roars off, sirens wailing, to his next appearance in a gruelling 14-hour day. The crowd returns to a daily struggle for survival: queues for petrol, power cuts, intermittent running water and salaries paid in near-worthless currency.

That day in Venezuela’s western state of Trujillo was an apt metaphor. Despite strong popular support, ample bravery and international backing, Mr Guaidó’s “people power” revolution is also behind schedule.

Having failed so far to dislodge the Maduro regime, both Mr Guaidó and his backers in Washington, Europe and Latin America face difficult questions. Although he remains by far Venezuela’s most popular politician, it is not clear how long Mr Guaidó can keep his fractious opposition coalition together and his supporters enthused.

For the Trump administration, the issue is whether it now needs to start thinking about a plan B for Venezuela. And while the political stalemate in Caracas drags on, the implosion in the economy and the humanitarian disaster is only gathering pace.

“Venezuela is in a state of perverse equilibrium,” says Luis Vicente León, director of Datanálisis, a polling and market research firm in Caracas. “We are in a catastrophic deadlock where neither side can defeat the other but their conflict can destroy the country.”

Hawks in Washington had initially promised a quick win, portraying the fight against Mr Maduro as part of a wider battle to rid the Americas of socialism. “The Troika of Tyranny in this hemisphere — Cuba, Venezuela and Nicaragua — has finally met its match,” national security adviser John Bolton said in Miami last November.

The plan went as follows: newly elected head of the opposition-controlled National Assembly, Mr Guaidó would launch a public bid to topple Mr Maduro, a Cuban-trained former bus driver with a fearsome reputation for economic mismanagement, corruption and authoritarian rule. Other nations would back him, crowds would mass and the regime would fall.

On January 23, before a huge crowd in the streets of Caracas, Mr Guaidó proclaimed himself interim president citing an article in the constitution allowing the head of parliament to take power in the absence of a properly elected president. He was quickly recognised by Washington, then the EU and most Latin American countries.

But there was no easy victory. Mr Maduro denounced what he termed a US-inspired coup plot and — publicly backed by senior figures in the military — remained in power.

Amid the humanitarian crisis, Mr Guaidó tried a different tack the following month. Addressing Venezuelans from across the border in Colombia, he promised to send in a convoy of mostly US-supplied aid and appealed to the military to allow it in. The troops stood firm and the convoys never entered.

By now, excitable talk of a possible US military intervention to overthrow Mr Maduro was fading and Washington had opted for a “maximum pressure” strategy of ever-tighter sanctions. The measures began under Barack Obama, targeting regime officials with travel bans and asset seizures for human rights abuses. They were greatly extended under Mr Trump to hit the Venezuelan economy, progressively halting trading in Venezuelan debt and securities, gold and oil as well as blocking central bank transactions.

With each turn of the screw, the Venezuelan economy was ground down further but the message remained the same: one more push and Mr Maduro would be gone.

Following weeks of street protests and rallies and frustrated by the continuing deadlock, Mr Guaidó raised the stakes further at the end of April. At dawn, he appeared outside a military base in Caracas with one of the country’s best-known opposition leaders, Leopoldo López, who had escaped from years of arrest. Guaidó appealed directly to troops in a video message to rise up and remove Mr Maduro.

The uprising was over almost as soon as it began. Mr Guaidó’s message sounded improvised and less than clear. Why, Venezuelans asked, was he proclaiming a putsch from outside a military base and not inside? One high-ranking official, Manuel Cristopher Figuera, the head of the feared intelligence service, did defect. But the troops again stood firm behind Mr Maduro, riot police quickly put down scattered protests and Mr López took refuge in the Spanish ambassador’s residence.

Now, six months after proclaiming himself interim president, Mr Guaidó is feeling the pressure. Independent polling shows he remains by far Venezuela’s most popular politician but his support has slipped. He has been reluctantly forced into Norwegian-brokered negotiations with Mr Maduro’s government, talks which have yielded little in the past and which he had promised to shun.

While the situation is inherently unstable and could change at any time, analysts say that neither Mr Guaidó nor Mr Maduro seems able to deliver a knockout blow. “Maduro is not popular but he is effective,” says a senior western diplomat in Caracas “He controls an apparatus of repression and while he may not know how to govern, he has one weapon that works — repression.”

In the meantime, the stalemate is destroying what is left of Venezuela’s economy. An oil power so wealthy it boasted a Concorde service to Paris in the late 1970s has deteriorated so dramatically that more than 4m citizens have fled. Twenty years of mismanagement have lent Venezuela’s economic data an outsize, almost absurd dimension. The central bank says inflation hit 130,060 per cent last year. The economy has shrivelled to less than half its former size in the space of a few years. The effect of tightening US sanctions this year has only added to the pain.

Ricardo Hausmann, a Venezuelan former minister and Guaidó backer, describes it as the biggest economic collapse in human history outside of war or state failure, more than twice the magnitude of the Depression.

Queues for fuel outside the capital can stretch around blocks and along the side of highways. Drivers sleep inside their vehicles during a wait to fill up which can last two days and nights. When they reach the pumps, guarded by armed police, the precious fuel is dispensed free of charge: hyperinflation has rendered the officially fixed fuel price so low that there is not a banknote small enough to pay for a full tank.

The Organisation of American States estimates that if the exodus continues at its current rate, 8m Venezuelans will have left their homeland by the end of next year, around a quarter of the population and a larger number than left Syria during its civil war.

For those who remain, protest against the Maduro regime is increasingly dangerous. Michelle Bachelet, the UN high commissioner for human rights, reported last month that nearly 7,000 people had been killed in the past 18 months in confrontations with security forces, and said many appeared to be extrajudicial executions. The government flatly rejected the report.

Mr Maduro and his ministers rarely appear in public these days, preferring stentorian communiqués in robust revolutionary language. Interview requests to senior officials were not answered.

Amid the crumbling economy, US officials insist that Mr Guaidó’s victory is a question of time. “The pressures keep growing and we are helping that along,” says one senior official. “I don’t see how they can survive. I really cannot believe they make it to the end of the year.”

That is not necessarily how it feels on the streets of central Caracas, where special efforts are made to keep fuel, power and water supplies going and a vague semblance of normality endures.

Moisés Naím, a writer who was a Venezuelan minister in the 1990s, says there are two scenarios. “One is that the current situation becomes permanent . . . The stalemate continues and you have Libya on the Caribbean, a nation with two rival governments each supported by a different international coalition.” He adds: “The other scenario is some kind of imperfect, hard-to-swallow agreement for elections and the elections taking place.”

Asked about the failure of the April uprising, Mr Guaidó smiled and changed the subject. Instead, he stuck closely to a script: the country is behind him and sooner or later, his campaign of non-violent protest will succeed.

“If we look at it rationally and do a checklist . . . of all the elements needed to substitute a dictatorship and have a transition: popular support, institutional support, access to resources . . . international support, the state of the armed forces, capability to mobilise . . . well, we have them all, or the majority of them,” he explains.

But a lethal combination of repression and daily privation is sapping the will of a once-feisty population. Mr León points to survey numbers indicating the Venezuelan state of mind. Forty-nine per cent feel sadness, 41 per cent anxiety, 35 per cent rage, 31 per cent mistrust and 27 per cent frustration. Most of the emotions are passive, he explains: the people are in deep shock.

And the Chávez myth dies hard, as evidenced by polls suggesting that up to a fifth of Venezuelans still consider themselves supporters. On a hilltop overlooking central Caracas lies a military fort from which Mr Chávez launched his first attempt at taking power, a failed military coup in 1992. Now it is a mausoleum for his outsized tomb guarded by four soldiers.

Daxis Mosquera, a lawyer who volunteers her services to escort visitors, bristled at the suggestion that Mr Chávez, “the greatest man who ever lived” was merely buried there. “The supreme commander is not buried,” she explained. “He is superimposed.”

With his legacy still superimposed on Venezuela, there are few immediate signs that Mr Chávez’s heirs will be dislodged from power.

From Beijing to Moscow: Maduro’s global allies

Nicolás Maduro’s government might seem isolated in the west but it has plenty of support around the globe. China, Russia, Turkey, Cuba, Iran and much of the developing world stand behind it; Venezuela is president of the nonaligned movement of 120 nations.

Havana plays a central role. In return for regular shipments of Venezuelan oil, Cuba provides an estimated 2,000 intelligence officers (“the central nervous system of the regime”, as one US official describes them) as well as Mr Maduro’s personal bodyguards.

Russia provides military equipment, defence advisers and oil investment via state-controlled energy company Rosneft. China builds Venezuela’s buses and, according to a Reuters report, Chinese telecom group ZTE has a key role in producing the electronic “fatherland card”. This controls access to the subsidised monthly food boxes distributed by the government upon which millions of poorer Venezuelans rely.

Turkey has provided strong diplomatic support to Mr Maduro and sells Venezuela food, as well as acting as a conduit for gold mined from the Amazon region. Iran is another strong backer.

While most Latin American nations have sided with Mr Guaidó, leftwing governments in Mexico and Uruguay have maintained ties with Mr Maduro.

The other key to the regime’s survival is the Venezuelan talent for improvisation. Statistics of plunging food consumption suggest that mass starvation is imminent. In reality, though part of the population suffers severe malnutrition, many poorer citizens have found ways to survive: scavenging rubbish dumps, tearing fruit from trees in streets and parks, growing their own vegetables and tapping the growing diaspora abroad for money.

Regime officials and senior military and police officers have proved similarly inventive in the face of US sanctions. Drug trafficking, gold mining, logging and fuel smuggling offer lucrative hard currency profits which fill some of the gap.

US Treasury Secretary Steven Mnuchin last week accused Mr Maduro and his family of profiting from a government-run food aid programme, saying they had pocketed “hundreds of millions of dollars through a number of fraudulent schemes”. es un sitio web oficial del Gobierno Argentino