How did Venezuela, an oil-rich country, become such an economic and political disaster?
Venezuela’s current plight can be traced to a revolution that went terribly wrong.
When Hugo Chávez, a former military officer, was elected president in 1998, he inherited a middle-income country plagued by deep inequality. Chávez had led an abortive coup attempt in 1992 and after winning power through the ballot box he set about transforming society. Chávez drove through a wide range of social reforms as part of his Bolivarian revolution, financed with the help of high oil profits – but he also bypassed parliament with a new constitution in 1999.
The muzzling of parliamentary democracy – and the spread of corruption and mismanagement in state-run enterprises – intensified after 2010 amid falling oil prices. Chávez’s “economic war” against shortages led to hyperinflation and the collapse of private sector industry. The implosion in the economy between 2013 and 2017 was worse than the US in the Great Depression.
In an attempt to stabilize the economy and control prices of essential goods, Chávez introduced strict controls on foreign currency exchange, but the mechanism soon became a tool for corruption.
When Chávez died of cancer, his place was taken by his foreign minister, Nicolás Maduro, who has intensified his mentor’s approach of responding to the economic downward spiral by concentrating power, ruling by decree and political repression.
How has Venezuela fared under Maduro?
Lacking Chavez’s charisma and personal popularity, and having been bequeathed an already crippled economy, Maduro has dealt with discontent largely by neutralising other branches of government.
He has packed the country’s supreme court with loyalists who simply overturned laws passed by the national assembly that the president opposed, including a measure freeing political prisoners.
Elections for provincial governors were suspended, and the court even ruled in favour of dissolving the legislature, but the decision was reversed in the face of national and international outcry.
In July 2017, Maduro followed Chávez’s example by holding elections to a constituent assembly, with candidates from government-approved lists, imbued with powers to bypass or dismantle any dissenting state institution.
It was a way of bypassing the opposition-led national assembly, elected in the country’s last free poll, in May 2016. Maduro’s own attorney general objected and has since fled to Colombia. Street protests against the move were crushed, with more than 110 dead.
In 2018 with the economy in freefall, hunger has become epidemic, and up to a tenth of the population (an estimated 4 million people) having fled the country. Several members of Maduro’s inner circle have been implicated in drug trafficking.
In an attempt to consolidate his power, Maduro called an early election in May but turnout was below 50% and the UN, EU and Organization of the American States, rejected the election as rigged. It was Maduro’s defiant inauguration on 19 January that precipitated the current showdown.
Who is Juan Guaidó?
The young face of the opposition is almost unknown both inside and outside Venezuela, and was thrust on to centre stage by chance. Guaidó was made chairman of the national assembly on 5 January because it was the turn of his party, Voluntad Popular (People’s Will). At 35, he is a junior member of the party but its leaders are either under house arrest, in hiding or in exile.
His relative obscurity has been an advantage in a country where the opposition has generally failed to distinguish itself, losing its nerve at critical moments, succumbing to infighting, and getting involved in a failed coup against Chávez in 2002.
Guaidó stakes his claim to the presidency on a clause in the constitution that states that the chair of the national assembly is allowed to assume interim power and declare new elections in 30 days if the legislature deems the president to be failing to fulfil basic duties or to have vacated the post.
What is the US role in all this?
Donald Trump has a weakness for autocrats, but Maduro has been an exception. With little personal interest in Latin America, he has allowed policy towards Venezuela to be steered by hawks in his administration – including Vice-President Mike Pence and the national security adviser, John Bolton – and in the Senate.
The Republican senator Marco Rubio, whose Florida electorate includes an increasing number of Venezuelan exiles, has been an important influence, and appears to have suspended criticism of Trump in return for hardline policies towards Cuba and Venezuela.
Diplomats at the state department advocating dialogue, have been overruled in favour of a policy orientated around regime change.
Trump himself has mused about a military option, and the unanswered question is how the administration hopes to follow through on its gambit to recognise Guaidó in the absence of mass defections in the armed forces.
That does not seem to have been thought through.
The US has already imposed significant sanctions on Maduro’s ruling circle. A full oil embargo would bring more devastation to the Venezuelan people and could backfire on the US economy. The administration could ultimately be left with the choice between abandoning Guaidó or risking armed confrontation.
