Is Venezuela in time to avoid exploding?

Venezuela is burning. Maduro is digging his heels in while numerous countries are refusing to acknowledge the Constituent Assembly and the population fears for their future. Can the spiral of insanity be stopped? Español

Tomás Straka
14 August 2017
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Photo courtesy of Nueva Sociedad. All rights reserved. This article is published as part of the partnership between Nueva Sociedad and DemocraciaAbierta. You can read the original article here.

Many Venezuelans believed that something approaching the end of the world was coming on the 30th of July. The election of an all-powerful Constituent Assembly pushes further the legal rulings that blocked Nicolás Maduro's recall referendum last October of last year, and those that de facto dissolved the opposition-held Congress this March. That is to say, it grants, through this legal route, all power to a government, which was defeated overwhelmingly at election and which, according to polls, is not in a fit state to win another election. 

One hundred days of protests, which intensified since Maduro announced on the 1st of May that he was convoking a Constituent assembly and so bypassing the steps stipulated by law and the principles of equality and universal suffrage, have not prevented his efforts. Neither did the appeals from many countries, United States' sanctions or the negotiation attempts led by José Luis Rodríguez Zapatero. With firm support from the Armed Forces, the votes were cast on the 30th of July. In the early hours of the morning the National Electoral Council announced that just over eight million people had turned out to vote. Maduro declared himself to have won. An all-powerful Constituent assembly has been installed and most Venezuelans wonder anxiously what will come next. 

Almost all analysts indicate that there will be increased conflict. The events of the very day of the election marked a very bad omen: the 30th of July was the bloodiest of the hundred days of the protests, with sixteen people dead after numerous clashes. Two days later, opposition leaders Antonio Ledezma and Leopoldo López were again jailed for a while. To this is added the debate concerning the voter turnout announced by the National Electoral Council. Eight million voters turning out has been very hard to believe, being almost as many as the highest vote obtained by Hugo Chávez, just when all polls indicated that 70% polled rejected the Constituent Assembly and only 13% intended to vote. The government faced the 16th of July's monumental act of protest, when seven and a half million people took to the streets to sign against the plan for the Constituent Assembly.

Eight million voters turning out has been very hard to believe, being almost as many as the highest vote obtained by Hugo Chávez.

Just how this act deprived the government of legitimacy and gave it to the opposition can be measured by the international reaction it unleashed. It needed to overcome it in some way, and on July 30 it was time to take action. All impartial observers agree the government lost ground. Estimates are of two and a half million in voter turnout, the most optimistic put it at five million. 

The result is that the governments of the United States, Colombia, the United Kingdom, Panama, Brazil, Argentina, Paraguay, Mexico, Costa Rica, Chile, Switzerland and Spain have decided not to recognise the National Constituent Assembly. The European Union has recently followed suit. A list of twenty-eight other countries has expressed concern and many announce that they will apply sanctions.

No one has gone as far as the administration of Donald Trump, however. First he imposed financial sanctions on thirteen senior officials. Later, he did so directly with Nicolás Maduro. Finally, it has already announced that it is considering imposing other measures, probably in the oil sector. Experts say Trump has a good margin to move in this direction without affecting fuel prices. To explain it simply: in its effort to diversify the market and reduce dependence on the United States, Venezuela progressively reduced the sale of crude oil to that country, today averaging around seven hundred thousand barrels. However, as the rest of the production is divided between what is sold to other markets with agreements that do not pay immediately or not in cash (Petrocaribe), or what is already mortgaged to China who paid in advance, barrels going to the United States have become increasingly important since it is these that produce cash flow.

Besides, there is no way to find placement for them elsewhere. Maybe some can be routed elsewhere, as ISIS or Nigerian mafias have done through certain brokers, but this would be at an even lower price than currently and never in sufficient quantities (although perhaps it would do to keep the leadership rich and arm the Armed Forces). On the contrary, Trump finds it relatively easy to find other suppliers or to free up some of his strategic reserve (which would provide him with cash as well, which he also needs) because it has for some time bought less Venezuelan oil. While wanting to be less dependent on the United States, Venezuela has managed just the opposite.

Hopefully, as can firefighters when they know of leaks, someone will be able to avoid an explosion.

The sanctions considered so far are just some of a long menu. These range from the possibility of refusing petrol sales to Venezuela - which due to the situation of the state-owned PDVSA must import it -, to refusing solvents for the heavy and extra-heavy crude that make up the bulk of its reserves. But above all they can make life impossible for the top (and many of the middle circles, as they have already talked about sanctioning all those who participated in the Constituent process) and the country's financial transactions. Holders of bonds, a key piece of state funding, and major or minor partners in other businesses, have reason to be worried. 

It is still difficult to know the next moves of Maduro and his allies - especially Russia -, or whether the Constituent Assembly will make moves to gain popular support. For the moment, it's a Constituent Assembly without a broad social base, unrecognised by many countries (including the one that gives us the dollars we need to live); a president declared a dictator by the United States; a legitimised and majority opposition, but with few resources to confront the Armed Forces; growing social protest that responds to dynamics separate to the agenda of the opposition; a conflict that is increasingly more international and an economic and social situation that is already huge and only seems to be getting worse, especially if sanctions are imposed.

Venezuela is now seeing the combination of all these flammable gases. Hopefully, as can firefighters when they know of leaks, someone will be able to avoid an explosion.

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