Image; Fernando Llano / AP/Press Association Images. All rights reserved.
Venezuela has been shut off from access to financing, just when it needed it most because of the balance-of-payments crisis, exacerbated by the dramatic fall in oil revenues and an inefficient economic policy that has increased exponentially the perception of risk in international markets.
The depth of the external crisis is such that Venezuela is left with but one choice: attracting private capital. And this means dismantling the exchange and price controls, in addition to massively increasing the direct transfer of resources to the most vulnerable sectors in Venezuelan society through a substantial improvement in the quality and targeting of public spending.
Any other option would mean to keep on subjecting the country to the external adjustment by quantity policies that its national government has been undertaking, which inescapably lead to rationing, controls and runaway inflation.
Impoverishment and sense of the vote
In the last three years, Venezuela has lost almost 15% of its GDP, and has experienced a drop in per-capita income that has resulted in a rapid impoverishment of the population. This is the origin of the current political crisis and the logic explaining the punishment vote against the government which the opposition managed to successfully exploit at the parliamentary elections in December, 6, 2015.
Despite the fact that the economic basis for these electoral results is quite obvious, it is nevertheless surprising to see how the behaviour of both the government and the opposition after the elections is affected by some substantive errors: both sides continue to take refuge in polarisation as a means to maximize its chances of resistance (in the government's case) or to prompt the Executive’s exit (in the case of the opposition).
Apparently, the voters who made the change possible are still being unheard.
The government has clung to authoritarianism through exerting its control of the Supreme Court, violating the popular will instead of expanding its electoral coalition and modernizing its economic policies, and remorselessly insisting on the idea of keeping economic controls in place. The opposition has chosen to fix a date for the departure of Chavism and to try to symbolically dismantle the revolution.
They are both addressing their core voters and flexing their muscles in preparation for a terminal conflict, but the fact is that the voters in December delivered a different message: they wanted to punish Madurismo by producing a divided government and thus to force it to negotiate with the opposition at the National Assembly, so as to bring about a change in the Executive’s behaviour, especially in economic and human rights issues.
If the Executive were not to change its behaviour, the voters gave the National Assembly the power of a two-thirds majority to produce a constitutional, democratic and electoral solution. What both parties had to do, then, was to agree on a standby period to confront the economic crisis and to open a space for political negotiation.
This is what the country was expecting.
Conflict of powers
The government chose to precipitate a power conflict instead. It did so, first, by violating the rules for the selection of new judges; next, by using the Enabling Law to wrap up the autonomy of the Central Bank of Venezuela and to prevent the National Assembly from electing its board of directors; finally, by eroding the two-thirds majority in the new National Assembly through cautionary action before the Electoral Chamber, thus undermining the popular will of one of the least populated but most over-represented states in the country: the Amazonas state.
Clearly, the decision of the Electoral Chamber creates uncertainty about the two-thirds majority, for it is not known if this majority is to be counted on the basis of the deputies present at the time of a vote, or on the basis of the number of seats in the National Assembly. If it is the number of seats, the 109 opposition deputies will no longer be enough to warrant the two-thirds majority. The Chavist leadership has thus used a deeply undemocratic means to override – temporarily - a credible threat by the opposition to push for a constitutional way out and renew public authorities.
With this attack, the government achieved several political objectives: it prevented the future appointment by the Assembly of two National Electoral Council (CNE) members whose terms are due to end this year and whose appointment requires a two-third majority; it prevented the removal of Central Bank executives and the restoring of its autonomy to combat inflation; it avoided the likely removal of the newly appointed judges, for which the supermajority majority is also required; and it blocked any constitutional reform and the possibility of convening a National Constituent Assembly.
That is to say, the government used its political power to limit in the short-run all possible constitutional solutions and to leave the Recall Referendum as the only available way out, which is something that does not depend on the National Assembly itself – for it requires a process of collecting signatures which is regulated and supervised by the CNE. While it is certainly true that a constitutional amendment to cut short the presidential term could always be pushed through, this is a legislative decision that would most likely be challenged by the Constitutional Court.
In other words, the government reduced (at least temporarily, until final judgment by the Supreme Court, or new elections in the state of Amazonas) the number political options for resolving the crisis to just one: the Recall Referendum.
Through the Electoral Chamber, the government managed to effectively undermine the credibility of the threat by the opposition to use the qualified majority, because it is no longer clear whether or not the opposition has, or does not have, this majority. At some point, the Constitutional Court is going to have to pronounce itself on this issue. The opposition retains, however, its three-fifth majority in the Assembly, which allows the possibility of removing the Vice President and the government ministers. And this is a threat that Chavism seems willing to live with.
But the opposition has also proceeded too hastily in several areas, knowing full well that it is operating in a context where there is no independent judicial control of the government, where the Bolivarian revolution won over 42% of the votes at the parliamentary elections, where its own victory at these elections relied on attracting disgruntled Chavists who were willing to give its electoral alternative a try. Interestingly, after promising political change, the opposition, on the basis of a new internal alliance within the Democratic Unity Roundtable (MUD), chose a parliamentary leadership that re-established the Fourth Republic spokesperson, arguing the need for a seasoned and practiced leader.
Symbolically, this decision allowed the government to talk about restoration and to minimize the opposition’s promise of change, even though the opposition did manage to get on board an experienced political veteran.
The opposition also decided to swear in its MPs at two different times, arguing formal reasons derived from the decision of the Electoral Chamber. The truth, however, is that, as it could not swear in all 112 MPs, the three Amazonian deputies were left in a vulnerable position.
Internationally, it would have been very costly for the government to prevent the constitution of the National Assembly on January, 5, so it would have made political sense for the opposition to wage this battle from the start and not do it in two separate acts (which is what constitutional lawyers allegedly recommended). Chavism took advantage of this political weakness, and the MUD was forced to backpedal under the threat of contempt and legislative omission. It had no alternative but to do so, given the swearing-in scheme it had chosen.
If it had chosen to swear in its 112 MPs as a block, at the very same time the United Socialist Party of Venezuela (PSUV) members did, it would have been very difficult for the Electoral Chamber to divest the Amazonian deputies without de facto dissolving the National Assembly.
International pressure would have been enormous.
The opposition chose to install itself before shielding politically its qualified majority and exposing the constitutional manipulation they were undergoing.
Finally, instead of opening a space for dialogue, the opposition stated in its inaugural address that its main objective was to get the President out in six months and openly communicated its political agenda. Therefore, it appeared as unwilling to open a negotiation process, confirming the government’s suspicions.
The hasty way in which the portraits of Simón Bolivar and Hugo Chávez were removed from the Assembly only confirmed that perception.
No fast track changes in the horizon
These events highlight two facts: first, change will not be speedy in Venezuela; and second, the conditions for a speedy collapse of the government are just not there.
Rather, the incidents that took place in the vicinity of the National Assembly during the first week after its constitution seem to confirm that the democratic transformation of Venezuela will be a very complex affair indeed, both economically and politically.
The truth is that there is no way out of the current situation without an agreement. To believe that there is a fast way out would be to repeat the same mistakes as the "Chávez, go away" phase and to underestimate the government’s capacity to institutionally and politically block all of the options that have been raised.
Chavism was up and ready at each session, but it did not hide its disposition to violate the popular will and contradict its own laws – namely, the law according to which elected officials who have proclaimed cannot be challenged.
It is hard to believe, however, that the current situation could benefit the government. Later on this year there will be governorship elections, next year there will be mayoral elections, and then presidential elections.
The opposition is facing an election cycle that it can benefit from in the midst of a major economic meltdown. And the only option for Chavism is to make use of the system’s darkest subterfuges. But this does not by any means guarantee its political survival, and even less so its recovery at the polls.
Even if the opposition does not manage to remove President Nicolás Maduro, Chavism is in a dead end street and can only bet on delaying the inevitable.
In any case, the Venezuelan population will clearly not have the same patience as politicians in facing this electoral cycle and in coping indefinitely with this power conflict.
The economic crisis is such that it is a political imperative to find a way out. The social pressure will be mounting and it will force the government to accept some negotiation.
The appointment of Aristóbulo Istúriz as Vice President is a clear sign that the government is also bracing for that possibility, knowing full well that it cannot block things indefinitely. Both the opposition and the government have to move in two areas: negotiation or a recall referendum.
In order to negotiate, the opposition needs to force the executive into sitting at the table (the former two-third majority threat, which is now uncertain). The only credible threat it now has is its capacity for social mobilization and protest in a context of economic downturn - an issue that, interestingly, divides radicals and moderates within the MUD.
If negotiations with the government fail (or never actually happen), the opposition has no choice but to activate the recall referendum and face all the obstacles that the government will put in the way.
The recall referendum path can start from April, 14, this year, but in order to make it more expeditious and to overcome the barriers that are bound to be erected, the MUD will depend on its mobilisation capacity - that is, its street power.
A necessary negotiation in a broken nation
In theory, a potential negotiation with the government would imply an agreement on several issues: the economy, electoral rules, political amnesty and institutional renewal.
For Chavism, a key issue in any negotiation will be a constitutional reform for changing the current election schedule, including the elimination of the recall referendum and the postponing of the governorship and mayoral elections, to share the political cost of an economic stabilization program, and to obtain an amnesty to be shielded from any future lawsuits.
For the opposition, it is essential to cut the presidential term of office from six to five years, to annul unlimited re-election, to grant an amnesty to political prisoners, and institutional renewal.
Agreement on these issues is not only possible. It would also undoubtedly be the best for the country. But usually politicians negotiate only when they are forced to. And the only thing that can make Chavism accept to do it is social pressure.
A country with a budget deficit exceeding 18% of its GDP, with four different exchange rates, more than a 10% decline in economic activity in 2015, and inflation at more than 270% (no official figures available): we are talking about an almost broken nation.
To this should be added the shortage of more than 70% of pharmaceutical drugs, and of more than 65% of food staples, which make the daily life of Venezuelans complex and miserable.
This year Venezuela needs more than 16 billion dollars to cover its needs and pay for its commitments. And this, without access to capital markets and with its sole financier, China, entering a deepening crisis.
Given the scale of the Venezuelan economic crisis, it is obvious that the only option is a political agreement which would enable to confront the major macroeconomic imbalances and to promote a massive program to attract investment and undertake the necessary social transfers.
This agreement requires political guarantees for both sides, which is something that inevitably involves some tradeoffs.
After the formation of the National Assembly, a few weeks have been enough to realize the obvious: how easy it is to polarise and how hard it will be to reach a solution that works for all.
This article was previously published by Lalineadefuego.
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