2018/05/23

What Will Maduro’s Re-election Mean for Venezuela?

Venezuela

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Penn's Dorothy Kronick and University of Houston Law Center's Julian de Cardenas Garcia discuss what's ahead for Venezuela following the re-election of Nicolas Maduro.
As the humanitarian crisis in Venezuela worsens, and in the wake of what has been widely condemned as a sham presidential election on Sunday to keep Nicolas Maduro in power, questions are focused even more sharply on what could be done to improve living conditions for citizens there.
Given Maduro’s iron grip on the military and on most of the country’s important political institutions, many observers outside of Venezuela agree that any solution will likely require a regime change. Dorothy Kronick, a Penn professor of political science, and Julian de Cardenas Garcia, a Venezuelan attorney and research professor at the University of Houston Law Center, offered their views on the country’s crisis on the Knowledge@Wharton show, which airs on SiriusXM channel 111. (Listen to the full podcast using the player at the top of this page).
Immediately following the election, U.S. President Donald Trump imposed new economic sanctions on Venezuela, forbidding anyone in the U.S. to buy debts or accounts receivables that are owed to the government, including the government-run oil company, PDVSA, once the second-largest company in the world. That was added to various other economic sanctions the U.S. has placed on individual Venezuelans and businesses last year, following Trump’s taking office.
The sanctions imposed last year have already had a devastating effect on Venezuela’s oil sector, Cardenas and Kronick pointed out. According to Kronick, when Hugo Chavez became Venezuela’s president in 1999, the country was producing 3.5 million barrels of oil a day. With poor maintenance and other problems in PDVSA’s operations, output has steadily deteriorated in recent years. Then, with sanctions, things got worse. Today, the output number is between 1.4 and 1.6 — less than half. “The oil sector … is really in terrible straits, and sanctions are contributing to that,” Kronick said. But that impact hasn’t yet filtered down to changes in government. “I think the question is, is that going to lead to political change? Is that going to facilitate a political transition?”
A ‘Bad Middle Ground’
The U.S., the European Union and — in an unprecedented move — the Lima group, made up of 13 Latin American countries plus Canada, all essentially called Sunday’s election a fake. There have been similar widespread condemnations by these groups of the dire humanitarian situation within the country, which includes extensive hunger, pervasive crime, a health care system in tatters from medicine and other shortages, politically oriented arrests and imprisonment, and an increasing number of people fleeing the country.
“What happened in Venezuela on Sunday is truly bizarre,” said Kronick. “Here you have a country in the middle of the worst economic contraction in recorded Latin American history — worse than that of the U.S. in the Great Depression — and yet the incumbent president that has caused all of this misery was apparently re-elected with 67% of the vote. How does that happen?”
Kronick and Cardenas went on to explain that one key reason for the large win by Maduro is that most opposition parties boycotted the election. However, lack of political coordination has led to what Kronick called “the worst-case scenario for the Venezuelan opposition.” Because a portion of the opposition still participated in the election, “we ended up in this bad middle ground where … 1.8 million people voted against Maduro, which lends the election this kind of veneer of legitimacy. But then, on the other hand, you have people boycotting. And so I think the opposition is really in a tough spot right now.”
Double-edged Sword
Many large corporations were nationalized or fled the country in recent years, and about 90% of Venezuelans now live below the poverty line. And as oil production in the nation — which has the world’s largest reserves — has been cut by half or more, the lack of hard currency revenues has helped to drive inflation to the highest level worldwide. It is likely to hit 13,000% for 2018, notes the IMF, adding to the nation’s economic woes.
“What happened in Venezuela on Sunday is truly bizarre.”–Dorothy Kronick
Cardenas noted that removing Maduro from power would require more than the added U.S. sanctions and the condemnation by other Latin American countries. Key players such as Russia and China, which hold a large amount of Venezuelan debt, need to work with the U.S. to find a solution to the humanitarian crisis, he said. “The Venezuelan crisis is not only a national issue, a national crisis created only by Venezuela. There are other countries that are embroiled in what is going on [there].”
Kronick noted that increasing sanctions on Venezuela would be a double-edged sword. On the one hand, sanctions increase the economic pressure on the Maduro government in a way that could lead to an eventual downfall. On the other hand, they inflict more economic and social pain on everyday Venezuelans. Sanctions also give support to a pro-Maduro narrative that the U.S. is directly responsible for most of Venezuela’s problems. Sanctions “play into Maduro’s rhetoric about imperialism from abroad and the evil empire.”
http://knowledge.wharton.upenn.edu/article/whats-next-venezuela/?utm_source=kw_newsletter&utm_medium=email&utm_campaign=2018-05-22
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