The World Policy Institute understands that policymakers and opinion leaders need creative ways to catalyze innovation and engage wider coalitions in solving some of the world’s biggest challenges. By working with artists focused on the same issues, this cross-cutting initiative seeks to build a new, collaborative model for social change.
In Every Nation for Itself: Winners and Losers in a G-Zero World, World Policy Institute Senior Fellow Ian Bremmer illustrates a historic shift in the international system and the world economy—and an unprecedented moment of global uncertainty.
By Robert Valencia
What a difference three months makes. In October 2012, Venezuela’s incumbent President Hugo Chávez won reelection for his fourth consecutive term, seemingly cementing his Bolivarian Revolution. Then, in December 2012, he required a fourth operation to treat his existing cancer. Now, pundits are spilling ink on whether Chávez and his Revolution will survive, and if Vice President Nicolás Maduro has the charisma to replace him. A more crucial question, however, remains: How can Venezuela get its economy moving? With or without Chávez, the country desperately needs economic reform, but daunting political obstacles stand in the way.
Recently, the economy has taken a backseat to the election. Venezuela has relied on oil money for years, but poor governance has led to shortages of food and medicine, a fragile banking system, and a public debt, which has increased five-fold since 1998, totaling 71 percent of the country’s GDP. Without Chávez or an electoral mandate, Maduro might not command the authority necessary to implement reforms, and a healthy Chávez has shown little inclination to change course.
Venezuela’s moribund economy requires significant policy initiatives. These need to include investments in oil refinery infrastructure to end gasoline imports, reductions in draconian business expropriations, and increases of social programs for the poorest. The government needs to incentivize the domestic production by purchasing coffee from local producers at a reasonable prices rather than importing, alleviate the decline of the Bolivar over the U.S. dollar, and improve relations with countries like the United States, a major trading partner.
These measures are both pressing and unlikely to be acted upon anytime soon. Chávez’s illness, according to some experts, is playing a role in the economic paralysis. It’s unknown whether Chávez has granted economic powers to Maduro, and only the sitting president can act on these matters and others, such as the Central Bank’s liquidity, a problem giving the high demand for foreign currency. To make matters worse, Moody’s Investors Service announced on January 9th that it will revise Venezuela’s already crippled credit ratings due to fear of civil unrest and heightened political uncertainty.
Before being hospitalized in Havana, Chávez named Maduro as his successor, saying Maduro is capable of carrying the Bolivarian Revolution’s torch. Should Chávez step down, Maduro has big shoes to fill. He does not share Chávez’s charisma. Maduro simply doesn’t excite or uplift the hundreds of thousands of low-income Venezuelans that re-elected Chávez in October.
Maduro has the experience though, shaping the Chávez administration’s policies, particularly abroad. He is the architect of Venezuela’s decision to upend relations with neighboring Colombia and keep close ties with pariah regimes like Iran and Gaddafi's Libya. Maduro also won one the Revolution’s biggest foreign relations victories: a seat on the United Nations Human Rights Council. Venezuela was added last November, a move that does not sit well with human rights activists.
Chávez’s surgery prevented him from attending the January 10th inauguration ceremony. This poses a dilemma, as the constitution mandates a new election be held within 30 days if a president cannot be sworn in. Maduro claims that Chávez has a “constitutional right” to take oath at a later date since Chávez is sitting president and not a president-elect.
Maduro pledges to maintain unity among Chavistas and has accused the international media of waging a “psychological war” to destabilize the country. Julio Borges of Primero Justicia (Justice First Party) denounced the alleged division within the Socialist party, noting that Maduro fears the head of the National Assembly and doesn’t want the Assembly president to take the reins. Some experts further claim that there are factions within Chávez’s Partido Socialista Unido de Venezuela (PSUV) who are more radical his own. The military has pledged loyalty only to El Comandante Chávez.
In addition to potential internal splits, the October 2012 elections showed a more evenly divided Venezuela. The opposition made gains, thanks to a strong campaign led by Henrique Capriles Radonski, governor of the state of Miranda.
As Maduro tries to keep the Revolution alive with Chávez absent, he's been unable to address the concerns Venezuelans face everyday. The country is rife with corruption, according to Transparency International, which ranked it as Latin America’s most corrupt country. Petróleos de Venezuela (PDVSA) has become the backbone of Chávez’s economic initiatives that range from food imports and distribution to athletes’ training. Corruption levels inside the company are also staggering, with dubious contracts to unknown companies for oil exploration. The country’s fiscal deficit is at 20 percent and inflation is likely to increase by 28.8 percent, up from last year’s 23.2 percent, according to the International Monetary Fund. Massive expropriation has curtailed any foreign direct investment.
It’s no secret that Chávez suffers from cancer and a pulmonary infection, so for the government to not adequately address his health adds insult to injury, creating more uncertainty among investors and consumers alike. Chávez’s lack of media appearances since he moved to Havana (unusual for the star of the six-hour “Aló Presidente”) has made some question whether he’s dead or alive. President Juan Manuel Santos of Colombia and Paraguayan former President Fernando Lugo learned while undergoing their own cancer treatments that in order to maintain public order, it was best to communicate overtly about their illness.
An ailing Chávez, an alleged split among the Chavistas, and an unproven leader does not bode well for Venezuela’s immediate future when rapid and significant changes are needed to keep the country afloat.
Robert Valencia is a Research Fellow at the Council on Hemispheric Affairs and is a contributing writer for Global Voices. He also has a personal blog called My Humble Opinion.
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