Venezuela’s deteriorating economic crisis

Venezuela’s deteriorating economic crisis

US President Barack Obama upstaged Venezuelan President Nicolas Maduro by his historic meeting with Cuban President Raul Castro at the Seventh Summit of the Americas in Panama on April 10-11, 2015.

Mr Maduro had promised to present a petition signed by millions of Venezuelans protesting at the imposition of US sanctions on a group of officials in the Venezuelan government for their violations of human rights, writes Dr Joseph S. Tulchin.

Mr Maduro did not present the petition to the group of leaders. But he did denounce the US in his speech. His accusations were echoed only by the leaders of Argentina, Bolivia, and Ecuador, an indication of the much greater significance of the Obama-Castro meeting.

Mr Maduro is in crisis mode. The situation in Venezuela continues to deteriorate - basic foodstuffs and other daily necessities are in short supply, inflation is accelerating and now above 60 per cent. Most importantly, the price of petroleum on the international market is around US$50 a barrel, well below the price at which the Venezuelan government profits from exporting its main product.

It is amazing the Maduro government does not appear to have a plan or programme to deal with the impending disaster. The president’s approval rating is now at 20 per cent and in freefall.

The president requested, and received, decree powers for the entire year ahead, despite his governing party, the United Socialist Party of Venezuela (PSUV), having a large majority in the legislature. Now we shall see how he plans to solve the economic and social problems Venezuela faces.

In this context, the decision by the Obama government to sanction seven officials in the Maduro government for human rights’ violations, however warranted, was extraordinarily clumsy.

The legislation authorising America’s action requires that the country in which the sanctioned individuals live is a threat to US national security. This is patently absurd. But it is the right language to enable Venezuela’s government to scream that the US was about to invade and to state categorically that any opposition to the government was support for US intervention.

Faced with this situation, those democratic countries in Latin America which were critical of Mr Maduro for jailing opposition leaders were forced to state their opposition to US intervention and keep quiet about criticising Mr Maduro.

The public gnashing of teeth has abated for the moment. Mr Maduro continues to have the support of Venezuela’s security forces and has made no further moves to constrain political discussion since the arrest of the mayor of Caracas in December 2014.

The opposition hopes legislative elections will be held before the end of 2015.

The government must find a way to relieve the economic crisis in the next three months. If the price of oil stays below US$60 a barrel, the lack of a viable government response will produce widespread popular discontent and increasing popular demonstrations against the government.

The last round of demonstrations in early 2014 resulted in thousands arrested and dozens of deaths. At that point, the Union of South American Nations (UNASUR) will be forced to act. Let us hope the US keeps out of the trouble.

Related reports:

Challenges facing US and Cuba talks

Oil price crash will challenge Latin America’s major producers

Oil riches mean little in the chaos of Venezuela


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