What Comes After Venezuela’s Collapse?

For months, even years, stories of protests, food shortages and violence have come out of Venezuela. Even before the oil prices plunged into the abyss, the situation was looking dire for the Bolivarian revolution, now, however, tension is rising. It is almost certain the Chavist government will fall, eventually, but what will happen afterwards? (Featured image © Maria Alejandra Mora)

The Problem

The main problem is the dysfunctional economic system that was implemented by Hugo Chavez and inherited by his successor, Nicolas Maduro. Inflation has for the first time in twenty years capped 100% annually. Capital flight has been debilitating the country for years and the government is relying heavily on oil revenue to fund its revolution. However, the current economic system, which was funded by this oil revenue, is broke and Venezuela is in debt. Heavy debt. Currently, the government is selling off gold reserves, pumping oil and hoarding cash to be able to make the next debt payment, and even though repayment is a priority to the government, it simply may not be enough.

The main problem is the dysfunctional economic system that was implemented by Hugo Chavez and inherited by his successor, Nicolas Maduro.

A default is expected to arrive by the end of the year, and this will surely create a political mess in the country. Meanwhile, queues for basic goods are becoming longer. Although producing those goods is not economically viable due to the state’s price regulations, Maduro is nevertheless trying to threaten factory owners into producing. The situation is further destabilized by gang violence and one of the highest murder rates in the world.

Rising Tension

Last year, change was around the corner. The opposition had secured a super majority in parliament, for the first time in almost twenty years and tried to oust Maduro from office, yet the Supreme Court ruled otherwise. At the same time the government claims that everything going wrong is the result of a neoliberal, US-imperialist conspiracy and an economic war waged to undo the revolution. While there is some truth in blaming the elite for withdrawing their capital from the country, the government should not ignore the economic consequences of their policies either. Facing more pressure, Maduro and the United Socialist Party of Venezuela (PSUV) opt for an increasingly stronger rhetoric and even more repression of the opposition, the right and ‘imperial forces’.

Facing more pressure, Maduro and the United Socialist Party of Venezuela (PSUV) opt for an increasingly stronger rhetoric and even more repression of the opposition, the right and ‘imperial forces’.

As for now, the military is still a Chavista stronghold, supporting the revolution and keeping the government in power. But will this remain so when money runs out? The military is a powerful force in Venezuelan politics and could therefore be decisive if it comes to a showdown between government and opposition. Venezuela is planning extra military exercises to counter ‘foreign threats’ and combat imperialism and neo-liberalism. At the same time, the military is increasingly taking to the streets in support of Maduro.

The prestige and alliances that Chavez had built in the region are also dwindling. Cuba has opened up to the US, leftist Argentina and Brazil have fallen (respectively democratically and less democratically) and even leftist superstar ‘Pepe’ Mujica, former leader of Uruguay, has stated that Maduro is ‘as crazy as a goat.’ Only Ecuador and Bolivia seem to remain as allies on the left, even though Ecuador is facing economic difficulties as well. Leftist populism (socialism of the 21st century as they call it) is still powerful in Latin America, although it is receiving some blows.

What comes next?

The fall of Maduro is almost certain. The main questions are when and how? Even if Maduro leaves without any bloodshed, the future still looks bleak. Inflation will be hard to control and foreign debts still need to be paid. China, Venezuela’s main creditor, might be willing to restructure the debt, allowing some room. The poor rely on the subsidized foodstuffs and gasoline to survive, but these are part of the economic problems. As seen in Argentina, the poverty rate rose when Macri implemented more liberal policies and cut subsidies for electricity, transportation, water and gas. Accordingly, his popularity plunged to 51,3% (and it continues to fall).

Let us hope that the deep rootedness of democracy can prevent bloodshed when the future appears not to be as makeable as the opposition claims.

Still, it remains unlikely that the overhaul of the economic system would go as smoothly as the opposition expects. Democratic Unity Roundtable (MUD), the coalition of opposition parties that won the parliamentary elections, demands change and wants to have the economy grow again. Opposing the government and proposing change is very easy when you are in a situation as terrible as Venezuela, but how they aim to achieve this change remains very unclear. Due to the country’s politico-economic entanglement, economic deterioration – under any party – will further destabilize the country, making it almost impossible to control.

Hisham Aidi claimed that the protests are a sign of a mature democratic tradition in Latin America. Legal protests and elections that punish the ruling party as happening in Venezuela do confirm his observations.  Let us hope that Aidi is right and that the deep rootedness of democracy can prevent bloodshed when the future appears not to be as makeable as the opposition claims.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of International Perspective. Please be advised that all works found on International Perspective are protected under copyright, more information in the Terms of Use.

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By | 2017-01-14T14:34:01+00:00 June 5th, 2016|Categories: Impression|Tags: , , |0 Comments

About the Author:

Ruben Peeters
Ruben is a Belgian student of Socio-Economic History. He focuses on geopolitics, history, economy and trade. Ruben also has a passion for Ecuador, Singapore and the US.

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