Venezuela on the Edge: Can the Region Help?

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 Venezuela

Latin American governments need to do more to help Venezuela overcome its worst political and economic crisis in more than a decade.

FEDERICO MERKE, ANDREAS E. FELDMANN, OLIVER DELLA COSTA STUENKEL

June 29, 2016

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Venezuela is being rocked by its worst political and economic crisis in more than a decade.1 A humanitarian crisis is taking shape in a country that has among the largest proven oil reserves in the world. With President Nicolás Maduro having neutralized the opposition-dominated National Assembly elected in December 2015 and decimated the judiciary’s independence, a negotiated, democratic solution to the crisis looks increasingly remote.

Given that Venezuela seems unable to overcome its internal divisions alone, external actors will be vital in influencing how the crisis unfolds. Yet the crisis has erupted at a moment when Latin American governments’ interest and capacity to engage in Venezuela are limited. While the Maduro government has fewer regional allies than his predecessor Hugo Chávez could count on, governments in the region are doing little to defend democratic governance in Venezuela. Despite much pro-democracy rhetoric and some mediation efforts, they seem content to let Venezuela find its own way out of the crisis—whether this means an abrupt collapse of the authoritarian government or a prolongation of its increasingly heavy-handed rule.

Latin American governments need to do more to help Venezuela overcome its impasse. The regional mechanisms established to preserve democratic governance in the Americas have dramatically underperformed in Venezuela. South American governments, such as those in Argentina, Brazil, and Chile, need to adopt a less equivocal position toward the crisis. Field research that we carried out in April in Caracas leads us to the conclusion that existing external efforts to build dialogue and mediation are unlikely to gain traction if they are not accompanied by clearer commitments to defend core democratic norms.

THE EDGE OF THE ABYSS

On May 19, 2016, President Maduro declared a state of emergency in Venezuela and argued that the country was under attack from imperialist forces led by the U.S. Central Intelligence Agency. The political and economic crisis engulfing Venezuela is rapidly deteriorating and pushing the country into an abyss. In what for decades was one of Latin America’s most prosperous countries, a combination of hyperinflation, price controls, capital flight, and falling oil prices have produced an incipient humanitarian emergency. Over the past year, Venezuela’s GDP contracted 8.4 percent while inflation rose to an astonishing 400 percent a year. The budget deficit is running at 14 percent of the country’s GDP, one of the highest levels in the world.

The social consequences of this situation are severe. Poverty levels previously reduced by the Chavista revolution are now being wiped out by hyperinflation. Poverty levels rose from 27 percent of the population in 2013 to 73 percent in 2015.2 Industrial production has largely stopped. The government lacks hard currency to import even milk, eggs, flour, and other basic products. Food shortages are widespread. There is an acute shortage of medicines. A major drought has forced the government to ration energy, crippling the economy even further. Falling budgets and energy shortages have forced the government to ask public employees to work only two days a week.

Violence has spread, particularly in major cities across the country. So far in 2016, 170 major looting incidents have been reported in San Cristóbal, Puerto Ordaz, Maracaibo, Caracas, and elsewhere. Violent crime has grown to epidemic proportions. Venezuela now has the highest homicide rate in the world.3 The Economist ranks Caracas as the most dangerous city in the world.

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Photo credit:Filiberto Rodriguez