When Nicolás Maduro begins another six-year term on Thursday, politics in the crisis-stricken country will get even more complicated. On Jan. 4, the Lima Group announced they would only recognize the country’s National Assembly as a legitimately elected body and called for the OAS to follow suit.
“On Jan. 10, the clock starts ticking on a full-fledged accountability crisis in Venezuela,” said Luisa Palacios, the head of Emerging Markets research at Medley Global Advisors.
The group includes the governments of Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Guyana, Honduras, Panama, Paraguay and Peru – but not Mexico. A president that much of the region considers illegitimate could mean that Venezuelans representing the Maduro government won’t be able to enter many countries. Further, financial dealings could be thwarted, accounts in foreign soil frozen, and weapons cooperation suspended.
Americas Quarterly asked Palacios, a member of AQ’s editorial board, about what to expect come Jan. 10.
AQ: What is the significance of the Lima Group’s declaration days before Maduro’s second term begins?
Palacios: A statement that Maduro is no longer the official president may sound just a proclamation, but there is a lot that can happen from that. If there is no longer a legitimate government, what happens to Venezuelan delegations at international organizations? What happens to the Venezuela’s representation at the IMF, the World Bank, the Andean Development Corporation? What will happen to Venezuela’s ambassadors? These are relevant questions. It has been my long-held view that Maduro will face a governability crisis in 2019. It is no secret that Venezuela is experiencing one of the worst economic crises that any country has seen outside of outright war or the breakup of the Soviet Union with no chance of stabilizing the situation. Venezuela has the worst inflation in modern history, and although its economic crisis has not led to political change, the pressure is mounting. Because Maduro cannot contain the Venezuelan crisis inside its borders, the Venezuelan refugee crisis is making political change in Venezuela a national security priority at a regional level.
The declaration of the Lima Group underscores how invested many countries in the region are in finding a solution to the Venezuelan crisis by exerting maximum diplomatic pressure on the Maduro regime. Their statement that the National Assembly is the only elected body they recognize and the suggestion about the legitimacy of the Supreme Court in exile sets the stage for the opposition in Venezuela to start moving in the direction of an institutional transition that many countries could support.
AQ: How do you read the announced actions of the National Assembly with its new leadership?
Palacios: In his inauguration speech, the newly elected speaker of the national assembly, Juan Guaidó from the Popular Will party, laid out a blueprint for a political transition, including naming a transitional committee. There will be more actions taken in coming days and it is not yet clear if the National Assembly will move to appoint an outright parallel government in Venezuela. But some within the opposition see this as the ultimate goal after January 10, given the unique historical moment that could help trigger a crisis of legitimacy that could finally break chavismo and the military.
AQ: What are the options for the Maduro government?
Palacios: To believe that the Maduro government can keep itself in power amidst the legitimacy crisis he is about to face, you also have to believe that he can stabilize either the economic situation, or inflation, or oil production. However, everything that could lead to stabilization is going in the opposite direction. Venezuelan oil exports are at their lowest levels in nearly three decades and, given current oil prices, there will be a significant decline in oil revenues this year. So instead of being able to stabilize the economic situation, the Maduro government will be facing a significant deterioration of the country’s cash flow in 2019 with oil production falling below 1 million barrels a day.
What Venezuela’s severe economic crisis and hyperinflation mean is that Maduro’s capacity to distribute rents is significantly declining and the value of those rents is evaporating. Guaidó in his inaugural speech mentioned something which is also very true: Maduro cannot protect anyone anymore, because the revolution is killing his own. The recent death of Nelson Martinez, former CEO of PDVSA in a Venezuelan prison is a very chilling example for other chavistas, as is the recent defection of a Supreme Court justice. Both were Maduro loyalists.
It’s true that Maduro has lived through other governability crises and he has survived them all. In fact, since 2013 he’s had one every year, but the combination of events in 2019 will be much harder to face given the multiple challenges Maduro will be facing on all possible fronts imaginable.
AQ: What has held Maduro in power despite the deepening of the crisis?
Palacios: The protests in early 2017, which ended with more than 100 people dead and thousands in prison, should have led to breakdown of the chavismo. People were drawing parallels to the Arab Spring and many of us thought the risk of regime change had significantly increased. While the events did lead to significant discontent within the military and defections within chavismo, those were not as substantial as you would have imagined given the circumstances at that time. So what happened?
Looking at the theory of street protests and whether they lead to regime change, one cannot ignore the different outcomes of the Arab Spring, which are useful to draw parallels with Venezuela. The regimes that were able to survive all had a complex and comprehensive security apparatus that were difficult to break. This theory explains why, in Tunisia and Egypt, the military turned to the side of protesters instead of going against them, while in the case of Iran and others the government prevailed. The latter show a complex security apparatus within many agencies that not only serves to repress civilians but also spare the military of having to face the population. These are known as coup-protected or coup-proof regimes.
In Venezuela, where the state and public services are in disarray or destroyed, the one thing that still works is the security apparatus. And the complexity of it looks very much like the description we see in regimes that have been able to survive massive protests that would have led to political change in another country. The Maduro regime has at its service paramilitary forces, secret police, and gangs in addition to the military. The foreign presence within that security apparatus could also explain why political change in Venezuela has taken so long.
AQ: Given what you’ve described, can Venezuela hope for a peaceful transition?
Palacios: The theory of coup-protected regimes in my view explains why political change has not occurred in Venezuela yet, but I still assign a decent probability of political change in Venezuela in 2019 given the set of significant and multiple challenges the Maduro administration is facing. But if there is going to be political change in Venezuela it will happen because there is a break within chavismo. I have always thought that regime change in Venezuela might be a two-stage process with some kind of political change within chavismo before there is a transition towards an opposition government.
