Can New Elections Save Venezuela?
By Anthony Tipping for Global Risk Insights
The economic crisis in Venezuela has left the country with severe shortages in food, medicine, and other basic goods. Thousands of demonstrators have taken to the streets in the last few weeks, demanding early elections and the resignation of President Nicolas Maduro.
Venezuela’s economic woes have resulted in social disintegration and led Maduro’s government to the brink of collapse. As the socialist government fails to attract foreign investors, and people are starved of the basic essentials to survive, protesters are demanding elections for a new political order.
Cracking down on dissent
As Venezuela plummets deeper into financial misery, opposition to Maduro’s administration threatens to grant the president a crushing descent into political ruin. Julio Borges, head of the Venezuelan National Assembly, composed a series of letters to major international banks, asking the halt of all transactions with the Venezuelan government.
Maduro’s administration is attempting, through Venezuela’s central bank, to exchange gold into dollars. Without financing from international banks, Maduro will struggle to revitalize the economy.
Borges warned that banks should concern themselves with their reputation if they continue pursuing negotiations with Maduro. Borges affirmed that these banks would knowingly be pursuing financial profits with a government recognized as dictatorial by the international community.
Maduro responded by claiming Borges the mastermind behind an attempted coup. The president has assured dissidents a heavy hand of justice for those inciting violence. This promise become particularly evidenced in the government’s crackdown on protests, where 20 people died following the demonstrations of recent weeks.
To justify the attacks on opposition protesters, Maduro declared to Borges, “don’t complain when the law comes for you. Julio Borges, I am telling you ahead of time.”
According to human rights campaigners, the government’s actions resulted in over 1,000 people arrested following the recent bout of protests, with 700 still detained.
Armed bands, or colectivos, have become key enforcers for the Venezuelan president in his bid to quash protests. These groups, armed by the government, used lethal violence to dissuade protesters from demanding elections in Venezuela. The colectivos provide intimidation along with the National Guardsmen, who are ordered to fire at protestors with rubber bullets and water cannons.
The colectivos arose as an influential force in the early days of former President Hugo Chavez, envisioned as social organizations to transform poor neighborhoods. Eventually these groups were handed arms and trained as militia groups, prioritized with a mission to crack down on dissent.
Sitting on oil
The export of oil is Venezuela’s prized commodity and a priority of Maduro’s administration. Because Venezuela lies on top of the richest oil reserves in the world, the country successfully maintained an agreeable relationship with the global capitalist order. However, as the world price of oil has decreased in recent years, the country’s foreign currency reserves plummeted.
State-owned oil company Petróleos de Venezuela, S.A. (PDVSA) is struggling to cope, as it fails to pay bills across the world. In the past, Maduro prioritized debt payment over essential services and goods such as the import of food. Maduro’s aim was to stall foreign creditors from jumping ship and prioritizing the continued investment into PDVSA. The tide has turned in recent months, with PDVSA bonds now valued at close to nothing.
Large oil tankers are currently stuck in Portugal, Turkey, and Curacao, as PDVSA fails to pay debts and struggles to acquire parts for necessary repairs. With PDVSA in crisis, the country is starved of foreign capital.
General Motors (GM) became the latest foreign conglomerate to fall under Maduro’s regime; GM was forced to flee as its assets were seized under a government ruling. With the government’s actions causing turmoil at the international level, the world’s media slowly turned its head and focused on the imploding crisis.
Maduro is under major pressure to concede to the demands of protesters. In the latest development, Maduro called for renewed talks with opposition leaders. The president endorsed the idea of elections for state governors and mayors, but did not mention a vote at the presidential level.
If Maduro allows early presidential elections to go ahead, Venezuela could see its luck radically overturned.
As stated in a recent Financial Times report, with the emergence of a new “civilized” regime, the country would be flooded with new financing from G7 governments, China, and the International Monetary Fund (IMF). If this were to occur, a restructuring of PDVSA would undoubtedly take priority, along with an influx of essential goods and services for the country’s suffering population.