A rough week further complicates Venezuela’s uncertain future

Venezuelan President Nicolas Maduro delivers a speech during a demostration in Caracas on December 15, 2014. Thousands of government supporters took to the streets criticising the new sanctions against Venezuela, which the US Congress has approved after considering the government's treatment of opposition protests earlier this year a violation of human rights.
Venezuelan President Nicolas Maduro delivers a speech during a demostration in Caracas on December 15, 2014. Thousands of government supporters took to the streets criticising the new sanctions against Venezuela, which the US Congress has approved after considering the government's treatment of opposition protests earlier this year a violation of human rights. AFP/Getty Images

Last week was rough for Venezuela. Over the course of 48-hours, the country saw its closest ally and ideological role model, Cuba, cozy up to its biggest enemy, the United States. The following day, Washington slapped Venezuelan officials with sanctions, including freezing assets and denying and revoking visas.

The twin moves created the sensation that Venezuela’s socialist administration is more out of touch and isolated than ever, analysts said. And it’s likely a fitting preamble to what will be a turbulent 2015 as the oil giant has fallen on tough times.

For many, the week was summed up by two images. On Monday, during a rally, President Nicolás Maduro mocked the threat of sanctions, telling his followers that the Yankee Empire could “stick their visas where they have to stick them.”

Two days later, Cuban leader Raúl Castro was on national television announcing the communist island would restore full diplomatic ties with the United States for the first time since 1961.

As opposition leader María Corina Machado tweeted to her followers, “Two days ago Maduro was ordering everyone to burn their visas to the United States. Meanwhile, Raúl Castro was applying for his.”

It’s hard to describe Cuba’s role on the Venezuelan psyche. The late President Hugo Chávez often called Fidel Castro his political “father” and treated him a like doting son.

In addition, Venezuela sends the island 100,000 barrels of fuel a day that Havana pays for in kind by shipping thousands of doctors, and military and political advisers to Venezuela, which only augments the island’s influence.

But as Venezuela struggles with falling oil prices and a deep economic crisis of its own, Havana is well aware that the largesse is at risk.

“Cuba, like the rest of South America, knows that the Venezuelan model isn’t viable,” Miranda Governor and opposition leader Henrique Capriles said in a statement. “The Cuban government knows that it can’t live off the resources of our country anymore because of the economic deterioration.”

And some wonder if Cuba’s step closer to the United States might have a ripple effect in Venezuela, which hasn’t had an ambassador in Washington since 2010.

“Nicolás Maduro has an enormous dilemma,” said Jesus Seguias, a Caracas-based political analyst and pollster with DatinCorp. “How is he going to justify his anti-imperialist politics when his principal ally has turned into an ally of the empire?”

While Maduro mocks the United States and squeezes the private sector with expropriations and draconian price and currency controls, Cuba is “not only extending a bridge but a freeway to the United States,” he said.

“Nicolás Maduro doesn’t have any options but follow Cuba’s path,” Seguias speculated. “Cuba has given them the alert by saying ‘Look, you have to get along with the United States and come to an agreement with the private sector. The state run socialist economy is a failure everywhere.’”

Cuba isn’t exactly embracing U.S. ideals. On Saturday, during his address to the National Assembly, Raúl Castro said the island would remain firmly communist and a steadfast friend to Venezuela. Castro also pledged to defend Maduro against “destabilization” efforts and U.S. “pretensions to impose sanctions on that sister nation.”

Venezuela needs all the friends it can get, as it has become the hemisphere’s poster child for economic dysfunction. It’s saddled with a shrinking economy and skyrocketing inflation of 63.4 percent through August, according to official figures. Sporadic shortages of food and basic goods have led to massive lines that sour the national mood.

Falling crude prices have forced the government to slash its budget by 20 percent and scramble for revenue by selling assets — including, potentially, its Citgo operations in the United States. The budget deficit is also threatening the popular social programs that underpin the administration’s support.

Some 82 percent of the population believes the country is headed in the wrong direction, according to a poll by Datanalisis. And a full 68 percent believe Maduro should step down or face a recall in 2016 — rather than serve his full term until 2019.

Oliver Wack, the senior analyst and team leader of the Andean region for Control Risks, says he’s warning clients to be prepared for more street protests in Venezuela early next year after the holiday season is over, year-end bonuses have been spent and the mood turns surly.

“I think it’s going to be an extremely challenging year,” he said.

And Maduro might have made things tougher by recently announcing that he would dedicate himself full-time in 2015 to “fighting the economic war,” while delegating all other responsibilities to young Vice President Jorge Arreaza, who is married to one of Chávez’s daughters.

Maduro “is getting into an arena from which he cannot emerge victorious,” said Wack, who speculated that forces within Chavismo might be trying to isolate Arreaza from the economic woes so that he remains a viable candidate in the future.

“It will be interesting to see how the relationship between Arreaza and Maduro plays out,” he said. Will Areaza manage to “keep his vest clean of the big stain that will be Maduro’s managing of the economy next year?”

But Maduro’s new job description might also be savvy politics. Venezuela will see National Assembly elections next year where the battered opposition is expected to make gains.

Under the pretext of visiting farms and factories, Maduro will essentially be going on a nationwide campaign tour to drum up support for ruling party candidates, said Alfredo Croes, a Caracas-based analyst with Croes, Gutierrez and Associados.

“His new position will be particularly useful,” he said. “It will provide the perception that the president is giving his undivided attention to the issue [the economy] that’s most important to the country right now.”

Despite ruling-party weakness, the opposition, too, is in disarray, as longtime standard bearers have been sidelined. Former mayor and presidential candidate Leopoldo López is in jail for his role in anti-government protests that rattled the nation in February; María Corina Machado, an opposition legislator, was stripped of her job and is facing charges for an alleged plot to kill Maduro; and Capriles, a two-time presidential candidate, seems out of touch with the national mood.

“The only thing that Venezuela’s opposition can do right now is make fun of Maduro,” Croes said. “That’s all they have the power to do.”

Seguias says the lack of leadership — on both sides of the political spectrum — makes Venezuela volatile.

“When the people don’t have confidence in any of their leaders they invent one,” he said, noting that Chávez’s sudden rise to power in 1999 was a product of just such a crisis.

“This coming year is going to be one of outcomes,” he said, “but they will be unpredictable outcomes.”

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