Friday, May 24, 2019

The Erickson Report - Page 3: A Deeper Look: Venezuela

A Deeper Look: Venezuela

What happened to Venezuela as a news story?

It was all over news in April, you couldn’t turn your head without bumping into a Venezuela story. Ever since January we had breathless media reports of building tensions, we had reports of massive demonstrations by opponents of the government, all against a backdrop of - as our media would have it - a dictator desperately trying to cling to power against a rising tide of internal resistance and international condemnation. How long can he hold out, he’s going to fall, it’s got to happen, any day now, any day now, any day now!

Now, there’s still news, but by comparison, it’s crickets. So what happened?

The two leading characters in this are Nicolás Maduro, winner of the last election for president of Venezuela, and Juan Guaido, head of the National Assembly, who have been metaphorically butting heads for four months.

The roots go back earlier - of course you can always go back earlier, claiming ever-earlier roots of most any conflict, but the immediate roots date to 1999. That was when Hugo Chavez was elected president of Venezuela as the face of a movement to raise the poor: to raise their living standards and to raise their voices.

Chavez launched big poverty-reduction programs that had measurable impacts:
- between 2003 and 2009, the poverty rate was cut by more than half
- between 2001 and 2007, illiteracy was cut by nearly a third
- government programs brought food, housing, and health care to the needy

Nicolás Maduro
But during his time in office, he made three serious mistakes, all of which bear on the present moment:

For one, his anti-poverty measures were paid for with oil income, which accounts for 98% of the country’s foreign earnings, which meant they depended on oil prices remaining high.

Notice on Graph 1, which displays the world price for oil, that I’ve marked when Chavez came into office. It was a time of increasing oil prices. Not in an unbroken string, but overall, yes, clearly increasing. Prices continued to generally climb - until around 2008-2009 when they crashed to less than a third of what they had been, saddling Venezuela with debts it couldn’t pay and sending the country into a deep recession from which it has still not recovered.

Juan Guaido
Second, he didn’t account for - or at least didn't count enough for how much international finance and transnational corporations would hate him and how much they would hate what he was trying to do for the poor, how much they would try to smear him, how much they would try to undermine the economy. When he nationalized some parts of the oil industry, the reaction among those self-labeled Masters of the Universe was to declare Venezuela unsafe for investment.

Even though unless they were in certain segments of the oil industry they had no reason to be concerned, even though foreign investment was still welcome, even though private enterprise continued across the economy, still Venezuela was declared too risky for investment, thus denying it needed foreign capital. That hatred, including among his domestic elites, was enough to see an attempted (and US-endorsed) coup in 2002.

Hugo Chavez
They couldn’t stand what he was trying to do and they especially couldn’t stand that despite their best efforts, he kept winning elections that even his opponents were forced to admit were free and fair.

Before Chavez died in office in 2013, he had named Nicolás Maduro as his preferred successor. Maduro was elected in April 2013 but by the thin margin of 1.6 percentage points.

During his first term in office, the economy, still suffering from the effects of the price crash of 2008-2009, sank even further when oil prices hit another decline, leaving the people increasingly struggling and Maduro increasingly unpopular.

Even so, Maduro was re-elected to a second six-year term in May 2018, but in an election that could politely be called controversial. In fact, there is good reason to regard that election as at best unfair if not illegitimate. Most opposition parties boycotted it because the most popular opposition parties were barred from running, leading to charges the poll would be neither free nor fair. As a result, Maduro's re-election was not recognized by the National Assembly, which is controlled by the opposition.

Which relates to Chavez’s third failing: He failed to build a movement that would survive him. The movement was Chavez, Chavez was the movement. When he died, he left behind him a party structure, but there was no movement beyond that structure, no broad base of organized support to call on, to not only hold that party up, but to hold it to point. Yes, Chavez could be authoritarian - although he was never near the incipient dictator much of the media here would have him be - but he could be authoritarian but at least it could be said of him that it was in service to that idea of lifting the poor.

For Maduro, being authoritarian - and he most certainly is that and more than Chavez ever was - is in service to idea of staying in power.

On January 10 of this year, Maduro was inaugurated into his second term. Almost immediately, the National Assembly held itself to be the only legitimate governing body and Guaido, as head of the Assembly, declared himself the legitimate "acting" president. The US recognized Guaido, and the players were all in place.

Graph 1
The US got others to go along with its endorsement of Guaido, intentionally setting the conflict up as an ideological proxy war between the hideous phantasm specter of "socialism" as pesented by the US foreign policy apparatus on the one hand and fields of flowers "democracy" on the other. The crisis in Venezuela deepened and sharpened complete with the US repeatedly dangling the possibility of sending in the Marines.

Across this time, the US kept claiming its only interest was the welfare of the people of Venezuela, but that was a lie. Already reeling from a the deep recession caused by 2008-2009 the collapse of oil prices, Venezuela has been hit with two rounds of severe economic sanctions from the US.

The first round, in August 2017, prohibited the Venezuelan government from borrowing in US financial markets, making it impossible for the country to restructure foreign debt, which made it impossible to obtain more financing which made it impossible to recover from the recession and caused oil production to crash.

Look Graph 2. It compares domestic oil production in Venezuela and Colombia, with Venezuela’s in the dark blue. I want you to notice the vertical dashed line closer to me. It marks the imposition of the 2017 sanctions. Notice what happens to Venezuela’s production in their wake. The result was driving the economy from a state of very high inflation to one of hyperinflation, with all the attendant effects of the population.

The second set of sanctions, laid down in January of this year, prohibited the sale of oil from Venezuela’s national oil company in the US, which has previously been the customer for more than a third of Venezuela’s oil, and also froze nearly $18 billion in Venezuelan assets.

Moreover, the US has pressured other countries not to buy the oil that previously had been imported by the US and has instructed oil trading houses and refiners around the world to further cut dealings with Venezuela or face sanctions themselves, even if the trades are not prohibited by published US sanctions. Put another way, the US has declared to the world “do not deal in, do not refine, do not even transport Venezuelan oil or we will come for you.”

In a report issued in April, economists Mark Weisbrot and Jeffrey Sachs calculate that US sanctions have resulted in the death of 40,000 Venezuelan civilians between 2017 and 2018, with an additional 300,000 at risk “because of lack of access to medicines or treatment” and another four million with diabetes and hypertension who cannot access needed medicine. They say the numbers “virtually guarantee that the current sanctions are a death sentence for tens of thousands of Venezuelans.”

Some have challenged those figures, claiming they are inflated - but significantly, the challengers have not disputed that fact that the sanctions have resulted in Venezuelan deaths, they only dispute how many.

The US is literally killing thousands of Venezuelans to oust Maduro - and remember, these sanctions started in August 2017 - nearly a full year before the suspicious elections that are supposedly the basis for declaring Guaido the president.

Graph 2
The lie about the welfare of the people also lead to that staged “relief caravan” at the border with Colombia, with the US bringing trucks of “aid” to the starving, desperate people of Venezuela because the US government was just so moved by their need, aid they knew would be refused, aid that was intended to be refused, intended to be refused as part of a cynical political carnival so transparent that international aid organizations refused to take part. In other words, the US was oh so graciously offering some minimal help in order to relieve suffering for which it itself was significantly responsible. Meanwhile, the response of the Maduro government was in effect “don’t send aid, unfreeze our assets and we’ll buy what we need.”

And so we stumbled forward until April 30 when Juan Guaido, apparently believing that the venom and froth coming from such as John Bolton meant the US really was ready to invade on his behalf, declared “the final phase” and “the time is now” for an uprising, declared it in a video designed to make his supporters believe the military had switched sides and he may have already seized a military base near the capital of Caracas.

It turned out that the two dozen or so soldiers appearing with him on the video were all he had and his call for an uprising quickly fizzled, as did his call the next day for a general strike. The opposition could and still did generate mass protests, but they were neither large enough nor, more importantly, sustained enough to force change. Instead of being forced out, Maduro seemed even more secure.

This is not to say things are resolved or that it’s all over - although it is, interestingly and revealingly, that point at which our mainstream media lost interest and Venezuela disappeared from the front page, to be replaced by the latest shiny penny.

But let it be known that there are clear signs that there is more to be told about Venezuela and the opposition might not be reduced to issuing defiant proclamations, our media to the contrary.

For one, Guaido is still dreaming of US military support. On May 5 he told the BBC that he was considering asking the US to launch a military intervention and a few days later he asked for a meeting with the US military for “strategic and operational planning” and said he "welcomes the support of the United States and confirms our government's willingness to begin discussions regarding the cooperation that has been offered." In response, a representative of the US Southern Command said “We are currently following up with” Guaido’s representative in the US, which could mean he's not the only one still thinking about it.

For another, there are signs that Maduro may be bending. On May 13, Venezuela lifted foreign exchange controls on banks for the first time in 16 years. Observers were skeptical that it will do much to lift the economy, but it is a shift.

There was also a report that Maduro was inviting a range of local officials to meet with him and suggest changes in his policies, which could mean he is feeling confident in his position but could also mean he feels the need to look flexible in order to deflect some of the pressure.

And finally, there are multiple reports that representatives of both sides have traveled to Norway for exploratory talks on resolving the crisis. Members of the National Assembly confirmed the reports on background and while Maduro has not directly commented, he did say May 15 that Minister Jorge Rodríguez was on a "very important" mission outside the country.

And finally, on something else that may - emphasize may - help to move things toward a resolution, it develops that the US is unlikely to grant a request from the Venezuelan opposition for an executive order protecting the nation’s assets from creditors. That means Guaido will need to make a critical bond payment by the end of this month to ensure that investors don’t try to seize Citgo, which is owned by the Venezuelan national oil company and was put up as collateral on the note. Supposedly this reluctance is because President Tweetie-pie doesn’t want to get too involved in the opposition’s economic agenda, but in reality it means that the US will not shield Guaido’s administration from the banks - and Juan Guaido may just gotten his first lesson in whose interests he is truly supposed to act.

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