Nobody can say that Venezuelans have taken their chaotic government lying down. They have protested time and again against first Hugo Chávez and later his hand-picked successor Nicolás Maduro. The difference this time is in who is protesting, which is to say most people.
That wasn’t the case earlier. Poor and working-class Venezuelans loved Chávez and his populist economic ways, which put him over the top electorally and kept him there. Back then, the opposition was the upper, middle and business classes who lost out under Chávez.
So what’s the difference today? Maduro won re-election to a second term in 2018 amid an opposition boycott and allegations of vote rigging. This spurred an international backlash, undermining Maduro’s legitimacy. So Maduro, who also has not addressed Venezuela’s steep slide, opened the door wider to discontent.
The people whom the so-called Bolivarian Revolution was meant to benefit are starving and fleeing the country – 2 million and counting, including 1 million spilling over to bordering Colombia – because the Venezuelan government is incredibly mismanaged and inept, and has squandered the country’s vast wealth.
With no money to placate voters, everybody is unhappy and eager to move on from Chávez’s failed political experiment for the sake of their sanity, their children, their stomachs, their pockets – in short, the future of their country. Bravo for them.
The United States, the European Parliament and at least two dozen foreign powers have recognized the self-proclaimed new leader Juan Guaidó. Other countries may follow. International condemnation is a big shove against Maduro, who despite his hungry compatriots is looking a bit ripe or overfed.
But the current crisis also has a huge financial component that is not being adequately reported. Follow the bouncing ball:
Venezuela owns the world’s largest oil reserves, larger than that of Saudi Arabia. Chávez’s revolution was financed with the country’s oil money. However, Venezuela’s oil output has fallen to about one third of what it was in Chávez’s era, meaning there’s a lot less money to splurge on populist programs. (Unfortunately for Venezuela, it cannot control the price of oil.)
About That Oil
Guaidó wants to privatize the country’s state-owned oil sector, generating a fresh flow of cash for his interim government. Last week, the United States froze Venezuela’s oil assets held in this country and sanctioned its oil company Petróleos de Venezuela S.A., known as PdVSA. President Trump would like to turn over some of the seized cash to Guaidó, undercutting Maduro.
Meanwhile, watch what is happening with Citgo Petroleum Corp., which is majority-owned by Venezuela but happens to be one of the U.S.’s largest oil refiners and this country’s sixth largest gas station operator. It is sitting on $1 billion in cash. The Venezuela-vs.-U.S. showdown may force Citgo to go bankrupt.
As happened with Puerto Rico, private bondholders want their money, even if it means a Citgo bankruptcy. The Wall Street Journal reported that Maduro loyalists on Citgo’s board “may be referred to the Treasury Department for further scrutiny” of their private assets. Oh-oh. The taxman cometh.
The hard line against Venezuela is a win-win for Republicans, who sniff an opportunity to soften its anti-immigrant stance and push Florida’s 220,000-plus Venezuelans to the right. Look for the administration to declare temporary protective status or TPS for Venezuelans, although it has taken it away from nearly everyone else, including Central Americans.
Venezuela is a horrible humanitarian crisis – its approximately 33 million people have no money, no food, few medical supplies and an 80,000 percent inflation rate. Yes, 80,000 percent in 2018, further impoverishing the country.
But the Venezuelan crisis also has unleashed political opportunities and a financial feeding frenzy that points to a revolution that will be monetized.
˜˜María Padilla, Editor