Some signs show that it is Venezuela where the new US policy for Latin America could be tested, and which could become a card in the impending power game between US president Donald Trump and Russian president Vladimir Putin.
Caracas has been blaming the American “Empire” for all its problems for the last couple decades, but it stopped doing so since Mr. Trump won the election. Nicolás Maduro mentioned to the press the “brutal hate campaign” Mr. Trump was subject to, and still hopes for “the best possible political, economic and energy relation” with the US. Mr. Trump will not be “worse than Barack Obama,” said Chancellor Delcy Rodriguez, who seeks the repeal of Obama’s executive order that declared Venezuela “a threat to the United States” and barred entry to the US to several officials who took on protesters in 2014 leaving more than 40 people dead.
Oil, Venezuela’s only economic resource
Mr. Trump’s “America First” applies also to energy, and especially to oil, of which the largest resources in the world lie in Venezuela. The country, however, is exploiting it ever less, even though its economy is 95% dependent on it, because it simply does not have the means to invest in the infrastructure.
In addition, in 2016 oil prices plummeted. The current recovery following the agreement to reduce production between OPEC and non-OPEC countries, including Venezuela, is now at odds with Mr. Trump’s goal of achieving energy self-sufficiency, that is, “drill, baby, drill”. Increasing supply in the oil markets will bring down prices again in a vicious circle that is proving detrimental for Venezuela.
“The US depends on imports from Venezuela and the Gulf,” said Rafael Quiroz Serrano, an oil economist on the radio to En este país, “but it will increase domestic production in any case from 9.6 million barrels per day to 12 million, against the 19 it consumes, if not else to reduce its dependence on not-so-friendly countries.” Taking into account that the next likely head of the State Department will be Rex Tillerson, ex CEO of oil giant Exxon, “it is highly unlikely that the oil price will go back up from the current $40-48 to the $100 a barrel” that Venezuela would need.
It is a short step from that data to the world’s highest inflation. “The government is spending more than it collects, and is injecting money to finance state-owned Petroleos de Venezuela (PDVSA) and other public companies, resorting also to printing money. This puts pressure on prices. If the government kept this model through 2017, inflation could reach 850%,” said taking to Eastonline Carlos Miguel Álvarez, professor at UCAB and senior economist at Ecoanalitica. “If the government instead implemented anti-inflationary policies, the handle could go down to about 350%, that is less than the 525% we reckoned for 2016. At this time, however, we believe the first scenario is more likely.”
A liquidity crisis and even riots ensued following the government’s announcement that the 100 bolivar bill would not be valid anymore, because it was buying ever less. The insult to injury is that for weeks the government did not have the means to pay for the printing of the new 500 bolivar bills. Meanwhile, the basket of basic staples increased by 52 times in five years.
This implies widespread shortages in a nation that does not have dollars to import food or spare parts, whose industry is on its knees, and from which foreign investment is fleeing. Six global companies recently sold all its assets in Venezuela for half their value, Reuters reported.
The final collapse of a “socialist” and already quite isolated country in its “backyard” would not be a huge problem for Donald Trump, who would certainly reap a political advantage from it, perhaps even re-negotiating the terms of the 20% of Venezuelan oil that the US imports and those of the light crude Venezuela has been buying from the hated enemy since 2016.
The Republicans
At his confirmation hearing, Tillerson mentioned the “Venezuela disaster, due largely to Chavez’s and Maduro’s governments incompetence”. His effort would aim at “negotiating a transition to democracy”, while continuing to denounce the anti-democratic practices and political prisoners, and hardening sanctions against those who violate human rights and against drug traffickers”.
Tillerson dropping the gloves could be seen as a conflict of interest, a revenge for Exxon’s in Venezuela against Maduro, who accused him personally of “funding a brutal campaign to destabilize the country”. He could instead resort to putting in the front line the likely new heads of foreign policy for Latin America, Senator Marco Rubio and Congresswoman Ileana Ros-Lehtinen, both very vocal against the Cuban and Venezuelan regimes.
Following a recent AP investigation on officials close to the Venezuelan government, who allegedly profited on food supplies from the United States, Mr. Rubio said that sanctions against those officials “should be one of President Trump’s first actions in office.”
Russia
Mr. Maduro precautionally, you never can tell, is flattering Russian President Vladimir Putin. “I admire him, and believe he is a world leader for peace,” he told the Russian press.
Moscow, while not siding with Mr. Maduro, presumably believed to be weak (only 20% of the population supports him according to Datanalisis), issued in mid-January an official statement on the risk that “actions of anti-government forces in Venezuela are a scenario of a ‘color revolution’.”
Claudio Sandoval, a political science researcher at Georgia State University, said via La Patilla that the Russian unsolicited taking stances (an “unacceptable interference” in the view of the opposition) indicates a concern “about the negative impact that a sudden change of government would have on its interests in Venezuela and in the region.”
Mr. Putin would also be sending out a message to Mr. Trump: “Venezuela belongs in our area of commercial and geopolitical influence, so, United States, do not help the opposition, and keep the ‘dialogue’ open.”
The dialogue
Former presidents José Luis Rodríguez Zapatero, Martín Torrijos and Leonel Fernández, secretary of Unasur Ernesto Samper and Vatican nuncio Monsignor Aldo Giordani proposed in December to act as mediators for a dialogue between government and opposition. The opposition’s conditions to participate in were that the government respected the Congress’ decisions, released political prisoners and set a date for the election of governors whose mandates expired in December.
Mr. Maduro’s government instead halted with gimmicks a referendum that could have removed him from office, maintained a heavy hand over political prisoners, and did not yet set a date for the election of governors. He is now further taking steps to delegitimize the Congress the opposition controls by large majority since December. Though split, the opposition believes that Mr. Maduro’s government is merely taking advantage of the “dialogue” to buy time and just stay in power. It therefore refused to sit to that negotiating table.
While for the vast majority of Venezuelans the day by day is used up standing in lines for basic foods, is made of despair at the lack of medicines and of perpetual anxiety due to world record violence, the nation and its oil may already be a card in the upcoming power game between Mr. Trump and Mr. Putin.
Some signs show that it is Venezuela where the new US policy for Latin America could be tested, and which could become a card in the impending power game between US president Donald Trump and Russian president Vladimir Putin.
