The World This Week: Venezuela Hurtles to Total Collapse

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Poverty, inflation, food scarcity, medicine shortages, crime, killings and injuries spiral out of control in Venezuela.

US President Donald Trump, who was once called “The Donald,” is not exactly conventional or predictable. This week, Trump declared that he would be “honored” to meet Kim Jong-un, the dashing dictator of North Korea. Of course, the president would only meet Kim under the “right circumstances” and thinks the young leader is “a pretty smart cookie” for managing to cling on to his saddle despite others wanting to unseat him.

Trump also invited Philippine President Rodrigo Duterte to the White House. Duterte raises hackles in Europe and the US because of his crackdown on drugs, extrajudicial killings and authoritarian tendencies. Of course, there is also the tiny matter of the powerful Philippine leader cozying up to China that worries foreign policy wonks in Washington. Given this backstory, you have to give marks to Trump for being creative in solving the Duterte problem. Presumably, The Donald believes that the warmth of his welcome and deal-making skills might seduce the Philippines back to Uncle Sam’s warm bed.

It remains to be seen if Trump succeeds with Kim or Duterte, but he seems to be picking up Washington’s deal-making tricks. The president signed a $1.2 trillion spending bill that averts government shutdown. Much haggling resulted in this bill and it is merely 1,665 pages long. Both Democrats and Republicans claimed victory and assert that the bill reflected their priorities. Indubitably, they have perused the 1,655 pages to come to their conclusions.

To add the cherry to the cake, Trump and Paul Ryan, the speaker of the House of Representatives, achieved a long overdue win. The House passed a bill abolishing Obamacare and launching Trumpcare. The March 26 edition of The World This Week chronicled how the failure to repeal Obamacare was bad for Trump, worse for Ryan and disastrous for the Grand Old Party (GOP). Now, Trump, Ryan and the GOP can heave a sigh of relief.

Like Dracula, Trumpcare has come back from the dead. The bill is now in the Senate’s court. Although senators will most likely kill the bill, the prospects of Trumpcare is increasing uncertainty in the American health care system. Already, insurance companies, medical providers and common citizens are grappling “with just 9,625 pages” of rules and 7,432 pages of proposed rules. There might just be new set of rules to play by.

Trump is certainly shaking up fusty Washington. Some have hailed the president’s first 100 days in office as historic. Others are horrified by what The Donald has been up to. Glenn Carle, a foreign policy wonk who once served in the Central Intelligence Agency, is one of them. He frets that the arbitrary and authoritarian Trump is turning the US into a bigger version of Venezuela.

Carle might not be entirely right, but Venezuela certainly offers rich lessons about the limitations of populism. This week, mass protests brought the country to a standstill.

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HAUNTED BY HUGO CHÁVEZ

The Partido Socialista Unido de Venezuela (PSUV), or the United Socialist Party of Venezuela, rules the roost in the country. It is led by Nicolás Maduro, successor to the “visible, vocal and controversial” late Hugo Chávez who founded the PSUV. Chávez remains the eternal president and his followers are popularly called Chavistas. The dead Venezuelan leader was populist and socialist. He admired and was an ally of the late Fidel Castro.

Just as Castro attacked Moncada army barracks in 1953, the paratrooper Chávez attempted a coup in 1992. The government of the day had presided over neoliberal policies since 1989 and was rather unpopular. It implemented severe spending cuts proposed by the International Monetary Fund. These cuts caused much hardship and led to mass protests, known as the Caracazo. In response, the Venezuelan government cracked down on protesters with a heavy hand. This gave Chávez his chance to attempt a coup.

Chávez’s coup attempt failed quite spectacularly. Yet it served him well. Poor and disenchanted middle-class Venezuelans fell in love with mestizo Chávez for standing up to the posh white elites of Caracas. As the September 4, 2016, edition of The World This Week pointed out, “the descendants of the conquistadores” in Latin America “sit at the top of the food chain with the most wealth and land.” The “aristocracy of rank, office and wealth” that Simon Bolivar condemned still persists and Latin America continues to be the world’s most unequal region. Therefore, socialism has an enduring appeal and Chávez emerged as the darling of the left once he got out of prison.

In 1999, Chávez became president when Venezuelans turned against their traditional political elite. He had been railing against neoliberal economics of Washington and traveling through Latin America to boost his public image. Plummeting oil prices in the 1990s led to social unrest and allowed Chávez to grab the presidency just as the old order was falling apart. The disenfranchised poor and the disenchanted middle class voted for him in droves.

Chávez proved to be a canny president. He began as a center-left moderate and retained some figures from the previous government. Soon, he began to remove checks and balances. Plan Bolivar 2000, a social welfare program, and Aló Presidente, a Sunday morning radio show, strengthened Chávez’s hold on the public. A few months prior, he had won a referendum and summoned a new constituent assembly. Today, the 1999 constitution still governs Venezuela.

Chávez won 13 electoral victories before voters rejected his new constitution in 2007. Still, he was able to win a 2009 referendum that abolished term limits. Chávez died in 2013 but his legacy still lives on. Even when he was alive, coup plots, mass protests and big strikes were par for the course. Yet Chávez was able to triumph over threats because of tactical retreats, high oil prices and raw charisma. He was the classic caudillo, a Latin American strongman ruling through charm and menace. Dead, Chavismo or “socialism for the 21st century” is losing its appeal but retains a significant following.

Kirk Hawkins offers valuable insights on the essence of Chavismo. It was a movement built around the personality of Chávez that aimed to fundamentally transform society. The mestizo sought to establish a personal relationship with his voters, unmediated by any institutionalized party. As per Hawkins, Chavismo based itself on a Manichean discourse of “the people” versus “the elite” and an “anything goes” attitude amongst its adherents.

In many ways, Chavismo is quite similar to the narrative peddled by populists like Trump and Marine Le Pen. It shares its suspicion of institutions with parties led by lower-caste leaders in India who distrust colonial laws, upper-caste bureaucrats and market forces after suffering centuries of discrimination. The big difference is that Chávez was able to latch on to power and implement his ideas through multiple social programs. He did so through pouring proceeds of oil revenues into “Bolivarian Missions” aimed at expanding access to food, housing, health care and education. Poverty dropped, literacy increased and quality of life improved for poor Venezuelans. Income inequality dropped as well.

Yet not all was well even in the heydays of Chávez. Good old patronage, inefficiency, mismanagement, cronyism and corruption continued to plague Venezuela. Tearing down institutions led to soaring crime, skyrocketing violence, falling productivity and increasing inflation. Chávez founded the PSUV in 2006 to unite the left, give it grassroots heft and prepare the next generation of leaders. Yet the party fostered no tradition of debate, discussion and critical thinking. The PSUV remains a maudlin personality cult. The ruling party has failed to realize that Chavismo suffered from a fundamental problem. As Valentina Perez points out in Harvard Political Review, it was simply not sustainable.

According to the Organization of the Petroleum Exporting Countries (OPEC), Venezuela has the world’s largest “proven crude oil reserves.” Chávez hit the jackpot when he came to office. Oil prices went up from $10 per barrel in 1999 to $126 in 2008. Unlike Norwegian leaders, Chávez did not prove to be a good shepherd of his fortune. He profligately squandered money merrily, subsidizing oil for low-income Londoners and for poor Bostonians shivering in the cold. Chávez forgot that poor countries have to invest wisely. Sending money to rich countries to score empty brownie points is a luxury they can ill afford.

Naturally, the party had to end. By the end of his life, Chávez presided over a country in chaos, with poverty, inflation, shortages, crime and killings spiraling out of control as his Chavista state lost control.

DEMONSTRATIONS, DIVISIONS AND DISTRESS

Maduro, Chávez’s insipid and uninspiring successor, is dealing with chickens of Chavismo that have come home to roost. Maduro won the 2013 election by about 200,000 votes, a majority of less than 1.5%. Henrique Capriles, the defeated opposition candidate, alleged fraud. In any case, the Chavista regime had allowed the opposition virtually no airtime on television. Unsurprisingly, mass protests broke out on the streets.

Since then, protests have never really stopped. The most recent demonstrations were triggered when the not quite independent Supreme Court decided to take over the powers of the opposition-controlled National Assembly on March 29. Outrage erupted at this judicial coup and Maduro appealed to the court to review its ruling “to maintain institutional stability.” The court promptly backtracked but public fury did not subside. Venezuelan authorities have most conveniently banned Capriles from running for office for 15 years.

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With Venezuela in economic free fall, social upheaval and political chaos, the opposition has smelt blood. Incessant protests for more than a month have brought the country to a standstill. Women are marching too. Supporters of the regime have taken to the streets as well. After all, Chavistas still exist in large numbers. The opposition accuses the government of eroding democratic institutions and mismanaging the economy. The government derides the opposition as elitist, exploitative and in the pay of Uncle Sam.

The opposition demands the removal of judges who attempted a coup, release of political prisoners and immediate elections. On May Day, Maduro made a countermove by proposing a new “people’s body” to rewrite the constitution. Julio Borges, the leader of the National Assembly, has denounced Maduro’s proposition as “a scam to deceive the Venezuelan people with a mechanism that is nothing more than a tightening of the coup in Venezuela.”

The Chavista regime has dismantled democratic institutions. Issues are no longer debated in the legislature. Politicians representing different interest groups no longer negotiate with each other. In a racially, socially and economically divided society, polarization has turned extreme. Protests and counter-protests invariably lead to clashes. Violence is the order of the day with many dying and many more suffering injuries. Passions are waxing as trust is waning in a society that is splitting at the seams.

Meanwhile, life in Venezuela is turning nasty, brutish and often short. In 2016, inflation hit 800% and GDP shrank by 18.6%. In 2015, inflation was a comparatively moderate 180.9% and GDP shrank only 5.7%. The government has imposed currency controls and increased minimum wages. They have not worked. Factories sit idle, grocers have no food to sell and hospitals have no medicines. Al Jazeera reports that 74% of Venezuelans have lost 8.7 kilograms in weight over the last year. The country is on the brink of total collapse.

Yet most bizarrely, Maduro is still making bond payments to creditors. In the words of Harvard’s Kenneth Rogoff, Maduro “is so desperate to avoid defaulting on the country’s foreign debt that he is starving his own people, much the way Romanian dictator Nicolae Ceauşescu did in the 1980s.” Furthermore, Venezuela’s “despotic socialist government” is mortgaging “its industrial crown jewels.” It absurdly donated $500,000 to Trump’s inauguration fund. Has Maduro gone mad?

Ricardo Hausmann, another Harvard man and a former Venezuelan minister, provides an interesting answer. He takes the view that “the chaos into which Venezuela has fallen may seem to be beyond belief” but it is, in fact, “a product of belief.” In the late 17th century, witch hunting was a sensible conceptual paradigm or belief system in the land of Harvard and MIT. Maduro believes in Chavismo, a glorious mish mash of liberation theology, Marxism and Bolivarianism. If devious business behavior is responsible for inflation and recession, then the answer is “more regulation, more expropriations, and more managers in jail.”

At the same time, Maduro’s regime has to save face and present to the world an illusion of strength. Hence, it shells out cash to Trump and to creditors, with Venezuelans literally paying the price in pounds of their flesh.

Maduro’s end may be nigh, but deeply-divided Venezuela is destined for distress in the days ahead.

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Donald Trump © The White House

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The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.

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