Venezuela's Maduro, Used to Crises, Faces His Toughest One Yet - Press "Enter" to skip to content

Venezuela’s Maduro, Used to Crises, Faces His Toughest One Yet

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CARACAS, Venezuela — Only a month ago, President Nicolás Maduro seemed to be consolidating his autocratic rule. The opposition was fading into irrelevance, international pressure was waning and the country’s devastating economic woes were finally easing, if only a bit.

Then, suddenly, a global pandemic shut down what’s left of the economy, the collapse of global oil prices wiped out Venezuela’s remaining economic lifeline and the United States mounted a determined, new effort to oust Mr. Maduro.

Long a skilled political fighter, and survivor, the Venezuelan leader now confronts one of the most complex crises of a seven-year rule that has been filled with them.

“The regime is in survival mode,” said Michael Penfold, a Caracas-based fellow at the Wilson Center, a research group. “The country is entering into a very fragile equilibrium that’s going to be increasingly difficult to maintain.”

At stake are the lives and livelihoods of millions of people in South America’s poorest nation, who face a seventh consecutive year of economic calamity, a new bout of hyperinflation and the deadly threat of the coronavirus.

Mr. Maduro has had his back to the wall many times before, but he has managed to adapt to multiple rounds of American sanctions and fend off a variety of challenges from within, from coup plots to a drone attack.

The current combination of global forces, however, has thrust his government into uncharted territory, exposing the shallowness of his economic resources and the limits of his international support.

Mr. Maduro’s latest round of troubles began on March 8. On that day, Saudi Arabia and Russia scrapped an agreement to hold back their domestic production, unleashing a price war and plunging the global energy industry into its biggest crisis in decades.

Within days, much of Venezuela’s crude oil, the country’s main export, became unprofitable to extract, causing production to plummet.

The plunge in prices also helped unravel a complex system of trades that had allowed Venezuela to exchange its crude oil for imported fuel, bypassing American sanctions.

Left without the means to import or produce gasoline, Venezuela has come to a near standstill. Drivers line up for days at gas stations, even in the normally privileged capital, Caracas, as helmeted soldiers with automatic weapons guard scarce supplies that are now mostly reserved for officials and emergency workers.

“We’ve never been worse off in our lives,” said Ivan Herrera, a rancher from central Barinas state, who can no longer bring his cattle to market. “We’re paralyzed.”

Angry motorists have clashed with gas station guards and blocked roads in some rural towns. Farmers, having no fuel to tend their fields, have left crops to rot even as about half of Venezuelans don’t get enough to eat.

Almost overnight, Venezuela went from having the world’s cheapest consumer gasoline prices to having among the most expensive — $15 a gallon on the burgeoning black market, more than twice the country’s minimum monthly wage.

The fuel shortages have been compounded by the soured relationship between Mr. Maduro and what had been his main oil partner, Rosneft, Russia’s state-controlled oil company.

Mr. Maduro’s ill-timed decision in February to review the country’s contracts with Rosneft created tensions just as the company was smarting from a U.S. decision to sanction two of its subsidiaries for supporting the Venezuelan president.

As a result, Rosneft said late last month that it was halting operations in Venezuela and selling all of its assets in the country to a company wholly owned by the Russian government.

Rosneft had been trading Venezuelan oil to small refineries in China for gasoline and money. While in theory another Russian company can do the same, it can’t do so immediately in the absence of Rosneft’s sophisticated trading systems — choking off, for now, a source of gasoline and funds for Mr. Maduro’s government.

Mr. Maduro has scrambled to obtain gasoline instead from trusted, insider business people who have helped supply his government with essential products in difficult times in the past.

Such a patchwork provides, at best, temporary relief to Venezuela’s major cities, but does little to address the structural problems causing the shortages, said Asdrúbal Oliveros, head of the Caracas-based economic consultancy Ecoanalítica.

Mr. Oliveros said he expected the Venezuelan economy to shrink 25 percent this year, which, if it proves accurate, would be devastating for a nation that has already seen the biggest peacetime decline of gross domestic output in modern history.

The economic crisis is building as Venezuela confronts the coronavirus epidemic, which health experts say could overwhelm the country’s depleted health care system. Mr. Maduro was among the first Latin American leaders to act against the virus, rolling out a national lockdown on March 15, two days after confirming the first infection in the country.

The lockdown, combined with gasoline shortages and Venezuela’s international isolation, may be slowing the spread of infection domestically, at least for now. By Friday, official figures show Venezuela had 181 cases and nine deaths, significantly fewer than most of its neighbors.

The closed roads, shops and government buildings, however, have worsened economic pain in a country where the vast majority of people have little or no savings.

The government will struggle to maintain social distancing measures long term, said Luis Pedro España, a sociologist at Caracas’s Andrés Bello Catholic University, as Mr. Maduro is forced to choose between risking further spread of the virus or social unrest born of economic catastrophe.

“If this prolongs, I give it 15 days before we see street protests,” he said. “The only thing that this government truly fears is an explosion of widespread social disorder.”

Mr. Maduro has few means to respond to these economic and public health challenges beyond greater repression, economists say. The tenuous uptick in consumption and private exports that was seen last year has been snuffed out by the virus lockdown and global economic downturn.

The loss of oil revenue means the government has been unable to step up the importing of the food that it subsidizes for the country’s poorest. Mr. Maduro plans to distribute stipends of the nearly worthless national currency to six million workers, but economists say that will merely rekindle the country’s hyperinflation. Mr. Oliveros of Ecoanalítica expects inflation to jump to 12,000 percent this year.

Just as Mr. Maduro confronted these sudden economic and public health problems, the Trump administration in March began its most determined effort to topple his government in over a year.

In a rapid succession, the United States charged Mr. Maduro and his inner circle with drug trafficking, announced a major naval antidrug operation near Venezuelan waters and offered the country’s senior officials a place in a transitional government if they would abandon their president.

The United States and most of the West recognize Juan Guaidó, the head of the Venezuelan Parliament, as the country’s interim president. Mr. Guaidó met this year with dozens of world leaders, including President Trump, and won assurances of continued American support, but his movement has struggled to keep up momentum at home, drawing ever-smaller crowds for rallies.

The drug indictments have increased political uncertainty in Venezuela, said Mr. Penfold, the political analyst, by making Mr. Maduro even less likely to cede power through negotiations. The president may also rely more heavily on the armed forces to maintain control as the economy deteriorates, with unpredictable results, he said.

“Everything appears to point to a situation that’s not sustainable,” Mr. Penfold said. “That doesn’t necessarily mean that we’re heading toward a political shift anytime soon.”

Isayen Herrera contributed reporting.


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