Bello |ı| The endgame in Venezuela

Screen Shot 2016-02-04 at 6.20.21 PMFeb 6th 2016

The country is on the brink of a social explosion that only a negotiated transition can prevent

AT 9.30am on a Thursday six Venezuelans wait for a guided tour of the former military museum that is now the mausoleum of Hugo Chávez, the country’s populist president of 1999-2013. Across the road around 120 people are queuing for food at government-controlled prices from a state-run supermarket. The food queue starts at 3am. Sometimes there’s food and sometimes there isn’t, one would-be shopper says.

In this district of Caracas, once a Chávez stronghold, his aura is fading amid the struggle for daily survival. Long gone are the days when he used a massive oil windfall triumphantly to impose his Bolivarian revolution, a mishmash of indiscriminate subsidies, price and exchange controls, social programmes, expropriations and grand larceny by officials. The collapse in the oil price has exposed the revolution as a monumental swindle.

The government has admitted that in the 12 months to September 2015 the economy contracted by 7.1% and inflation was 141.5%. Even Nicolás Maduro, Chávez’s hapless heir and successor, called these numbers catastrophic. The IMF thinks worse is in store: it reckons inflation will surge to 720% this year and that the economy will shrink by 8%, after contracting by 10% in 2015. The Central Bank is printing money to cover much of a fiscal deficit of around 20% of GDP.

The government has run out of dollars—liquid international reserves have fallen to just $1.5 billion, thinks José Manuel Puente, an economist at IESA, a business school in Caracas. While all oil-producing countries are suffering, Venezuela is almost alone in having made no provision for lower prices.

This spells misery for all but a handful of privileged officials and hangers-on. Real wages fell by 35% last year, calculates Asdrúbal Oliveros, a consultant. According to a survey by a group of universities, 76% of Venezuelans are now poor, up from 55% in 1998. Drugmakers warn that supplies of medicines have fallen to a fifth of their normal level. Many pills are unavailable; patients die as a result. In Caracas food queues at government stores grow longer by the week. Shortages will get even worse in March, worries a food-industry manager. Violent crime is out of control.

Rising discontent brought the opposition victory in an election for the National Assembly in December. Stalemate has followed. Chávez turned the institutions of state—including the Supreme Court and the electoral authority—into appendices of the presidency. The court, packed by the legally dubious naming of 13 new justices by the outgoing assembly, threw out four legislators, depriving the opposition of the two-thirds majority needed to change the constitution. Mr Maduro shows no sign of changing course. Last month he issued an economic emergency decree, rejected by the new assembly, that mainly offered more controls. His government seems paralysed by indecision and infighting.

 

Henry Ramos, the speaker of the assembly, has given the president six months to solve the economic crisis or face removal by constitutional means. On paper these include a recall referendum, an amendment to shorten his six-year term or a constituent assembly, which could rewrite the constitution. In practice, the rigged court and the chavista electoral authority can block or stall all of these. So the first step, says Mr Ramos, is for the new assembly to replace the 13 justices. That, too, would be vetoed by the court.

Stalemate is costly. Violent scuffles in food queues and localised looting are everyday occurrences. We are seconds away from situations that the government can’t control. It’s a very thin line, says Henrique Capriles, a moderate opposition leader who narrowly lost to Mr Maduro in the 2013 presidential election.

Most in the opposition and some chavistas believe a negotiated transition is the only way to prevent a descent into bloodshed. The outlines of such a deal are clear. The regime would concede an amnesty for political prisoners and agree to restore the independence of the judiciary, the electoral authority and other powers. In return the opposition would support essential, but doubtless unpopular, measures to stabilise the economy.

Mr Ramos says that there are some conversations but no formal dialogue. On the street, time is running out. Many in the opposition want Mr Maduro’s resignation as the price for such a deal, and either a fresh election or his replacement by Aristóbulo Istúriz, his new and moderate vice-president. But would Mr Maduro go along? He seems transfixed by the thought that resignation would be a betrayal of Chávez’s legacy. In fact, what remains of chavismo would be better off without him.