Tuesday, January 16, 2018

Venezuela: what comes next?

There is a fast-growing flow of Venezuelans to T&T this year, says Rochelle Nakhid of the Living Water Community, which works closely with international refugees.

It's not just those who apply for formal refugee status. Plenty of other Venezuelans work in bars and restaurants, in retail and on construction sites, with a few in iffy nightclubs.

Small business owners like Venezuelan workers. Some lack language skills, but they work hard and accept low wages. As well they might—most fled desperate conditions in their homeland. They need their jobs.

Most migrants find ways to survive. This economy can still absorb without too much fuss.

Wednesday was the anniversary of Venezuela's first Independence declaration in 1811. Dense-packed crowds on the streets of Caracas and other cities stretched way out of sight, protesting against the regime of Nicolás Maduro, who succeeded Hugo Chávez four years ago.

Seven have been killed in recent protests, and hundreds arrested. Released detainees say they were beaten, subjected to electric shocks or sexual assault, and threatened with reprisals.

There are reasons to protest. A middle-class Venezuelan says it costs US$300 a month to feed his small family with food bought on the parallel market. The minimum wage will now buy around US$40.

Low-income households rely on low-cost state rations—rice, spaghetti, maize and wheat flour, sometimes powdered milk or a frozen chicken. That carb-heavy package usually comes every fortnight, sometimes less often.

The national living conditions survey reports that the average Venezuelan has lost almost 20 pounds in weight in the past year.

The IMF estimates unemployment at 25 per cent, with runaway inflation. Venezuela has squeezed consumer imports to avoid debt default.

Seven dead is small change in a country which suffered perhaps 20,000 to 30,000 murders last year. That's two to three times T&T's per capita murder rate. “There's a killing every night” says a resident of Ciudad Bolivar, a relatively peaceful mid-sized city.

“Half my daughter's friends are in Chile, and five more have their bags packed,” says a businessman.

Those who can, find ways to earn US dollars. Gold and diamonds are sold in Guyana—or leave with travellers en route to Panama or places with easy-going banking rules.

Venezuela is the region's leading hub for cocaine transshipment—and the source for many of T&T's illegal guns. Two nephews of Maduro's wife were held in 2015 on US drug charges, which they firmly deny.

Maduro, meanwhile, found time last week to visit St Vincent and exchange friendly platitudes at a routine meeting of the Organisation of Eastern Caribbean States.

Venezuela's painful crisis has dragged on for years. The current protests started at the end of March. Before that, there were big demonstrations in October last year, when the electoral council blocked a referendum intended to remove Maduro.

International pressure counts for nothing—except perhaps from China, a big trading partner and creditor.

Regime leaders now look stressed. How long can they hold power? Anything from five minutes to five years, says one observer.

What happens next?

The most benign and probably the likeliest scenario is for presidential elections held on time, in October next year. Maduro has support from at most one-quarter of the voters—so that should mean a peaceful transition to a new government. With such a wide margin, fudging the result would be a challenge.

A problem: one of the two best-known opposition leaders, Leopoldo López has been locked up since mass protests in 2014. The other, Henrique Capriles, was two weeks ago banned from politics for 15 years. Conceivably, a split opposition vote with no clear leader could allow a Maduro win.

Next scenario: the government finds some excuse to delay or cancel the election. That would cause big trouble.

The military top ranks mostly love the current regime. They have plenty ways of making money.

Junior officers, lower ranks and conscripts are less happy. Conceivably, we could see a military rebellion from below—a larger-scale version of Desi Bouterse's 1980 Sergeants' Coup in Suriname. So that's scenario three.

Worse again would be scenario four: the current government's thuggish militia and neighbourhood watch committees seize power.

Scenario five sounds fanciful. But one well-informed Venezuelan can imagine the current leadership flying out with cash and gold to a friendly destination—either near at hand or across the world. Other former leaders have done something similar under extreme pressure.

On most of these plays, there's no fast fix to the troubles. The immediate impact could be chaotic—and that could boost the flow to T&T from a speedy trickle to a rushing flood. On the nastiest scenarios, we're in for real trouble.

With the benign outlook, we have at most 18 months to tie up Dragon and Loran-Manatee cross border gas deals before regime change.

And that 1811 anniversary? The short-lived first Venezuelan republic lost its Spanish market for cocoa, and ran into a trade deficit with the US and Britain. The government printed money, unleashing inflation. A 12-year conflict was needed to finish the Independence process. Let's not hope for a repeat.