VENEZUELA - Government Stability

7 March 2016 12:31 EST
> >
> > VENEZUELA - Government Stability
> >
> > Short-term trajectory: NEGATIVE    Long-term
> > trajectory: NEGATIVE
> >
> >
> >
> > Maduro’s ability to survive 2016 will depend on the
> > extent of social unrest
> >
> >  
> >
> > •    The government will use the Supreme
> > Court and Electoral Council to try to obstruct opposition
> > efforts to force regime change this year, because chavismo
> > can replace Maduro with his vice president in 2017 without
> > calling new elections.
> >
> >
> >
> > •    However, a surge of social unrest in
> > 2016 would persuade key players to negotiate an exit
> > strategy, forcing a disorderly political transition.
> >
> >
> >
> > •    The scale of the necessary economic
> > adjustment and associated political costs will threaten
> > political stability after a transition, as well.
> >

> >
> > Government will impede constitutional paths to regime
> > change
> >
> >
> >
> > The MUD opposition coalition is pursuing multiple
> > strategies to force regime change this year, including a
> > constitutional amendment to shorten the president’s term
> > (which would then go to a popular vote), a recall referendum
> > effort that can begin in April,
> >  and pressing for Maduro’s resignation. However, the
> > government will use its control of the Supreme Court and the
> > National Electoral Council to obstruct any constitutional
> > path to regime change this year since beginning in 2017, a
> > successful recall vote (or
> >  the president’s resignation) would result in the vice
> > president finishing Maduro’s term.
> >
> >
> >
> > The TSJ will quickly strike down a constitutional
> > amendment to shorten presidential terms and prevent it from
> > going to a popular vote. Likewise, the CNE and TSJ can
> > prevent a recall vote from happening by dragging their feet
> > in validating signatures and/or
> >  disqualifying signatures, a tactic employed during the
> > 2003-2004 effort to recall Chavez (in that instance, the CNE
> > was able to delay the recall vote for a year). The
> > opposition has said that it will change the law governing
> > referendums so as to prevent such
> >  tactics, but the government will probably challenge any
> > efforts to do so. Even if the government were to play by the
> > rules, a recall process would take around five months so the
> > government can probably find ways to delay a recall vote
> > until 2017 relatively
> >  easily.
> >
> >
> >
> >
> >
> > The opposition’s campaigns around regime change will
> > therefore serve primarily to ratchet up political pressure
> > on the government and look for space for some sort of
> > negotiated exit. However, chavismo will continue to back
> > Maduro through 2016. Despite
> >  the country’s mounting problems, Maduro continues to
> > represent chavismo’s most stable equilibrium, since for
> > now, he is the only figure who can guarantee that chavistas
> > remain in power, continue to enjoy rent-seeking activities,
> > and stay out of jail. Even
> >  if figures within chavismo are frustrated with Maduro,
> > their incentives are aligned around the need to make it to
> > 2017 at which point they can orchestrate a regime change
> > from within since there is no obvious candidate who could
> > win fresh elections. This,
> >  in turn, means that even more moderate figures within
> > chavismo have little incentive to negotiate some sort of
> > pact with the opposition.
> >
> >
> >
> > Maduro’s ability to hang on through 2016 is
> > contingent on social dynamics
> >
> >
> >
> > Because the political system does not have a way of
> > resolving the current crisis, Maduro’s ability to remain
> > in power through 2016 will be dependent on managing
> > increasingly difficult social dynamics. In order for
> > chavistas to negotiate an exit strategy
> >  before 2017, they will have to see clear evidence that
> > Maduro can no longer provide them with the privileges that
> > they currently enjoy, a signal that would have to come from
> > the streets. So far, major protests have been limited to the
> > opposition and have therefore
> >  not represented a material threat to chavismo’s ability
> > to maintain power. However, should chavistas join street
> > protests and call for Maduro’s resignation, it would
> > likely change certain group’s political calculations
> > relatively quickly.
> >
> >
> >
> > This includes the military, which will be key in any
> > transition. The military is a black box and is difficult to
> > understand but it does seem to be a heterogeneous body with
> > diverse preferences. The National Guard and National Militia
> > have consistently
> >  proven willing to exert force on the population to defend
> > the government. However, while the traditional armed forces
> > may be willing to use some repression against the
> > population, they would likely be reluctant to employ
> > wide-spread violence against the population
> >  at large. If protests are sufficiently large that the
> > government cannot rely exclusively on the National Guard and
> > needs to call in other sectors of the armed forces to
> > maintain public order, it would likely cause senior
> > officials in the military to come to
> >  the table and look for a negotiated solution. While some
> > 900 generals have been promoted over the past five years,
> > our understanding is that there are around 30-40 senior
> > officials and commanders who will be key in any
> > transition.
> >
> >
> >
> > Conditions are ripe for social explosion
> >
> >
> >
> > Predicting the timing and nature of a catalyst for a
> > more acute social crisis is extremely difficult (by all
> > accounts it should have already occurred). However, social
> > dynamics are already very tense and are ripe for broader
> > social unrest, for several
> >  reasons. First, December’s elections helped to anchor
> > expectations over the course of 2015, as voters had an
> > official channel through which to voice their discontent.
> > However, with the government and opposition now locked in a
> > political stalemate, voters will
> >  quickly grow frustrated as they realize that their vote had
> > no impact on the worsening economy and their personal
> > well-being, with the streets offering the only viable
> > channel to vocalize their discontent.
> >
> >
> >
> > Secondly, economic conditions will become more acute
> > in 2016 as the steep drop in oil income forces the
> > government to scale back imports even further (following a
> > 20% contraction in 2015). So far, Venezuelans have been able
> > to find creative means to feed
> >  their families (and even profit off of the lines and
> > arbitrage opportunities). However, more acute scarcity and
> > an increase in inflation stemming from the
> > recent/forthcoming devaluation will further erode
> > Venezuelans’ real wages and make it more difficult
> >  to put food on the table (voters consistently list goods
> > scarcity and inflation as their top concerns). Incidents of
> > looting and violence in lines at stores are becoming more
> > frequent, while last week saw a protest related to
> > healthcare, another area where
> >  shortages are particularly sensitive.
> >
> >
> >
> > Finally, the government is increasingly unable to
> > provide basic public services, with power outages and water
> > rationing are becoming more frequent even in areas that
> > previously been shielded from shortages, including Caracas.
> > While the catalyst for broader
> >  mobilizations will not necessarily be linear, all of these
> > problems suggest that the risk of broader unrest is
> > significant.
> >
> >
> >
> > Any transition would be disorderly
> >
> >
> >
> > Because the catalyst for regime change will come from
> > non-institutional channels, any transition in 2016 will
> > likely be disorderly. Negotiating an exit strategy will be
> > complicated by the fact that the country’s main actors are
> > heterogeneous groups with
> >  diverse preferences. Chavismo is a loose movement comprised
> > of different factions that would likely struggle to remain a
> > unified in the event of a political crisis. The opposition
> > is more unified following December’s legislative elections
> > but there are still
> >  important divisions within the MUD coalition including four
> > separate wings that have distinct interests, as well as
> > multiple figures that would want to be the candidate in the
> > event of new elections. Finally, different factions of the
> > military hierarchy may
> >  have different preferences.
> >
> >
> >
> > Thus negotiating a pact will not necessarily be a
> > straight forward process. It’s possible that different
> > groups within the military would initially side with
> > different factions within the opposition or chavismo.
> > However, incidents of political violence
> >  in the country have historically been short-lived, due in
> > part to the military’s limited appetite for repression. As
> > such, we would expect uncertainty to be resolved in a matter
> > of several weeks or a couple months, rather than a prolonged
> > period of violent
> >  uncertainty. Once it becomes clear which political figures
> > will come out on top, a significant portion of the military
> > – as well as more moderate actors within chavismo—would
> > likely look to strike a deal.
> >
> >
> >
> > Any sort of negotiated pact would necessarily have to
> > establish a path for new elections. While chavismo
> > frequently takes liberties in interpreting the constitution,
> > there is limited public appetite for overriding democratic
> > processes altogether, particularly
> >  elections. Thus any sort of eventual deal would have to set
> > forth a clear timeline for elections, even if it includes an
> > interim government.
> >
> >
> >
> > 2017 transition will also be bumpy
> >
> >
> >
> > Even if the government is able to withstand calls for
> > Maduro’s resignation and avoid a recall vote in 2016,
> > regime change is still inevitable by early 2017. At that
> > point, chavismo will likely look to replace Maduro with new
> > leadership and blame him for
> >  the country’s problems. Polls suggest that voters
> > principally blame Maduro for the country’s problems over
> > his cabinet, the party, or the policy framework. There is
> > some question as to whether Maduro’s fourth year begins in
> > October, January, or April, since
> >  he completed Chavez’s term that began in October 2012.
> > However, the TSJ will use whatever interpretation is
> > politically convenient for them.
> >
> >
> >
> > In this scenario, the government could undergo a
> > policy correction with an eye to improving the PSUV’s
> > chances in the 2019 elections. However, the latter would
> > entail a high degree of consensus within chavismo regarding
> > new leadership and the best course
> >  of action, which has eluded the government since Chavez
> > passed, due in large part to deep divisions within the
> > movement and the lack of alternative leadership. Staying
> > unified next year will be somewhat easier if political
> > survival depends on it, but economic
> >  conditions will be extremely complicated in the wake of a
> > likely default in the fourth quarter of 2016 which will
> > complicate the government’s ability to secure financing,
> > import goods, and export oil, among other
> > challenges.
> >
> >
> >
> > Any transition will also be complicated by the scale
> > of the necessary economic adjustment and the associated
> > political costs. Dismantling current exchange, price, and
> > capital controls will temporarily lead to an inflationary
> > shock and strong contraction,
> >  along with massive capital flight, all of which could also
> > be destabilizing. This means that the path to economic
> > recovery will be difficult and that even after a transition,
> > political stability is not necessarily guaranteed.
> >

> >
> > Director, Latin America
> >
> > Venezuela, Central America, Caribbean
> >
>
> >
> > Researcher, Latin America
> >