A Pivotal Moment in Venezuela

In the largest blow to the late Hugo Chavez's Socialist Party since its founding in 1999, it was announced yesterday that Venezuelan voters had handed the country's opposition party a supermajority in the National Assembly. The Democratic Unity coalition will now have the power to name the president of the Legislature, approve or reject the government's budget, and even hold a referendum on the president's leadership, after 16 years of political imprisonments, a hostile Socialist majority, and overall oppression.

The victory is a striking bellwether indicative of the various crises Venezuela currently sees itself in: an economy on the verge of collapse, an impending shortage of food, and a devastatingly failed healthcare system. Former President Chavez's handpicked successor, Nicolas Maduro, has managed to hold on to power since he took office in 2013, but has overseen a country with an increasingly grim forecast virtually since then. With more than 70% of the electorate turning out to vote - a record in recent years - it is clear that the people of Venezuela are fed up and ready for a change.

President Nicolas Maduro with supporters. Courtesy of Yahoo

The question now is whether or not the Democratic Unity will be able to facilitate the change that Venezuelans so desperately need--and the reason they voted with such decisiveness. Venezuela's economy has been in a virtual free fall for months, primarily due to plummeting oil prices. Crude oil - by far Venezuela's most important commodity - has dropped 65% in the past 18 months, sending shudders around the globe but none more apparent than in the South American country. According to the IMF, due to this decrease, Venezuela's economy is expected to contract 10% and 6% in 2015 and 2016 respectively, with inflation over 100% for 2015.

Venezuela's healthcare crisis is arguably more acute. Thousands of citizens do not have access to even the most basic medical supplies and medicines, and in March 2015, the Venezuelan advocacy group Doctors for Health found in a national survey that 44% of operating rooms were not operational and an astounding 94% of labs didn't have the equipment or supplies necessary to be operational. They also found that 60% of basic medical supplies were either partially or wholly unavailable. According to Human Rights Watch, because Venezuela does not have a developed pharmaceutical industry, it relies on imports for most of its medicines, and has in the past several years planned poorly and mismanaged storage of medical supplies and medicines.

The healthcare crisis is only compounded by an increasing lack of food in the country. An August poll found that 30% of Venezuelans were eating just two meals a day, and that 70% had stopped buying basic food products because they were too expensive or unavailable. Like the healthcare crisis, Venezuela's food shortage has triggered protests - some turning violent - throughout the past year, with little in the way of a substantive response from the government.

Waiting on line for food. Courtesy of the Wall Street Journal

However, the Assembly does not have much influence over the economic policy of the country, and therefore, in addressing these crises. That power will remain in the hands of President Maduro, despite talk of new laws passed to spur economic growth, provide pensions for elderly currently without them, and the removal of finance cabinet ministers. President Maduro will be tasked with improving the economy, cutting oil production to stabilize the price, and incentivizing foreign direct investment and small business growth. He will be responsible for heeding both the cries from his citizens but also the recommendations from NGOs and advocacy groups, working to increase pharmaceutical imports while expanding the industry domestically, and resolving the food crisis immediately.

Above all, though, in order to truly reverse the economic malaise, the President and the Assembly will have to work together. The likelihood of that today appears scarce. President Maduro has vowed to fight the opposition with whatever it takes; likewise, the opposition won their election on the message that President Maduro and his party were broken beyond repair. Both must put their differences aside now and govern in a manner that is effective and restores the public's trust. Venezuela is in dire straits; there is no time for political posturing. A successful collaboration between the two will almost guarantee a step in the right direction for the country--something its citizens voted for, and something they are counting on.

Venezuela's Path to Dictatorship (and Economic Collapse)

While the United States grapples with a solution for the military transition next year in Afghanistan, reaching a deal with Iran on their nuclear program, and (still!) managing the fallout from NSA revelations with international implications, Venezuela seems to have gone under the radar or perhaps has simply not been deemed a high enough priority these days. Should it be though? Venezuela is certainly no friend of America’s, and hasn’t been for years – former President Hugo Chavez, who died this past March, was constantly and publicly cold towards the United States.

Nicolas Maduro

However, Venezuela is worth keeping an eye on more than ever today, due to the outspoken aggressor that is President Nicolas Maduro and the state of his economy. It was reported today that the Venezuelan assembly narrowly passed a measure giving Maduro what are known as “decree powers” – that is, enabling Maduro to unilaterally create laws without the oversight of any legislative body. Talk about frightening: the man who has publicly referred to his opponents as “capitalist parasites” and frequently mentions his plan to fight and win the “economic war” now has the unchecked power to do so.

This drastic measure is in response to an existing – and already severe – problem. Venezuela has been experiencing historic inflation lately, at an annual rate of 54%. Along with one of the highest inflation rates in the world, Venezuela has severe shortages of many necessary items, such as toilet paper, and essential cooking supplies such as sugar, oil and milk. Economically speaking, the country is dangerously close to a freefall, where perhaps not even the shock therapies that have been implemented in countries such as Bolivia in the 1980s or Eastern Europe after the Cold War will be enough to mitigate the damage.

Soldiers outside a Daka store

Maduro, however, is not the answer, and nor are his policies. Recently, the Maduro government took over a chain of electronicstores, demanding the stores to sell their products at egregiously low bargain prices. Maduro claimed that these “capitalists” had excessive profit margins too high, and that clearing out their inventory by selling at discounted prices would stimulate the economy. This was before Maduro had been granted “decree power” – imagine what laws he may implement now that he has that power.

Besides the economic impact this could have on the international market, these conditions, sustained in a country long enough, that breed disillusionment among citizens and ultimately, spawn terrorist cells. South America knows all too well the perils of having a dictator-like government and a barely functioning economy: the 1970s and 1980s historically were filled with various terrorist organizations from Bolivia to Peru to Colombia (and even Venezuela) that resulted in millions dead and violent government changes. Today, with more global connectivity than ever before, the threat of terrorist influence in Venezuela should be taken very seriously by the United States. Nicolas Maduro has “decree power” for one year – it will continue to be important to observe the repercussions from the sidelines as he inevitably spins Venezuela’s economy further out of control.

The Aftermath of Chavez: What's In Store for Venezuela?

After battling cancer for over a year, Venezuelan President Hugo Chavez passed away yesterday. President of Venezuela for 14 years, and having just won re-election for another six-year term, Chavez was a charismatic, and often frighteningly influential politician in Latin America. While not necessarily ever on good terms with the U.S., Chavez was a leading figure in South American politics, garnering unwavering support from so many Venezuelans that it was unthinkable he would ever be ousted from his position. Impressive as this was, it was not necessarily a good thing for Venezuela. Chavez dominated politics in Caracas for so long that now the capital is left with a void that will be difficult to fill. Furthermore, many countries around the world are left shaking their heads, unable to fathom what it will be like dealing with a new and, much different, Venezuela.

Chavez and Maduro

The past several months have been particularly rocky for Venezuelan politics: after winning re-election late last year, Chavez was bed-ridden in a hospital in Cuba, leading Venezuela through his Vice President, Nicolas Maduro. As I wrote in January, Chavez was so ill he was unable to attend his inauguration, inciting protests and re-igniting the debate over who should really be leading the country. To the chagrin of the opposition, at the time, the Supreme Court ruled that the President could be absent during inauguration, as long as he was sworn in at a later date.