Events in Venezuela in recent weeks suggest that the Maduro regime has improved its position, winning a series of symbolically important contests as divisions in the opposition grow deeper. The ruling party’s unexpected victory in 18 of Venezuela’s 23 states in overdue regional elections, broadly denounced as fraudulent, and its winning of 308 of 335 seats in December municipal elections after key opposition parties boycotted the election, further demoralized and split opposition ranks.
Even before the setbacks of November-December 2017, the opposition had been frustrated over its inability to secure political change through massive and sustained street protests pressure from the international community via the 12-nation Lima Group. Nor was the opposition or international community able to block the election and August 2017 seating of an unconstitutional constituent assembly, which appears poised to rewrite the constitution to provide a legal veneer to the authoritarian state gradually created by Nicholas Maduro and his predecessor Hugo Chavez.
The boycott of the December municipal elections by parts of the opposition has also given Maduro the excuse to exclude from 2018 presidential elections those parties who boycotted municipal elections, eliminating two of Maduro’s chief rivals for the Presidency, Leopoldo Lopez (under house arrest) and Henrique Capriles. Such machinations, if validated by the new Constituent Assembly, leave Maduro as the frontrunner for the 2018 Presidential election, if held. Indeed, even if Maduro lost to an opposition presidential candidate, in theory, the constituent assembly has the self-delegated power to remove the victor.
Despite such appearances, the financial collapse of Venezuela, almost completely dependent on oil revenues to sustain the government’s activities, including the military, and buy off its supporters, continues apace. As of the end of November 2017, both the country and PdVSA were in technical default on hundreds of millions of dollars of bonds and associated interest payments, creating the possibility that international creditors could begin to execute default provisions in that could lead to the seizure of PdVSA assets globally, precipitating a revenue and payments crisis which could finally force the military to move to oust Maduro.
Yet nothing is guaranteed. How Venezuela’s international creditors will treat ambiguous default events, what assets they might seek to attach in international tribunals, and whether PdVSA has insulated itself from such actions by how it has structured its contracts, and by moving its current accounts to China’s CITIC Bank, are all unclear. Similarly, while the majority of people in Maduro’s own government, as well as his Chinese, Russian, and Cuban backers arguably would prefer someone more competent at the helm, it is difficult to judge at what point they will judge that it is less risky to replace him, than to continue to tolerate his economic mismanagement and impulsive statements and actions.
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