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reflections

Feb 16, 2016 | 01:43 GMT

In Venezuela, the President Fights a Two-Front War

(Stratfor)
It can be difficult to separate the important from unimportant on any given day. Reflections mean to do exactly that — by thinking about what happened today, we can consider what might happen tomorrow.

Stratfor has closely monitored Venezuela's deteriorating economy and rising political instability for several years. Such chaos merits observation, which is why an announcement Monday by political faction Marea Socialista that the ruling United Socialist Party of Venezuela (PSUV) is discussing the removal of Venezuelan President Nicolas Maduro was of great interest. Marea Socialista, a small political group in the larger coalition to which the PSUV belongs, has been at odds with the ruling elite for nearly a year. But unidentified sources cited in El Nacional on Monday seemed to confirm the dissident faction's claims and also reported that there are three potential replacements already being considered. Aragua state Gov. Tareck El Aissami, Vice President Aristobulo Isturiz and former Transport and Public Works Minister Haiman El Troudi are the primary candidates, with a fourth option allegedly being former Interior Minister Miguel Rodriguez Torres. 

For months, it has been increasingly clear that the ruling political system is divided. If the reports are accurate, Maduro now faces pressure from two fronts — the opposition in the National Assembly and his own party. Opposition lawmakers are moving forward with a constitutional amendment or referendum to cut Maduro's term short and mandate new elections in December 2016. These threats will likely force the president to make an important decision: He can resist the impeachment efforts against him, or he can negotiate an exit. However, without support from his party and the military, resisting would be risky.

Removing Maduro from power would not solve Venezuela's structural issues. All require major economic adjustments that have steep political costs for whoever is in charge of the country when they happen. But Maduro has so far been reluctant to undertake any measures that would straighten out the economy at the expense of the country's stability. Maduro probably knows that leaving the presidency is a possibility but wants to negotiate an exit rather than contend with messy protests.

Maduro could maintain a political impasse with the legislature for a long time. He could also deal with a slowly mounting economic crisis, as former Venezuelan President Hugo Chavez did during the latter years of his presidency. But the Venezuelan crisis is rapidly becoming a social crisis. Maduro's economic adjustments have focused on sharply cutting imports across the board, spurring rampant inflation that effectively places even basic food items out of the poor's reach. The situation is potentially explosive. With rapid consumer price increases on the black market, endemic shortages of food in public stores, failing public utilities and an intransigent president, the stage is set for a major wave of social unrest that could rival the 1989 Caracazo riots that killed hundreds of people.

This is why the PSUV's turn against Maduro is so important. The stability of Maduro's administration rests on the armed forces, and they will certainly have to deal with unrest if it occurs. Moreover, the civilians and military members in the PSUV may not have a political future in Venezuela if major protests lead to the disorderly collapse of the government. By removing Maduro — either by force or through negotiation — these officials can deflect public anger and buy time.

But even after Maduro's term, Venezuela's immediate future looks bleak. Caracas is trying to renegotiate the terms of Chinese oil-for-loans debt and raise revenue by selling gold from government reserves. If successfully enacted, the measures could push Venezuela to a potential foreign debt default in 2017 or beyond. A new opposition administration, which would be less hostile to foreign investors and domestic businesses, would still have to deal with a social crisis if it took power in the near term.

In the coming years, Venezuela will likely undergo a political transition toward another form of government. It will certainly undergo an economic transition, since the government lacks the funds for unrestrained populism. Venezuela will, for now, be a highly unstable place, and its government will have a long climb out of its crisis.

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