President Nicolas Maduro said that Venezuela raised $735 million in early sales of its new “petro” cryptocurrency, launched amid deepening financial and political crises in the country, the Council on Foreign Relations reports:
Maduro said that tax payments, tourist activities, and some oil and gas transactions can be made with petro (Reuters) and that the value of the cryptocurrency, the first ever created by a state, will be tied to oil prices (NYT). ….. Venezuela’s economy has shrunk by a third over the past five years, and the International Monetary Fund predicts an inflation rate of 13,000 percent (FT) for this year.
“Even a new administration would have significant problems stabilizing the economy. The feasibility of a stabilization program essentially depends on the credibility of a government’s promise to keep spending in check,” Francisco Rodriguez writes for Americas Quarterly.
The United States can do little to prevent a downward spiral, but it should take measures to mitigate the political, economic, and humanitarian consequences of a potential mass emigration, says CFR analyst Shannon K. O’Neil.
Severe restrictions on freedom of expression that include censorship and closure of media outlets, assaults and attacks against journalists and criminalization of opinion contrary to the government of Venezuelan President Nicolás Maduro, were documented by an annual report of the Office of the Special Rapporteur for Freedom of expression of the Inter-American Commission on Human Rights (IACHR) released this week.
Maduro’s presidency has given rise to one of the most impressive defenses of democracy in the twenty-first century, but what’s happening in Venezuela is a humanitarian crisis of immense proportions, notes Enrique Krauze, the author of Redeemers: Ideas and Power in Latin America and Editor-in-Chief of the magazine Letras Libres. By May 2017, Venezuela’s minimum monthly wage wasn’t enough to meet even 12 percent of a single person’s basic food needs, he writes for The New York Review of Books:
None of the present crises seemed likely in 2007 and 2008, when I made a number of visits to Venezuela. Caracas was seen as the new Mecca for the European, Latin American, and American left. .. …Despite ever-growing limitations on freedom of expression and the canceling of the license of RCTV (the principal independent radio and television service), some analysts, including the British writer Tariq Ali, kept proclaiming that Venezuela was the most democratic country in Latin America. Since they were indulgent of Cuba, they didn’t mind that Venezuela was drifting toward the authoritarian Cuban model.
The U.S. has been broadly successful in its “attempt to shore up regional support for isolating Venezuela’s autocratic government,” notes analyst Christopher Sabatini (left), a former Latin America program officer at the National Endowment for Democracy. But while Secretary of State Rex Tillerson “may have achieved his basic goal of securing support for tighter sanctions on the Venezuelan government, it was a narrow victory in a region where the United States has broad, varied interests,” he writes for the New York Times:
While a tougher collective response to President Nicolás Maduro’s march to autocracy and the looming state collapse is necessary and long overdue, the United States has a diverse range of interests that go beyond mobilizing action against Venezuela. Battling narcotics trafficking with local partner governments, expanding markets for American businesses, promoting broad-based prosperity, and defending democracy and human rights — not just in Venezuela and Cuba but in other countries like Honduras — are equally important.
The Cubazuela model has perpetuated the crisis, Krauze adds:
For Cuba, which had since 1959 hungered for preferential access to Venezuelan oil, the Chávez connection offered significant economic advantages. At its height in 2013, according to the Cuban-American economist Carmelo Mesa-Lago, Venezuela contributed about 15 percent of Cuba’s GDP—more than the USSR did in the 1980s. About 40,000 Cubans, many of them doctors, were sent to Venezuela and assigned to attend to the poor, part of a widespread program of Chávez’s to import Cuban educational and medical personnel into the country in exchange for oil subsidies.
Critics of this “mission” system pointed to the abandonment of established health institutions (hundreds of hospitals and thousands of mobile clinics), the cost for Venezuela ($6 billion in 2013 alone), and the political nature of the operation, since Chávez received obedience in return for his munificence. By now the missions barely exist, but the Cuban intelligence services remain fully entrenched in Venezuela. The government has ceded the management of the national identification system to Cuban functionaries, as well as the control of businesses, customs, and notary publics.
Venezuela is ripe for a crisis, the likes of which “we have never seen in the Western hemisphere,” analyst Moises Naím told the recent World Economic Forum in Davos:
Naím also pointedly quipped that “one of the perplexities and difficulties of our time is how there is consensus on what to do and an inability to do it”. He thought this applies to a number of situations like climate change, the refugee crisis, and containing war. The demand for such action mounts but the capacity of the world institutions for collective action is either “stagnant or declining,” creating a deficit of action and a glut of victims.
Is there an exit strategy for Venezuela? Krauze asks:
According to [economist Ricardo]Hausmann, the regime needs to immediately allow food and medicine into Venezuela, negotiate a substantial reduction in the country’s huge debt, arrange for an adequate delay in paying off the rest, and with the remaining resources open the gates to imports that might revive the economy. Such an economic shift would have to be accompanied by equally dramatic political changes. Maduro’s government would have to guarantee free and fair elections, liberate political prisoners, and recognize the National Assembly as the only legitimate parliamentary body.
“Maduro is bound to oppose such reforms,” Krauze notes. “But Venezuela has fallen into so deep an abyss that positive moves along these lines would meet with almost universal support from democratic countries around the world.” RTWT