In the aftermath of Venezuela's right-wing US-backed opposition securing its electoral win over President Nicolas Maduro's United Socialist Party of Venezuela (PSUV) in the December 6 National Assembly elections, the South American country is heading for two confrontations, each reinforcing the other — a political and an economic one. The future is very uncertain.
After the opposition's win — only its second national electoral victory since late president Hugo Chavez was elected in 1998 — it seems to be more determined than ever to steer towards an outright confrontation with Maduro. The goal is to destabilise the government as much as possible, with the aim of achieving the socialist leader's ouster before the end of the year.
Supreme Court stand-off
New National Assembly president Henry Ramos Allup said that his aim is to have a plan in place for the president's ouster within the first six months of next year. Ramos Allup furthered this confrontation January 6, when he swore in three opposition members as representatives, whose election the Supreme Court had previously put on hold due to electoral irregularities.
On January 11, the Supreme Court declared that the National Assembly president had acted in defiance of the court. It ruled that this means from now on, all laws that the Assembly passes are null and void, since it had incorporated members into its body that should not be there.
The political confrontation between the legislature and the executive is thus programmed. The next conflict will be about the amnesty law. The opposition intends to use such a law to free all so-called political prisoners. That is, all opposition figures who have been involved in violent protest of one kind or another, many of whom have been held responsible for deaths of innocent bystanders.
Ramos Allup already warned Maduro that if he and the Supreme Court do not implement the amnesty law, he will begin removing ministers from Maduro's cabinet: “Whether or not he accepts [the amnesty law] will not matter, to which we will say, 'We do not accept his naming of ministers.'”
The options for the new opposition-dominated National Assembly to get rid of Maduro are several. It can remove ministers and the vice-president — though this could lead to new National Assembly elections if the vice-president is removed three times in a row.
It can also remove the heads of other branches of government, such as the Supreme Court, the attorney general, or the National Electoral Council (with prior approval from either the Supreme Court or the attorney general), amend or reform the constitution (which then has to be submitted to a referendum), or call for a constitutional assembly (followed by a referendum).
Also, there is a lot of speculation the opposition might try to organise a recall referendum against Maduro, but doing so would require the collection of 20% of registered voters' signatures, which amounts to more than 3.8 million signatures. This would be a difficult undertaking.
In comparison, when the opposition organised its failed recall referendum against Chavez in 2004, it had to collect only 2.5 million signatures because the electorate was substantially smaller.
Aside from the project to remove Maduro and give amnesty to its law-breaking supporters, the oppositional Assembly also plans to introduce a number of laws that could undermine the Maduro presidency.
A populist measure that the opposition has wanted to pass for a long time is to give ownership titles to the beneficiaries of the government's housing mission. Over the past five years the government has built a million public homes.
It has essentially leased these homes to families in perpetuity, but without giving them a title that can be bought and sold. The reasoning is to avoid the development of a speculative housing market of homes built with public funds. The opposition is betting that most public housing beneficiaries would prefer a saleable ownership title, so that they can sell the home and possibly make a profit.
Another law that would probably get the president into trouble is a rumoured project to dollarise the economy. It is obvious to everyone in Venezuela that the current economic situation of high inflation, frequent shortages of basic goods, long lines at supermarkets and a huge black market for price-controlled products, is not sustainable.
One “solution” to these problems that some opposition leaders have favoured is to simply get rid of the local currency, the bolivar, and base the entire economy on US dollars, just as Ecuador did in 2001. Aside from undermining the country's economic sovereignty, such a move would also almost definitely mean major painful displacements for the economy, leading to higher inequality and unemployment.
No doubt the opposition would then try to blame Maduro, but it is possible of course that they themselves would end up carrying a large part of the blame. This is why the opposition will enter into this project neither unambiguously nor unanimously.
Other major projects on the opposition docket include the repeal of a wide variety of progressive laws passed during the Chavez and Maduro presidencies, beginning with undoing land reform, re-privatisating key industries and dismantling price controls, among other things.
Finally, the opposition has also announced that it will convoke special investigation commissions. Among these are commissions to investigate corruption within the executive and investigate the credentials of newly-appointed Supreme Court judges.
The investigation of the judges could lead to the removal of several of these because the Supreme Court law allows for the removal of judges who do not meet the fairly tough requirements for appointment.
On the Chavista side, the options for manoeuvring are even tougher. The foremost issue for the government is how to deal with the ongoing economic crisis, which is bound to get worse with the price of oil tumbling.
The price of an average Venezuelan barrel of oil reached a high of US$55 per barrel early last year, but the most recent figures point to half that amount, at US$27 per barrel. Unless this price recovers, this could be devastating for Venezuela. About 95% of the country's export earnings and 50% of its fiscal budget come from the sale of oil.
The 50% collapse in the price of oil over the past eight months, however, means a far larger collapse in revenues because a large proportion of Venezuela's oil is extra-heavy oil that is expensive to extract, reaching a high of around US$20-$25 per barrel. This leaves relatively little to no profit at such low prices.
In other words, a 50% drop in the price of oil represents a far larger than 50% drop in revenues for the state.
In the aftermath of the electoral loss, Maduro named a new cabinet, reshuffling many positions. But in the key position of vice-president for the economic area, Maduro named Luis Salas — considered to be a proponent of the same policies as before. In a context of economic crisis and shortages, Salas says that the price controls and currency controls must be maintained and that the government's main weakness has been in the area of enforcement of existing policies.
In other words, even though the country is now waiting for the announcement of a promised “economic emergency plan”, it seems doubtful that this plan will signal a significant departure from the economic policies so far.
The drop in revenues, combined with an inflationary spiral that the economic war of smuggling, hoarding and speculation and that the black market for dollars have inflicted on Venezuela, signal a very difficult near-term future for Venezuela's economy and people. Some economists warn of possible hyperinflation and of an inability to pay its foreign bills — a balance of payments crisis.
In short, Venezuela is heading towards two confrontations simultaneously, where each threatens to exacerbate the other: one economic and the other political. What the prospects are for overcoming these confrontations is impossible to predict at this moment.
Within Chavista social movements and the governing PSUV, more voices are calling on the government to organise a huge consultation process with the grassroots. Maduro has endorsed this perspective, but it remains an open question whether these will happen in time.
And if it does, whether it will be able to provide solutions that will allow the Bolivarian Revolution — set in motion when Chavez first came to power in 1999 — to move forwards, despite the reinvigorated opposition in parliament.
[Reprinted from TeleSUR English. Gregory Wilpertis funder of Venezuela Analysis and author of Changing Venezuela by Taking Power (2007).]