While in Argentina over the weekend, Secretary of State Rex Tillerson remarked to reporters that the imposing of oil sanctions and restrictions against Venezuela’s oil sector is now on the table. US oil sanctions are considered the nuclear option and would close off Venezuela’s economy to the single source of dependable income it has left. US and international sanctions already in place against Venezuela have not had the intended effect. If anything, the moves have emboldened Venezuelan strongman Nicolas Maduro to dig in his heels and go for broke. In January, 2018 Maduro announced he will be seeking a new term in office. The presidential election has been scheduled for 30 April of this year and with the majority of opposition candidates and leaders banned from running, Maduro is expected to skate to an easy victory.
If the presidential election proceeds, and the Trump administration imposes an oil embargo in response, the impact on markets, supply, and output will be significant. 2018 has seen an overall tightening in the oil market and a supply disruption now is sure to cause reverberations that weren’t felt when there was a crude superabundance. If Venezuela faces an oil embargo its economy will collapse entirely and that could cause an undesirable chain of destabilization among its neighbors, and other Latin American nations. The prospects of sanctions bringing a scenario like this to life are real. Caribbean nations rely heavily on cheap Venezuelan oil and have resisted Tillerson’s calls for a hemisphere-wide effort to challenge Maduro. US, Mexican, and Canadian oil officials, and diplomats are forming a working group to try and find an alternative to Venezuelan oil for nations in the Western Hemisphere that are reliant on it at the present time.
President Trump favors harsher sanctions against Venezuela, though its uncertain if he’s willing to turn to his nuclear option just yet. As mentioned above, the current sanctions in place have not motivated Nicolas Maduro to begin the reform process. If US efforts to create an anti-Maduro coalition show signs of success between now and the end of April, expect the Trump administration to begin thinking seriously about oil sanctions, or an outright embargo against Venezuela by 1 May.
Tomorrow, Venezuela’s newly created debt restructuring committee is scheduled to meet with creditors in hopes of renegotiating, or restructuring $69 Billion of Venezuela’s outstanding debt. It is not presently clear just how many creditors will actually be attending the meeting. It is also unknown if the meeting will include frank discussions about restructuring Venezuela’s current debt, or if Venezuelan officials will use the opportunity to simply blame the current economic situation on US sanctions. Quite honestly, it is unclear at this time whether or not a meeting will even take place tomorrow.
As meeting preparations continue this evening rumors of default continue to swirl from Caracas to Wall Street. Venezuelan President Nicolas Maduro has adamantly insisted that his country will never default on its debt. Despite his assurances, speculation is growing that the true purpose of tomorrow’s meeting is to lay the foundation for default. Venezuela’s economic situation is beyond dire. It’s cash reserves are nearly dried up, and US sanctions are making it impossible for Venezuela to refinance its debt. Securing a debt restructure in the current climate is virtually impossible. Therefore, Maduro’s only other option would be to declare insolvency and default on the country’s $150 Billion in debt.
The uncertainty surrounding Venezuela’s economic future is causing anxiety internationally. A default could possibly spark a global financial crisis, although the prospects of this happening are low. There is still a possibility of Russia extending a lifeline and saving the day. Or, at least postponing the inevitable for some time. The two nations are expected to sign a debt restructuring deal later this week that will provide some relief for Maduro’s socialist paradise.
Realistically, however, even Russian assistance might not be enough. After years of political catastrophe, social unrest, and economic disasters, time is truly running out for Venezuela. What happens this week will likely determine its fate whether Maduro is prepared to face the truth or not.
Venezuela and Nicolas Maduro are making headlines once more. Early on Sunday morning armed men in military uniforms released a video calling for Venezuelans to rebel against President Maduro and his party. A short time later, a military base near Caracas was attacked. According to the government the attack was repelled and the assault force suffered casualties. It was also revealed that the surviving attackers made off with some weapons. Judging from news reports, and information from independent sources, an attack did take place. Who the attackers were affiliated with is another question entirely. The same is true for the motivations and affiliations of the men on the video. Post-referendum news coming out of the country has to be taken with a grain of salt.
The situation in Venezuela is quite fluid at the moment and Maduro and his government have an agenda to promote. Altering the political narrative to place the opposition in a villainous light would be beneficial. Some of the facts coming out of Caracas seem to back the theory that Maduro’s government is behind this morning’s events. The attack on the military base does not appear to have come as a surprise. It was defeated quickly and with relative ease. The Venezuelan defense minister has stated that the men captured this morning during the attack have already confessed to being under contract by ‘right wing Venezuelan activists who are connected to foreign governments. Powerful members of the ruling socialist party were very quick to put out statements denouncing the attack and affirming their support for Maduro. The release of these statements appears to have been coordinated for maximum effect.
The timing of the attack on the military base and the video release raise even more questions. For the duration of the Venezuelan crisis the opposition has been hobbled by disorganization, and a consistent lack of initiative. It has not lacked passion though. The emergence of an anti-Maduro movement in the military would’ve likely come before last week’s referendum. Acting now, after the assembly has been formed, is essentially locking the barn door after the horse has escaped.
The timing of these events is extremely beneficial for the government and ruling party. The video conveniently paints a belligerent challenge to the government. The failed attack underscores a need for swift, decisive action to nip the ‘threat’ in the bud. The constituent assembly has justification to provide the tools needed for Maduro to expand the arrests of opposition members, and infringe on the constitutional rights of Venezuelans in the name of national security.
What’s happening in Venezuela is a text book example of a ruling party consolidating its hold on the government with no intention of relinquishing control anytime soon. Sunday’s actions did not stem from a desperate attempt to jump start the opposition and invigorate them It stemmed directly from Maduro’s desire to tighten his grip on power. His fingerprints are all over Sunday’s events, not the opposition’s.
Democracy is all but dead in Venezuela.
Just under two days remain until Venezuela’s national vote to elect delegates for a Constituent Assembly to rewrite the country’s constitution. The world is watching events in the embattled South American nation closely, and many diplomats around the world are cognizant that Sunday’s vote could be the death knell for democracy in Venezuela. The once vibrant state is on a path that could make it the next Cuba, and there is little the outside world can do about it at this point.
Venezuelan President Nicolas Maduro has ordered measures to ensure that the vote takes place with minimal domestic obstruction. The government announced Thursday night on state-run media a complete ban on demonstrations across the country for the next five days. The hope is that a ban will curtail opposition activity around the time of Sunday’s vote. On Sunday, Venezuelans will choose the delegates for the Constituent Assembly which will go about replacing the nation’s current constitution. Maduro’s opponents view the assembly as a move to effectively cement the president’s grip on power. There is no timeframe for remaking the constitution, it can theoretically take years. While it is underway, national elections would be cancelled, meaning next year’s presidential elections will not take place. This alone will give Maduro an extended stay in power until a new constitution guarantees him a leader-for-life status.
The US is beginning to take serious measures in regards to the situation in Venezuela. The State Department issued a travel warning on Thursday night. Dependents of US embassy staff in Caracas have been ordered out of the country, and restrictions on the movement of US diplomats around Caracas and the rest of the country were put into place. Earlier this week, President Trump announced a new round of sanctions on 13 Venezuelan officials. There is speculation that this is simply a precursor to a more comprehensive sanction program that will be put into place if Maduro goes forward with Sunday’s vote. Trump has stated that the US will not “stand by as Venezuela crumbles.”
The opposition movement in Venezuela has been energized by the results of Sunday’s unofficial referendum and are hoping it marks a turning point in its struggle against Venezuelan President Nicolas Maduro. Over 7.2 million Venezuelans cast votes, with the overwhelming majority were against Maduro’s plan to push forward with his plan to rewrite Venezuela’s constitution. On 30 July voters will elect delegates for a constitutional assembly. The assembly will be given the power to rewrite laws and many observers view it as nothing less than a power grab on the part of Maduro.
Venezuela continues to descend deeper into economic, and political chaos. Maduro is desperately clinging to the plan for a constitutional rewrite as his cure-all. Three months of unrest, and daily clashes between protesters, and security forces have taken a toll. A new constitution that neuters the power of his opponents in the legislature will pave the way for him to contend with the opponents on the streets once and for all. In spite of the growing turmoil, anti-government feeling, and the results of the referendum yesterday, Maduro’s position is relatively stable for the time being. There are no imminent threats to his rule. Despite the efforts of anti-Maduro lawmakers and their supporters, the current president appears likely to remain in power at least through the end of the summer.
A primary reason for this has been the opposition’s disorganization and lack of unity. The opposition is comprised of people from every facet of Venezuelan society. Unfortunately, there is no fabric to mesh together. No individual leader, or leadership council to coordinate the various groups. In the absence of a cohesion, the opposition’s efforts have been restricted mainly to street protests. In their own right, the protests are powerful, but without a political element to guide and lead them, the throngs of people taking to the streets are little more than an unruly mob. Maduro’s bands of thugs have intimidated the political opposition to a large degree. Pro-government thugs regularly assault opposition lawmakers, and on one occasion Maduro even sent a group of them to the National Assembly where they entered and beat a number of lawmakers bloody.
The political chaos might end up being overshadowed by even more economic despair soon enough. Venezuela’s foreign reserves are now down to less than $10 billion. In short, the country is on the verge of going broke. If that happens, all bets are off as to what happens next.