A rough week further complicates Venezuela’s uncertain future

A rough week further complicates Venezuela's uncertain future
BY JIM WYSS JWYSS@MIAMIHERALD.COM
12/21/2014 4:43 PM 12/21/2014 7:55 PM

BOGOTA
Last week was rough for Venezuela. Over the course of 48-hours, the
country saw its closest ally and ideological role model, Cuba, cozy up
to its biggest enemy, the United States. The following day, Washington
slapped Venezuelan officials with sanctions, including freezing assets
and denying and revoking visas.

The twin moves created the sensation that Venezuela's socialist
administration is more out of touch and isolated than ever, analysts
said. And it's likely a fitting preamble to what will be a turbulent
2015 as the oil giant has fallen on tough times.

For many, the week was summed up by two images. On Monday, during a
rally, President Nicolás Maduro mocked the threat of sanctions, telling
his followers that the Yankee Empire could "stick their visas where they
have to stick them."

Two days later, Cuban leader Raúl Castro was on national television
announcing the communist island would restore full diplomatic ties with
the United States for the first time since 1961.

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As opposition leader María Corina Machado tweeted to her followers, "Two
days ago Maduro was ordering everyone to burn their visas to the United
States. Meanwhile, Raúl Castro was applying for his."

It's hard to describe Cuba's role on the Venezuelan psyche. The late
President Hugo Chávez often called Fidel Castro his political "father"
and treated him a like doting son.

In addition, Venezuela sends the island 100,000 barrels of fuel a day
that Havana pays for in kind by shipping thousands of doctors, and
military and political advisers to Venezuela, which only augments the
island's influence.

But as Venezuela struggles with falling oil prices and a deep economic
crisis of its own, Havana is well aware that the largesse is at risk.

"Cuba, like the rest of South America, knows that the Venezuelan model
isn't viable," Miranda Governor and opposition leader Henrique Capriles
said in a statement. "The Cuban government knows that it can't live off
the resources of our country anymore because of the economic deterioration."

And some wonder if Cuba's step closer to the United States might have a
ripple effect in Venezuela, which hasn't had an ambassador in Washington
since 2010.

"Nicolás Maduro has an enormous dilemma," said Jesus Seguias, a
Caracas-based political analyst and pollster with DatinCorp. "How is he
going to justify his anti-imperialist politics when his principal ally
has turned into an ally of the empire?"

While Maduro mocks the United States and squeezes the private sector
with expropriations and draconian price and currency controls, Cuba is
"not only extending a bridge but a freeway to the United States," he said.

"Nicolás Maduro doesn't have any options but follow Cuba's path,"
Seguias speculated. "Cuba has given them the alert by saying 'Look, you
have to get along with the United States and come to an agreement with
the private sector. The state run socialist economy is a failure
everywhere.'"

Cuba isn't exactly embracing U.S. ideals. On Saturday, during his
address to the National Assembly, Raúl Castro said the island would
remain firmly communist and a steadfast friend to Venezuela. Castro also
pledged to defend Maduro against "destabilization" efforts and U.S.
"pretensions to impose sanctions on that sister nation."

Venezuela needs all the friends it can get, as it has become the
hemisphere's poster child for economic dysfunction. It's saddled with a
shrinking economy and skyrocketing inflation of 63.4 percent through
August, according to official figures. Sporadic shortages of food and
basic goods have led to massive lines that sour the national mood.

Falling crude prices have forced the government to slash its budget by
20 percent and scramble for revenue by selling assets — including,
potentially, its Citgo operations in the United States. The budget
deficit is also threatening the popular social programs that underpin
the administration's support.

Some 82 percent of the population believes the country is headed in the
wrong direction, according to a poll by Datanalisis. And a full 68
percent believe Maduro should step down or face a recall in 2016 —
rather than serve his full term until 2019.

Oliver Wack, the senior analyst and team leader of the Andean region for
Control Risks, says he's warning clients to be prepared for more street
protests in Venezuela early next year after the holiday season is over,
year-end bonuses have been spent and the mood turns surly.

"I think it's going to be an extremely challenging year," he said.

And Maduro might have made things tougher by recently announcing that he
would dedicate himself full-time in 2015 to "fighting the economic war,"
while delegating all other responsibilities to young Vice President
Jorge Arreaza, who is married to one of Chávez's daughters.

Maduro "is getting into an arena from which he cannot emerge
victorious," said Wack, who speculated that forces within Chavismo might
be trying to isolate Arreaza from the economic woes so that he remains a
viable candidate in the future.

"It will be interesting to see how the relationship between Arreaza and
Maduro plays out," he said. Will Areaza manage to "keep his vest clean
of the big stain that will be Maduro's managing of the economy next year?"

But Maduro's new job description might also be savvy politics. Venezuela
will see National Assembly elections next year where the battered
opposition is expected to make gains.

Under the pretext of visiting farms and factories, Maduro will
essentially be going on a nationwide campaign tour to drum up support
for ruling party candidates, said Alfredo Croes, a Caracas-based analyst
with Croes, Gutierrez and Associados.

"His new position will be particularly useful," he said. "It will
provide the perception that the president is giving his undivided
attention to the issue [the economy] that's most important to the
country right now."

Despite ruling-party weakness, the opposition, too, is in disarray, as
longtime standard bearers have been sidelined. Former mayor and
presidential candidate Leopoldo López is in jail for his role in
anti-government protests that rattled the nation in February; María
Corina Machado, an opposition legislator, was stripped of her job and is
facing charges for an alleged plot to kill Maduro; and Capriles, a
two-time presidential candidate, seems out of touch with the national mood.

"The only thing that Venezuela's opposition can do right now is make fun
of Maduro," Croes said. "That's all they have the power to do."

Seguias says the lack of leadership — on both sides of the political
spectrum — makes Venezuela volatile.

"When the people don't have confidence in any of their leaders they
invent one," he said, noting that Chávez's sudden rise to power in 1999
was a product of just such a crisis.

"This coming year is going to be one of outcomes," he said, "but they
will be unpredictable outcomes."

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