THE CRUNCH IN CARACAS
The Economist
WHEN Nicolás Maduro was anointed last December as the chosen successor of the late Hugo Chávez as Venezuela’s president, he inherited a divided country, a wrecked economy and a corrupt system—in short, a failed revolution. Six months after narrowly winning an election that the opposition claims was marred by fraud, it is still not clear where he wants to take his country. But he must do something.
The economy requires emergency treatment. Inflation is at 49%—a level unseen in any large Latin American country since the 1990s. Staples, from flour to toilet paper, are in short supply. The fiscal deficit is around 10% of GDP. Even though Venezuela is the world’s ninth-biggest oil exporter, dollars are scarce. The Central Bank’s liquid reserves are enough only for a few days’ imports. In the black market the dollar trades at seven times the official exchange rate.
Restoring Venezuela’s economy to health requires dismantling the ramshackle edifice of state intervention and controls erected by Chávez. In the short term, the only way out is another devaluation to end foreign-exchange rationing.
This month Mr Maduro has intervened in two ways. He has stripped Nelson Merentes, the finance minister who showed signs of accepting devaluation, of the post of economic vice-president, handing that role to Rafael Ramírez, who heads PDVSA, the state oil monopoly. Mr Maduro has also asked the National Assembly for power to rule by decree. Since his Venezuelan United Socialist Party is only one seat short of the three-fifths majority required to approve this measure, he is likely to get it. (One opposition legislator has already been suspended on trumped-up grounds.) Mr Maduro claims to need this power to combat corruption and economic “sabotage”, which he blames on the opposition and the United States.
Yet even he must know that these troubles are self-inflicted. So what is the real explanation for the power grab? The optimistic view is that Mr Maduro wants to reform the economy by decree. Mr Ramírez may also favour devaluation, for it would give PDVSA more bolívares for its oil dollars, and him more power. Pessimists explain the move as low politics—part of Mr Maduro’s continuing efforts to dominate the different factions of chavismo (which include Cuba, his main foreign ally). Under this interpretation, Mr Maduro and Mr Ramírez are ganging up against the third member of the unholy trinity that holds sway in Caracas—Diosdado Cabello, who heads the National Assembly and whose powers will be at least temporarily diminished by lawmaking by decree.
Little time to mend a dysfunctional country
Whatever the reason, the decree is another step backwards for Venezuelan democracy. Mr Maduro has already used an anti-corruption campaign to harass the opposition (even though it is his government that is plundering the country), and he has stepped up Chávez’s slow asphyxiation of media freedom (see article). Opponents fear he could use his new powers to rig or cancel local elections due in December, which opinion polls suggest the government might lose.
The ultimate test of any democracy is whether people can freely vote to oust an unpopular government. That is what is at stake in December, in a legislative election in 2015 and, potentially, in a subsequent recall referendum on Mr Maduro. If Mr Maduro suspends or manipulates elections, Venezuela should be thrown out of Latin America’s various clubs.
The person to lead this is Brazil’s Dilma Rousseff. She is evidently willing to use Brazil’s muscle in the region: she ganged up with Chávez last year to suspend Paraguay from the Mercosur trade pact when it impeached its left-wing president, in accordance with the letter of the constitution but with unseemly haste. Sadly, though, Brazil’s government has been all too happy to embrace fellow-leftists in Caracas and to hoover up the business that Venezuela’s companies are being cut out of by economic mismanagement.
Ms Rousseff has followed that path for too long. As the region’s leading democrat, she should take a principled stand if Mr Maduro gets up to any unconstitutional funny business.
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