Halting Venezuela's Meltdown

Halting Venezuela's Meltdown
AP Photo/Fernando Llano
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Venezuela’s crisis combines mind-boggling economic mismanagement, private-sector decimation, the crippling of democratic institutions, the suppression of individual freedom, and widespread human rights violations. Severe shortages of food and medicine coupled with hyperinflation are a daily struggle for most Venezuelans, except for elite government officials, some of whom are facing drug trafficking, money laundering, and corruption accusations. Given that Venezuela’s crisis is man-made, the international community has found it difficult to agree on a unified response. However, Venezuela’s Supreme Court decision to revoke the opposition-dominated congressional authority, and President Nicolas Maduro’s subsequent mandate to reverse it overnight, should dispel any remaining reservations on the need for urgent, coherent action. Denying parliament’s legislative powers represents not only an unconstitutional act, but also the final straw leading the Organization of American States (OAS) and multiple other international organizations and countries to declare Venezuela a dictatorship.

The Institutional Meltdown

The Venezuelan constitution maintained the legacy of Montesquieu’s checks and balances, even though former president Hugo Chavez insured that it gave far greater authority to the president than do the constitutions of the United States or other regional democracies. He also incorporated even more constraints through popular participation, all of which have been violated by his successor and the heavily militarized Socialist administration. Even more destructive have been the violations of individual rights, rule of law, and justice.

This is exemplified in the leading roles that both the executive-dominated judiciary and attorney general’s office have played in jailing opposition leaders. Venezuelans now distrust the police and National Guard because of persistent corruption and subservience to the regime. Government employees, the largest workforce in the country, are threatened when they show signs of dissent. Today, the political, economic, and social crises have spread throughs all sectors of government, including the education system. Public schools have distributed over 42 million copies of a government-sponsored book collection, Coleccion Bicentenario, in the last seven years. These cartoon books attempt to educate—or indoctrinate—children on the glory that was Chavez’s Bolivarian revolution and the evil manifested in western capitalist states. The books explicitly state that the International Monetary Fund (IMF), for example, is a nefarious and ill-intentioned organization. Any success in restoring a vibrant Venezuelan democracy will require fundamental policy reforms to rebuild virtually all public institutions from the ground up, including the education system.

The latest Supreme Court decision, and Maduro’s subsequent mandate to reverse it, typifies the type of haphazard and politicized governance that has plagued the Maduro regime. The Chavista-stacked Supreme Court has systematically taken powers away from the National Assembly since the opposition won a supra-majority in early 2016. In the past year alone, the court has targeted and dismantled key constitutionally granted powers, including the power to approve or reject federal budgets; to approve or repeal “state of emergency” orders; to amend the Constitution; and to investigate and indict government officials.

The court also approved a measure to dissolve the Assembly’s control and supervision over the Federal Bank. Last year, the court struck down 11 of the 13 total laws passed by the National Assembly, deeming them “unconstitutional.” The executive and its subservient judiciary branch have undermined and sought to bypass entirely the National Assembly, violating the core separation of powers principles of the Inter-American Democratic Charter and, most importantly, the voice of the people.

On the other hand, the refusal of the current administration to accept any humanitarian aid has increased the volatility of the political and economic environment and contributed to rampant and massive shortages of food, medicines, and basic commodities. A shocking number of Venezuelans are losing weight (19 pounds in the last year, on average), while an overwhelming number of children are showing signs of malnutrition or are at risk of it. The United States, multilateral institutions, and the global community should prepare to help Venezuela through the development of international humanitarian and financial assistance.

Concrete Steps Moving Forward for the United States and the International Community 

Finding a way out of this crisis, and eventually a road toward a transition, ultimately needs to be a Venezuelan-led effort. However, the United States and international community have an important role to play. Pressuring Maduro’s government through targeted sanctions of top officials, is necessary and already underway. Further economic and financial sanctions targeted at the regime’s leadership are needed. The OAS and United Nations should be utilized as the main avenues to bring regional diplomatic pressure against the regime. Beyond these more traditional methods, the United States and other countries can help by actively encouraging two concrete policy measures that would alleviate the suffering of Venezuelans:

  • Require the Maduro government to open a humanitarian channel. The current administration has so far denied the humanitarian crisis and therefore denied any humanitarian aid; however, the people face an urgent need to find the most basic medicine and food supplies. The international community and multilateral institutions should work together to pressure Maduro to open the country’s doors to receive humanitarian aid.
  • Strongly encourage the establishment of a currency board system or the adoption of dollarization. As explained in a previous article, dollarization will not magically fix Venezuela’s problems, but it will help “stop the bleeding” of the economic disaster and restore some semblance of purchasing power to a populace that desperately needs it. A larger portion of Venezuelans (more than half the country, including some Chavistas) support either dollarization or a currency board system, which would mitigate the death spiral of the highest inflation in the world and a shrinking economy.
    These two policy recommendations may be the only bipartisan issues that can be addressed positively at the current time.

Conclusion

Geopolitics will play an important role in the development of these policies. China and Russia, which together have extended Venezuela at least $55 billion in credit, are highly interested in seeing a stable financial system in Venezuela that allows the government to meet its bilateral payment obligations. Venezuela’s largest trading partner, the United States—more than 500 U.S. companies are represented in Venezuela, mainly in the energy and manufacturing fields—also wants to see a stable and healthy Venezuelan economy.

Once South America’s richest country, Venezuela’s government took less than two decades to upend its democracy, institutions, and economy. Venezuelan asylum applications to the United States jumped 168 percent in 2016, and all signs point to continuing and worsening inflation in 2017 beyond the 1,000 percent mark. The situation in Venezuela represents an opportunity for the current U.S. administration to advance the United States’ interests in the hemisphere. The United States should keep pursuing a strategic approach when pressuring the Venezuelan government, while encouraging the government to open a humanitarian channel and implement monetary policy measures, like dollarization. The State Department should keep backing the OAS general secretary and the member countries who are committed to restoring Venezuela’s democracy. This is perhaps one of the last opportunities for the international community to support the limited democratic resistance in Venezuela. Helping to restore democracy in Venezuela must be high on a positive foreign policy agenda designed to address regional stability and prevent further human rights violations. The current U.S. administration should lead a regional coalition to halt the implosion in Venezuela.

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