Discussion on the Crisis in Venezuela

On December 7, 2017, the World Affairs Council welcomed Professor José Antonio Lucero, Chair of Latin American and Caribbean Studies at the University of Washington, for a lunch discussion at Stoel Rives LLP. President and CEO of the World Affairs Council, Jacqueline Miller, moderated the conversation on the ongoing economic and humanitarian crisis in Venezuela. Venezuela is home of the largest oil reserve in the world. However, 80 percent of the country doesn’t have enough money to buy food. Lucero explained this discrepancy as a product of the distribution of resources.

IMG_9006Current Venezuelan President Nicolás Maduro, the successor of Hugo Chávez, was handed an impossible mission when he took office. Chávez, as a man of the people, was genuinely popular in Venezuela, cutting poverty in half in a short time. Maduro had the job of filling his shoes. Without the charisma of Chávez, Maduro needed another way to enforce his power over the country: the military. In return for the military backing, Maduro handed over control of the state run oil company to a military general. In addition, Maduro’s tight currency controls and government corruption offered all kinds of incentives for resources, like oil and food, to be mismanaged.

While a global crisis of falling oil prices has caused many oil producing countries to lose tremendous amounts of money, Lucero believes that falling oil prices are not fully to blame for the economic crisis in Venezuela. In fact, scarcity of basic necessities in the country began before oil prices took a dramatic plunge. Thus, Lucero explained, the polarization of politics played a bigger role in the country’s demise.

IMG_9007Although Maduro’s approval ratings remain below 30 percent, the opposition does not offer Venezuelans a strong alternative. However, Maduro is in part to blame for this lack of political leaders. While many opposing leaders still remain in the country, the manipulated legal system makes most of the viable opposition party ineligible for election. In addition, the opposition party is full of different personalities that do not seem to be able to get on the same page.

The United States has responded to the crisis in Venezuela with sanctions on upper level authorities and on extensions of credit from U.S. companies to Venezuela. These measures, though, have not proven successful in addressing the growing instability. Without the U.S. contributing funds to the country, Venezuela has looked to China and Russia. China is now the sovereign lender to Venezuela and Russia will own 50 percent of state run oil company Citgo if Venezuela defaults on its loans.

In order to addIMG_9029ress growing violence, hunger and disease in Venezuela, Lucero suggests that, ideally, someone outside of the usual suspects will assume office to avoid the complications of a fracturing opposition party. Another option involves the defection of disillusioned members of Maduro’s government joining the opposition. Lucero believes that a political solution is necessary to help the Venezuelan people recover.