Venezuela's December 6 election is only just behind us, and already the new battle lines are being drawn.
Since the December 6 election, it's become increasingly clear how the new balance of power between Chavismo and the MUD will play out in Venezuela, and where the economy is heading. However, a handful of crucial questions remain unanswered.
Chavismo: Opportunity Knocks … and So Do Material Conditions
If there is any positive lining to the December 6 results, it's that Chavismo may undergo a rejuvenation.
For the government, the theme of the past week has been critical self reflection. Maduro has vowed to seek to rekindle the PSUV's ties with the grassroots, and reconnect with the base. We've heard this before, in the short lived “government of the street” in 2013. This time, however, Chavismo may have nowhere else to go. If it's smart, the MUD will gradually purge the public sector of Chavistas, with the possible (or likely) exception of middle to lower level functionaries. Perhaps they won't go full speed ahead with these purgings while they campaign to oust Maduro, but that would be a blunder on their behalf. We've already seen some signs Chavismo is prepared to fight back to chip away the MUD's power from within the state apparatus, and this may not end anytime soon. Likewise, the MUD has already presented a vague 16 point plan with some hints of privatisations and major changes in state enterprises ranging from basic industries to public media. Nonetheless, it's possible the MUD might fail to purge the public sector, if the coalition continues to struggle to agree on anything beyond ousting Maduro and freeing opposition zealot Leopoldo Lopez.
One exciting possibility is that Chavismo will totally reorient itself away from the state, and around the communal councils and communes. This could re-radicalise the movement, and transform it into a new force capable of waging a long term, revolutionary battle without the state. However, before we get too excited, it should be noted that many Venezuelans are facing extremely tough circumstances. It's almost impossible to organise a communal council when everyone in the neighbourhood spends all their free time queuing for food. Nobody is going to spend time on a community project when their pay check is being eaten by inflation by the minute. On top of this, the yawning gap between the PSUV leadership and revolutionary grassroots is hard to understate, with the former living in a very different world than the latter. Therefore, while Chavismo has a kind of potential we haven't seen in years, it's also in dire straits.
The MUD: An Uphill Battle to Coherency
The MUD leadership seems to have skipped any post election honeymoon, and is already plunging head first into a new round of infighting. As usual, we've seen plenty of public sparring between various MUD personalities, most notably with Henrique Capriles trying to claw back his position as the “moderate” alternative.
Since the election, Democratic Action leader Henry Ramos has been pushing hard to position position himself as the centrist moderate, a position long held by Capriles. It's important to note how immaterial and fluid this position is. In reality, there's nothing particularly moderate about either Capriles or Ramos, and both personalities are hated by much of the opposition for various reasons. Ramos himself has been accused of showing a lack of restraint by none other than MUD legislator Julio Borges, who chastised him for suggesting gutting state broadcaster ANTV. Indeed, so far it seems the MUD can't agree on anything, except the united call to oust Maduro and provide political amnesty to Lopez. For now, the MUD seems totally unable to even propose clear solutions to the most important issues facing voters, including the economy and crime. Perhaps if the MUD eventually achieves its two key goals (removal of Maduro and freeing of Lopez), it will begin thinking about other issues in earnest. However, these two goals themselves are deeply problematic, and potentially self-defeating. Firstly, removing Maduro from office will be terrible for the economy, for two key reasons:
1. The drawn out process will make it almost impossible for the MUD to focus on the economy.
2. Before Maduro leaves office, there will have to be at least two elections (a recall referendum and a snap presidential election. Anyone who has seen a Venezuelan election knows they bring the country to a standstill, and are typically accompanied by economic issues such as a spike in hoarding.
For the MUD, the potential payoff from a referendum would be a solidification of power. The drawback could be another year of government inaction towards an economy in crisis, or at least a government spread thin while the referendum takes place. Secondly, when the dust finally settles, the MUD will have no one to blame when they begin struggling to govern Venezuela, after just killing off their scapegoat.
Freeing Lopez is also a highly questionable objective. The MUD is already engulfed in an internal power struggle. Once Lopez returns to politics, he will be yet another serious challenger to the likes of Ramos, Capriles and Maria Machado. In short, 2016 could become an exasperating year for MUD supporters.
The Economy: Things Aren't Looking Great
This entire paragraph comes with a major qualifier: Venezuela's economy is crazy, and it really is impossible to know for sure what will happen next.
However, since the December 6 election, there have been a few positive signs some kind of recovery could be imaginable in the near future. Some government and PDVSA bonds rose, and the value of the bolivar on DolarToday rose from around 900 to the dollar, to closer to 800. There were also some reports of hoarded goods magically appearing on supermarket shelves for the first time in months. Indeed, there are some clear signs a MUD government could ease some of Venezuela's economic woes in the short term, such as by seeking international aid.
But for every positive force, there is a negative drawback. The coalition should be able to coax major companies like Polar back into production, but will likely struggle to do much with state enterprises. It may secure some international aid, but it won't be able to single-handedly raise oil prices. The mere presence of a right-wing government may inspire a trickle of renewed investment, but it wont resolve Venezuela's currency disaster. In fact, at this point there doesn't seem to be any clean solution to the currency crisis that could manifest overnight. Some kind of managed float is the only realistic solution, that that will take time, effort and a lot of ideological concession from both Chavismo and the MUD. Unless productivity and confidence in the currency can somehow be dramatically risen overnight, any perceived devaluation will hit ordinary Venezuelans hard. Maduro had his chance to ease the crisis in 2014, and he declined to do so. Now, there are no quick and easy solutions for the MUD on the table (except prayer for higher oil prices). Perhaps they'll eventually cave to their baser instincts and seek to impose massive shock therapy neoliberal reform – ie, sacrifice the poor to save the rich. If the MUD has any sense of self-preservation, they'll wait until the recall referendum is over before heading down this road in earnest.
Assuming oil prices remain relatively low into the foreseeable future, Venezuela's best chance for anything resembling an economic recovery would have to begin with some level of cooperation between the PSUV and the MUD, with both parties putting the short term needs of the country above their own political interests and ideology. It's a tall order, but not impossible given the circumstances. If this doesn't manifest and all other variables remain basically the same, then 2016 could be a bad year for Venezuela.
In 2016, the key questions to be asked about Venezuela are where the country's two dominant political strains are heading, and how the economy could recover.
We've already seen Chavismo leaning back towards the grassroots, but it's unclear whether the movement can remain potent without control of the state. The MUD has shown signs its infighting is far from over, but can they run a country nonetheless? Will there be some kind of political cooperation between the PSUV and the MUD, or should we all brace for a year of chaos and deadlock? And lastly, can anyone fix the bloody exchange controls? Seriously?