Venezuela notes - September 2023
Negotiations may not succeed and everyone should be planning for what happens if they fail.
Three scenarios for Venezuela in the coming 15 months:
1) The scenario most of us hope for: A free-ish and fair-ish election occurs next year (2024) that somehow leads to a transition of power back to a democratically elected government in Venezuela.
2) The scenario that is more likely: A sort-of free-ish and fair-ish election occurs next year, but through a mixture of political skill, typical trickery/repression, and a bit of dumb luck or own goals by its political opponents, the Chavistas remain in power. At the same time, a bit of progress is made and there is some hope for an improved economy, reduced sanctions, less suffering, and a political transition in the future.
3) And the scenario we should fear: All-out repression combined with a canceled or fully rigged election.
The current negotiations are pushing to obtain one of those first two scenarios. The United States, Europe, and most of Latin America would prefer that some sort of election is held. Sanctions relief, movement on debt issues, and any hope for improved economic, security, and human rights conditions in Venezuela are dependent on getting to one of those top two scenarios.
Unfortunately, Venezuela is not too far off from scenario three. Crackdowns on protests and abuses of political opponents are once again on the rise. There are credible rumors that the election could be canceled or that most of the credible opposition candidates could be banned, leading to a sham election in which few voters participate (Caracas Chronicles PRR has had some great coverage on the divisions within Chavismo recently). As I wrote a few months ago, some of the anti-democratic signaling is simply the Maduro regime trying to provoke the opposition into overreacting. However, the shift in recent months has been towards the more hardline Chavistas (including Diosdado Cabello) who not only insist they hold on to power at all costs, but seem to prefer and delight in the more repressive options for doing so.
The international community, working hard for a negotiated path to an election in which both sides participate and sanctions relief for the country, is not prepared for scenario three. It's somewhat understandable. Nobody working for a better solution wants to be the pessimist suggesting that the country's situation will worsen once again. Everyone wants to offer carrots for better behavior because the Maduro regime doesn't easily dialogue with those threatening additional punishment for bad behavior and negotiations are the best path forward. Given the failure of sanctions so far, considering what a proper response is to additional and worsening repression seems like a futile exercise.
Of course, if scenario three happens, those events fall directly into the path of the 2024 US election. The Republicans, already preparing to bomb Mexico's cartels, will have no problem adding Venezuela to their list. The Biden administration is much more level-headed but also dealing with political reality in the US. They aren't going to consider methods to shake up policy, especially a restructuring of sanctions, if Maduro is in the midst of the crackdown and the Democrats are being attacked as being too soft on Venezuela's dictatorship.
For Maduro, what is the risk of continuing to follow the repressive actions of Cuba or Nicaragua if the leaders of both Cuba and Nicaragua seem to be surviving just fine? Yes, it hurts the Venezuelan economy, but his main goal isn't the betterment of his people; Maduro and the Chavistas only care about remaining in power and avoiding personal punishment for the damage they've inflicted on the country. They have decided more sanctions are survivable.
For much of 2022 and 2023, international businesses treated Venezuela as a country where conditions for investment were certain to improve in the coming years. With how far the country has fallen, economic opportunities exist in the energy sector, the country’s debt, and elsewhere. The assumption was there would be an election, and regardless of whether or not there was a transition of power, sanctions would be eased and business could slowly return. Foreign investors are operating as if that is the only path forward. If Venezuela instead enters a renewed cycle of repression in the coming months, those bets will be off.
Work towards the best-case scenario, but prepare for the worst.