In the past month, there have been over a dozen major street protests in Venezuela, each attracting hundreds of thousands of people. Many smaller protests that don’t make international headlines have occurred on a daily basis and not just in the capital city Caracas, but throughout the country. The NGO «Social Conflict Observatory» counted 946 protests in 37 days with a total of 44 deaths.1
In this and the next report, I’ll explain to you what’s going in my country.
A panoramic view of the size of one «the mother of all protests» in Caracas. (19. April 2017) Video: Facebook
The immediate bone of contention was a ruling by the Supreme Tribunal of Justice, Venezuela’s highest court. It’s worth noting that the Tribunal is utterly politicised and little more than an extension of the government (which will become obvious in just a second). On the 28th and 29th of March it published two rulings:2
- The first eliminated parliamentary immunity of the members of the National Assembly, Venezuela’s national parliament.
- The second ruling upset people more. It transferred the National Assembly’s power to a chamber of the Supreme Tribunal and thus allowed Venezuela’s president, Nicolás Maduro, to change existing laws without impediments.
The opposition called the rulings a coup d’état and street protests followed suit. Maduro has since told the Tribunal to revoke the ruling, which it did. (Just to spell that out again: The president told the highest court, the judiciary, what to do.)
«The president can and routinely does interrupt all terrestrial TV and radio channels to broadcast whatever he pleases.»
This almost complete absence of a separation of powers generalises: In the last almost 20 years, the populist government of Venezuela abolished almost all institutional limitations on its power. A few examples:
- The president can and routinely does interrupt all terrestrial TV and radio channels to broadcast whatever he pleases. His weekly show Álo Presidente is always transmitted that way.
- Naming supposedly neutral individuals to the deciding body of the National Electoral Council — often just days after they quit the ruling socialist party, the PSUV.
- In this show, the president can and does threaten private businesses to either produce goods at a certain price, or be nationalised. To give you a taste, here is the father of the «Bolivarian Revolution», the deceased Hugo Chávez, threatening the director of a bank with expropriation because they didn’t give a loan to somebody.3
In one Álo Presidente, a compulsory government broadcast that all terrestrial channels have to transmit, Hugo Chávez threatened the director of the bank «Banco Provincial» with expropriation for not giving a loan to somebody. (26 January 2011) Video: VTV/Youtube
Think about the checks and balances on the power of the government in your country that would have to be removed in order for these examples to be possible. Welcome to Venezuela.
The motivations of the protesters: Poor economics and the destruction of democracy
Never mind Maduro’s backing out, the rulings of the Supreme Tribunal sparked an already full barrel of gunpowder. On 1 May, Maduro then announced that he will convoke a Constituent Assembly to write a new constitution. The catch is that only half of the representatives of this assembly will be elected through proper4 elections. The other half will be chosen by certain civil society groups and the military, all of them closely affiliated with the government. Unsurprisingly, this led to even more protests.
«It isn’t, as it were, all just a terrible misunderstanding.»
Still, it’s important to understand that these aren’t random policy mistakes that led to some protests. It isn’t, as it were, all just a terrible misunderstanding. On the contrary: There are strong structural currents of frustration that propel this wave of social unrest that clash with very concrete political interests of the government.
In simple terms, people protest to demand elections because of economic hardship and an ever increasingly authoritarian government. There are other problems in Venezuela (e.g. crime makes it one the most dangerous places in the world), but economic hardship and authoritarianism are the ones that I think currently bring people into the streets. At the same time, the government can’t allow free and fair elections, because many important people would be put on trial if they were to ever lose power and face an independent judiciary.
In this report I’ll explain the two main motivations of the protesters. In the next piece I’ll explain how the government maintains its power.
1. Economics: Venezuelans lost 8 kg (18 pounds), 82% are poor, there are shortages of everything and inflation hit 500%
The government’s economic policy has all but destroyed the Venezuelan economy. I’ll first give you an overview of what that means, then tell you how life in such a situation is like and finally I’ll explain the causes of this economic implosion.
Nutrition: Most food items can be found in high end supermarkets but at unregulated market prices that are prohibitive for most Venezuelans — they simply can’t afford them. A recent study5 carried out by the three most prestigious universities in Venezuela concluded that a third of Venezuelans eat less than two meals a day, that 75% of the population have lost on average eight kilograms and that an ever increasing amount of people have to search the garbage for food. 6
«Economic data is so bad that the government stopped publishing most of it.»
Poverty: The year before the populist government took power, poverty level were just shy of 50% of the population. Under Chávez the rate came down to 26% in 2009, its lowest in the last twenty years. As in other areas there are not recent statistics for poverty in the country, however, the same study of the universities cited above also evaluated the evolution of poverty and placed the 2016 rate at 82%7, a shocking increase in unsatisfied necessities.
Healthcare: Scarcity also affects the healthcare system: There are shortages or outright lack of medicines. This adds to a general deterioration of the healthcare system.8 Even long eradicated or controlled diseases are spreading again.9 Most poor Venezuelans are without medicine and better well off ones have to ask friends or family to send them medicine from abroad. Several people have died already because people couldn’t find or access medicines. As there are no official figures, one cannot say if this is causing tens, hundreds or thousands of people to die.
Inflation: In 2016, inflation closed north of 500%. Economic data is so bad that the government stopped publishing most of it. Still, according to a leaked document of the country’s central bank, the economy shrunk by more than 18%, GDP per capita was 17% less than what it was before Chávez10 and the country is close to defaulting on its sovereign debt.
How life is like
Now, how does it feel like to live in this situation? Firstly, because of the high inflation, going to the supermarket to buy something today will be cheaper than going to buy them in a week’s time. Having money in a bank account is completely void of purpose – it’ll be worth less in just a week. Not all goods have the same level of inflation, but sadly food tends to have higher inflation than the rest of goods.
«In most middle and upper class homes you can find a closet or room filled with rice, sugar, corn flour, cooking oil, powdered milk, etc. in the tens of kilos.»
People are so sure prices will increase and know that having money in the bank is worthless that when they do come across some cash they will buy items in quantities that surpass their short and medium term needs. In most middle and upper class homes you can find a closet or room filled with rice, sugar, corn flour, cooking oil, powdered milk, etc. in the tens of kilos. This hoarding worsens the scarcity situation, but it is a way to obtain the most value out of one’s money.
Maduro increased the minimum wage to Bs. 200,000 on 30 April. However, at the same time, to cover the basic necessities of a family of five, since the end of March, you’d need slightly over one million Bs.11 In other words, the minimum wage can buy a Venezuelan family only a fifth of their basic necessities.
It’s really very obvious that things don’t add up if you compare two figures from last year: Throughout 2016, Maduro increased the minimum wage by a total of 180%. Sounds great, but as I already said, inflation hit 500%. Most people cannot make ends meet — and that I think is the most important motivation of why they protest.
Why is there so much scarcity and inflation?
To begin with, let’s first understand that price controls and scarcity go hand in hand: When inflation forces producers to produce at higher prices (because the supplies are more expensive), but at the same time the government forbids raising these prices, producers simply can’t produce at the government’s imposed price and their goods disappear from the shelves. Scarcity is little more than inflation forbidden by price controls to manifest itself.
Government officials will tell you the economy is in crisis because of a drop in world oil prices. And partly, that’s true. But the main cause — which is what they don’t tell you — is economic mismanagement.
«Oil prices sharply declined in the last months of 2014 — but Venezuela has had over 40% annual inflation since around the death of Chávez in early 2013.»
To understand this, you should know that Venezuela is an oil economy – in the last two decades oil constituted between 60% and 96% of Venezuela’s exports. Under Chávez, this share increased, as other exports — and the productive capacity of the Venezuelan economy in general — decreased.
In the economic data, you already see that the government’s story that Venezuela is in crisis only because of the oil price doesn’t entirely make sense. Oil prices sharply declined in the last months of 2014 (black line in the diagram below) — but Venezuela has had over 40% annual inflation (blue area) since around the death of Chávez in early 2013 (red line). In 2013, inflation totalled 46% while the oil price remained at $96 per barrel throughout the year. That’s even more acute in 2014, when Venezuela reached 68.6% annual inflation while an oil price that averaged $85.60 per barrel.
Inflation above 40% preceded the decline of world oil prices by almost two years. (10 Mai 2017) Picture: El Contexto
You can also compare Venezuela with other OPEC members (that is, other oil producers that are exposed to the same fluctuations in oil price). Between 2014 and 2016, these countries grew around 9%12 — but Venezuela’s economy shrank 26%.
Let me stress the severity here: 26% in three years — that’s a quarter of the country’s GDP! Even Greece compares favourably: The European nation worst affected by the Euro crisis hast lost 30% of its GDP in seven years. Also, Greece’s contraction seems to have levelled out – in Venezuela we’re almost certainly in for another year of recession.
The low oil prices hit an economy that was made completely dependant on oil income by the government of Chávez — that’s the single biggest error any oil producer can make, and anybody who took an introductory course of economics knows this. So the real reason for Venezuela’s economic plight is mismanagement, not the oil price.
«The most important source of inflation is how the government finances itself with newly created money.»
Since 2004 and especially 2007 Chávez tightened his grip on the economy, nationalised over 1200 private companies, established controls on currency exchange rates, prices, interest rates, lavishly spent Venezuela’s oil wealth on consumption instead of medium to long term investments, doubled the national debt during the oil boom and multiple times threatened private investors — as we’ve seen with the Banco Provincial above.13 Would you want to do business in such an environment? (That’s a rhetorical question. The answer is ‘no’.)
The most important source of inflation is how the government finances itself with newly created money from the central bank channelled through the national oil company PDVSA. You see, historically, when PDVSA needed Bs. for its operations inside Venezuela, it went to the central bank and bought Bs. like everybody else — whatever new currency was created was part of the central bank’s normal liquidity management. But since 2009, and at an ever increasing rate, PDVSA gets huge quantities of Bs. from the central bank and relays them to the government. The government needs them to finance its huge fiscal deficit — which, last year, was estimated at over 16% of GDP!14
A review of Chávez economic policy from our 2015 documentary «Venezuela in Context», which you can find at venezuelaincontext.org. (2. December 2015) Video: El Contexto
Chávez channelled some of the oil wealth on social programs and poverty reduction. Poverty reduction is, in and of itself, of course laudable. However, channelling oil revenues directly into poverty reduction (and not via meaningful employment, for example) is wicked. Why? As a practical matter, this wealth flowed directly into consumption and created no productive basis for the economy that could sustainably finance social programs. In other words, Chávez made Venezuela’s welfare state directly dependent on international oil markets — all the while he used these social programs as political advertisement.
In this edition of Álo Presidente, Chávez welcomed a homeless child on stage with a letter from his mother, asking for help. «You shall have a home, and life! I swear it!», the president exclaims. (23 Februar 2012) Video: VTV/Youtube
2. The demise of democracy
While most protesters are in the streets because of the economic factor, restoring Venezuela’s democracy has become an ever more important motivation, too. They have noticed that the opposition is in the majority, but is not allowed to exercise its democratic rights. Also, they noted that regional elections due to take place in December 2016 still haven’t been scheduled.
«The government made sure it stayed that way, no matter parliament.»
In December of 2015 the opposition won the parliamentary elections and obtained 67% of seats in the National Assembly. That’s a super majority, which, according to the constitution, would give the opposition important powers — among others, the power to initiate a referendum to remove Maduro from office.15
But the law is very flexible in Venezuela, as we’ve seen already — and the government made sure it stayed that way, no matter parliament. Just before the new members of parliament took office, the old parliament (controlled by the government) swore in new judges to the Supreme Tribunal. It thus assured that the highest court in Venezuela — and with it the entire judiciary branch — would remain loyal to the government.
In addition, the government made sure three elected members of parliament from the state of Amazonas were blocked from taking their seats — obviously, to deny the opposition its super majority. It did so by falsely accusing them of «electoral irregularities».
As 2016 went by, every time the National Assembly passed a law that was contrary to the interests of the government, the loyal Supreme Tribunal declared it unconstitutional — effectively rendering parliament powerless. Grotesquely, in the ruling I cited at the beginning, the Supreme Tribunal argued that all the laws parliament passes are unconstitutional. That’s why it transferred the National Assembly’s legislative powers to itself.
Couldn’t Maduro and his government have avoided the current crisis by not having declared the National Assembly void of power and just kept what they had done all of last year? No, due to the fact that the opposition in the National Assembly had declared – as stated by Venezuela’s constitution – that all new sovereign debt not authorized by the assembly would be considered illegal and not payed back.16 As the government is in a dire need of cash, not contracting new debt was not an option.
So the main motivations why people have decided to go to the streets and stay there have been mentioned above — economics and authoritarianism. There are, however, other factors that have facilitated the current protests. We can divide these into three main categories.
- The opposition no longer appears to be divided and all evidence of power struggles have gone out of public sight. Several opposition leaders and mostly a group of young members of the National Assembly and mayors are at the front of all the street protests, people see them there and they stay there the whole day. Finally the opposition’s objectives are clear, concise and achievable.17 They include a renewal of the Electoral Authority in order to assure fair elections, asking for general elections, that a humanitarian channel be opened in order for international organizations and donors to help deal with the current food and health crisis, that all powers of the National Assembly be observed and finally that all 14418 political prisoners in Venezuela be set free.
- The opposition and leaders have repeated over and over that all protests are and should be non-violent, the government has responded with ever increasing levels of repression and violence by police and armed forces, as well as armed paramilitary government supporters.19 The repression has been met with greater resolve by participants of the protests. There is a sense in the street that each time the government attacks protesters that it is doing so out of fear and not from a position of political or moral strength.
- The regional environment of Latin America has changed. Leftist governments in Argentina and Brazil that supported Chávez and Maduro have lost power. Previously more neutral governments in Chile, Colombia and Mexico have taken a stronger stance against Maduro and his anti-democratic measures. A newly elected Peruvian president is outright in favour of change in Venezuela. Finally, the Uruguayan Luis Almagro became Secretary General of the Organisation of American States in 2015 and made it one of his tenure’s mission to promote a democratic change in Venezuela.
«The continent calls on Venezuela to return to democracy»: Luis Almagro, Secretary General of the Organisation of American States, sends message to the Venezuelan government. (2. May 2017) Video: Facebook/OEA
The opposition has found new strength that just a month and half ago would have seemed very far-fetched. The government still appears to be in a strong position but one that is losing support as every day goes by and in every new protest there appear to be more and more – even though numbers are still limited – of low income Venezuelans taking part.
Will elections take place? Will there be a peaceful transition? Will repression increase? Could Venezuela explode into civil war? And Why is Maduro and the Chavista government so strong (between 20%-30% support)– all things considered? Answers to all these questions and more in the next report.
This report was written in the voice of Luis Salazar Mora (Caracas, Venezuela), with contributions from Marc Chéhab (Zurich, Switzerland).