Caracas Chronicles

I’ve been in the San Francisco Bay Area over forty years and it was the first time I’ve driven the thirty-five miles to Stanford in Palo Alto. What I knew about Stanford was that it’s one of “the top 3 [universities] in multiple global and national rankings” and its specialization in technology gave birth to Silicon Valley. And Palo Alto oozes with that same sort of prestige, something you notice as you approach Stanford on Sand Hill Road and pass all the multi-million dollar offices of the venture capitalists for nearby Silicon Valley.

The conclusions that Venezuela is in deep doo-doo didn’t require the data this panel of experts offered to convince us.

The huge buildings are hidden behind beautiful landscapes of trees and shrubbery, much the way Palo Alto itself hides adjoining East Palo Alto. Locally notorious for its 18% poverty rate, a city where 34% of its citizens are undocumented, East Palo Alto is a whole other story—but  it’s on the other side of the tracks from where we were going.

The Venezuelan Student Association (Vensa) at Stanford University, according to its President, Ena Alvarado, is a scant 20 people at the core, with a few other Venezuelans participating at the periphery. In order to put on such a conference as “Venezuela at a Crossroads” they had to hit up 13 different funds, associations and organizations—no mean feat for such a small group. But they managed to put on a great event, bringing together Francisco Monaldi, Colette Capriles, Javier Corrales, Margarita López Maya, Miguel Ángel Santos, and Stanford’s own Larry Diamond, an expert on the issue of democracy. This all-star line-up drew some 80 people to hear presentations, engage in panels and share tasty turkey sandwiches and chipotle chicken wraps.

The not-so-startling conclusions that Venezuela, simply put, is in deep doo-doo, didn’t require the data this panel of experts offered to convince us—everyone in the audience already seemed to know this much. It was the hows, whys and what’s-nexts we all seemed to find so compelling that we remained packed together in an auditorium for the full eight and a half hours of a beautiful—if cold—early Spring Saturday.

Venezuelans are under such great pressure as to be unable to think of anything but survival.

At 9 a.m. Vensa students were on hand in the lobby of the Shriram Center auditorium to greet attendees with customary Venezuelan warmth and lots of coffee. That’s where I met Ena Alvarado, a student of English Literature at Stanford, who would be opening the conference with a brief, powerful and personal reflection on the situation in her homeland under the chavista government. The conference was called by Stanford students, as she put it in her remarks, to allow people to think about the situation of her country because Venezuelans in Venezuela were so desperate and under such great pressure as to be unable to think of anything but survival.

As I took my seat in the auditorium, I caught sight of someone I vaguely recognized and yet couldn’t place at first. He wasn’t to appear on the panel but instead took a seat toward the back. Only later did I find out that it was Leopoldo López Sr. And there were other older Venezuelans like him sprinkled throughout the otherwise very diverse audience.

The subjects taken up by the speakers would be quite broad, but essentially they came down to a focus on the political and economic dimensions of the disaster and the role oil plays greasing the skids to hell. By far, most of the focus was put on the political dimension of the crisis. Larry Diamond took up the political impasse after Ena Alvarado’s opening remarks. He pointed out what other speakers would later reiterate in their own ways, that the crisis would unlikely be resolved from above by those in power. He said that “the key to all successful democratic transitions is to unite the opposition and divide the regime.”

The crisis will unlikely be resolved from above by those in power.

It’s critical, Diamond went on, that the opposition develop a unified strategy and begin pulling away moderate elements from the regime. Even though he found it repugnant that criminals might walk away unpunished, the present mafia (my word, not Diamond’s) needs to be divided. He gave the example of the bachaquero military man who could be given impunity to turn against the narco general “dead-ender” who would continue a fight to the death knowing that he had no safehaven from the US. Such divisions will be required if the opposition hopes to succeed. That might mean going so far as to declare amnesties for “petty” Chavista criminals so as to undermine the power and support of the mafia dons.

Margarita López Maya, in her presentation, gave the background to the crisis, pointing out Chávez’s “pivot” in 2006-2007 from a Constitutionally-based project of extending liberal democracy with other democratic forms such as “participatory protagonistic democracy” to a project of “21st century socialism” and “popular power” that increasingly became an authoritarian recentralization of power in the hands of the “Comandante Presidente.” Using oil money for patronage, the populist caudillo worked overtime to extend and personalize his power and Dr. López Maya used the image of the giveaway programs to convey this: “So, for instance, it wasn’t the state that gave you a refrigerator: it was Chávez!”

It wasn’t the state that gave you a refrigerator: it was Chávez!

Consistent with populist projects as a whole, Chávez gained immense personal power through his polarizing discourse, an effective technique for most of his time in power. Now, with Maduro, that discourse has changed to “we are one Venezuela,” an indication of the weakening of the chavista project. Polarization, after all, only works when you have a society roughly divided in half, but since 80% of Venezuela is opposed to the hard-core chavista 20%, that polarization is increasingly more difficult to maintain.

Colette Capriles: Ramos Allup in his term as president has alienated the military.

Colette Capriles talked about the way in which the opposition had failed to unite with a single strategy and “peel away” support from the chavistas. It had let Ramos Allup maneuver into power this first year that it held the majority in the National Assembly (AN), even though the presidency of the AN by right should have gone to Primero Justicia as the largest opposition party. Ramos Allup in his term as president had alienated the military and been unable to follow through on his promise to get rid of Maduro in his promised six months. It was clear that the desire for change drove the December 6, 2015 parliamentary elections, but none of the major parties of the MUD have even begun to clarify a strategy for regime change, talk about the role of chavismo in a new government, or consider issues of transitional justice. The leaders of the opposition had simply turned into “elected officials.”

Maduro has successfully warded off most risks to his presidency by means of the Judicial power.

Javier Corrales picked up the political theme in the afternoon session, talking about maneuvers Maduro had used thus far to stay in power. He offered the results of an informal and preliminary study he’d done of “interrupted presidencies” in Latin America and the various factors that had been present in those presidencies. These included military, constitutional, electoral and economic crises, street protests, congressional minority or ruling party splits. Maduro had successfully (thus far) warded off most of these blows by means of the Judicial power (the Constitutional crisis and minority status in congress); he’d bought off the military and thus avoided that blow; the sure electoral defeat he’d evaded by simply voiding elections; the economic crisis he’d managed with continued patronage to his followers; and the street protests he’d met with repression. Finally, he’d kept the ruling party from splits by accommodating the various factions.

Miguel A. Santos concentrated on the economic theme, presenting from his new research. Caracas Chronicles readers will probably already be familiar with his recent work, broken down very well by Carlos Hernández here, and based on Santos’ own article with Douglas Barrios (here). Santos elaborated on his study and noted the dimension of the problem by comparing it to the only two other recent economic disasters of its scale in Latin America: Cuba in the “Special Period” when that country’s income loss was -32%, and Nicaragua during its revolution (1978-1980) when incomes declined -29%. Venezuela’s income loss 2014-2016, by comparison, is now estimated to be -29.1%.

In another graph Santos showed that “over the previous twenty years only four episodes worldwide registered higher economic losses than Venezuela”: Libya (2009-2011), South Sudan (2010-2012), Iraq (2001-2003) and Central Africa (2012-2014). Santos crunched the numbers various ways and concluded that with some policy changes here and there, Venezuela could conceivably recover economically in ten years.

Over the previous twenty years only four episodes worldwide registered higher economic losses than Venezuela.

Santos said many people had found his conclusions pessimistic and depressing. Let me here interject some thoughts from the peanut gallery. By the end of his talk I couldn’t help feeling he was way too optimistic.  His conclusions seemed to presume the near-total transformation of Venezuelan culture and society from rent-chasing to highly productive: in itself, hard for me to conceive. The conclusions also assumed the likelihood of luring back international investors, entrepreneurs and the small business persons who had fled the country, not to mention all the professionals (like the oil workers Chávez had blithely dismissed on television some fifteen years ago). All those people are now settled in new lives all over the world. Why would they want to return to a country driven back to the stone age in development by wrong-headed policies where the daily challenge of finding enough food to eat will likely still be a problem for a long time to come after a post-chavista transition? Certainly, there will be opportunities, but unless someone deals with the growing numbers of pranes y malandros and the colectivos, there will also be risks that investors, et al. might consider too great to take on… 

Oil is neither blessing nor curse, but an opportunity that generates huge challenges.

Francisco Monaldi presented last with a look, predictably, given his work, at oil. Is it a blessing or a curse? Neither one, he said, but rather “an opportunity that generates huge challenges.” He pointed to the economic success of Venezuela from 1920-1980 and the relative political peace from 1958-1988. Many economies dependent on one resource have an extreme growth, followed by a long slump and then a gradual, and often stable, upward growth. Norway, for example. But Venezuela’s radical turn with Chavez, whose popularity moved with the price of oil, is the cause of its uniquely calamitous collapse, unlike all other oil producing countries that better managed both the boom and the bust. Norway banked those profits and now sits on a treasure chest of some $900 billion in investments from which it takes its three or four percent per year from stock yields, interest and dividends to manage its economy.

Venezuela did something else with its opportunity. Like East Palo Alto, Venezuela is on the other side of the tracks from places like Norway or even Saudi Arabia. And it looks like even harder times coming on that side of the tracks.