Venezuela’s Military Makes a Political Intervention

Venezuelan President Nicolas Maduro has granted sweeping political powers to Defense Minister Gen. Vladimir Padrino Lopez. In a public announcement on July 11, the president said that all government ministries would be subordinated to the defense minister and the president and that Padrino Lopez would be charged with a government initiative to improve food supply throughout the country. The president also gave the defense minister the power to make decisions at the municipal, regional and business levels.

If Padrino Lopez begins openly dictating domestic policy as a result of the president’s announcement, it will officially put him in the position of being a parallel president. That the defense minister is able to craft domestic policies is not an anomaly. The Venezuelan armed forces have wielded significant political influence for more than a decade. Former President Hugo Chavez rewarded the loyalty of the armed forces during the 2002 coup attempt against him by appointing military leaders to key political positions. That trend continued under Maduro, who at the time of Chavez’s death lacked the political authority to decisively produce domestic policy in the same manner as his predecessor.

The choice to give the defense minister broad governmental authority clearly changes the official balance of power within Maduro’s administration. At a minimum, the military faction represented by Padrino Lopez now has the president’s permission to create policy, even though its decisions could go directly against the president’s best interests. Venezuela faces a socio-economic crisis characterized by rising social unrest, growing demand for a recall referendum against the president, a potential default on foreign debt and widening political splits within the ranks of the ruling party. The president is increasingly at the mercy of a political elite that faces the daunting task of formulating a strategy for the continued survival of the United Socialist Party of Venezuela (PSUV) ahead of the 2019 presidential election. And the 2015 legislative elections have showed that the deepening economic crisis can hurt the PSUV at the voting booth.

With three years left until the next presidential vote, the PSUV elite is likely trying to decide whether to transition away from Maduro, either by forcing his resignation or by orchestrating a recall referendum, so as to preserve party unity ahead of the next election. Placing the defense minister in a position of such authority could make the idea of a change in government less appealing to the country’s politicians and armed forces in the coming months. However, officially granting the defense minister so much more influence over the direct administration of government could make it more difficult for the president and his immediate allies to resist a recall referendum, should the defense minister and other military leaders choose to support it.

The next few months will be crucial in determining the political and economic direction Venezuela will take. If there is a recall referendum, it is still unclear whether it would be held this year or next. Should the president be recalled in 2016, new elections will be held. If, however, a recall does not occur until 2017, the vice president will succeed Maduro and hold office until 2019. So far, the government has delayed the referendum to the point that a recall in the remainder of the year appears less and less likely, but the timetable for holding a referendum will probably change if unrest significantly increases.

After months of international efforts to bring Venezuela’s government and political opposition together, a narrow window for starting a dialogue between the two sides appears to have opened. The opposition coalition Democratic Unity Roundtable announced on July 7 that it would attend an initial meeting with the government on two conditions: that President Nicolas Maduro’s administration would agree to hold a proposed recall referendum this year and that the Vatican, along with a delegation from the Organization of American States, would mediate the talks. Former Spanish Prime Minister Jose Luis Rodriguez Zapatero — part of the coalition advocating the talks, which also includes the U.S. and Dominican governments and the Vatican — arrived in Venezuela on July 8, presumably to hold more meetings over the potential dialogue.

Venezuela’s economic deterioration is a pressing concern for the foreign mediators promoting the talks. With less than $12 billion in foreign currency reserves and reduced revenue from the state-owned energy firm Petroleos de Venezuela, the Venezuelan government could default on its upcoming debt payments, which are due in October and November. A default would likely reduce the company’s already declining production, which would, in turn, further impair the government’s ability to sustain imports of food and essential items. High inflation would rise even more in response, stoking social instability and possibly giving rise to rampant protests. Venezuela would become more and more difficult to govern, raising concerns among neighboring countries and the United States over persistent unrest or the threat of a coup.

Given the looming threat of calamity, the Venezuelan and foreign institutions pushing for a dialogue likely believe that talks stand a better chance of leading to substantive negotiation this time around than they did in 2014. Unlike during the previous attempt at negotiations, the ruling United Socialist Party of Venezuela now faces an existential crisis. Its popularity has plummeted amid the country’s worsening socio-economic conditions. In 2015, the results of legislative elections revealed widespread dissatisfaction with Maduro’s government, and after years of economic hardship, the 2019 presidential election could yield another landslide defeat.

In addition, the party has divided into competing factions. At least one camp, publicly represented by former Interior Minister Miguel Rodriguez Torres and retired Gen. Cliver Alcala, contends that Maduro must allow a recall referendum to proceed — an idea that the president and his followers have rejected. A default on top of protracted economic decline would exacerbate the rifts in the ruling party, fueling internal discord that could eventually precipitate its disintegration into competing political entities.

Yet in spite of the mounting crisis, Maduro’s government has clung to power and deflected the opposition’s challenges — even though its current economic approach is unsustainable. The administration’s resistance is due in part to concerns among the political elite over leaving power through a negotiated settlement with the opposition or through a referendum vote. In surrendering direct control of the country’s institutions, some officials could be subject to criminal prosecution for their alleged involvement in cocaine trafficking, while others would forever cede their place in Venezuela’s political arena. National Guard commander Gen. Nestor Reverol, whom U.S. law enforcement and judicial authorities suspect of drug trafficking, was already ousted from his position on July 7. Reverol is believed to be a political ally of Aragua State Gov. Tareck El Aissami, and the two are rumored to be among the politicians most opposed to a referendum. Reverol’s removal, however, suggests that he and El Aissami have lost some influence in the government.

Even though the situation in Venezuela is becoming increasingly dire, entering a dialogue with the opposition at any cost is likely not in the government’s interest. The growing possibility of default and the accompanying risk of extreme inflation notwithstanding, the government may continue to resist negotiations and, indeed, political coexistence with the opposition. If the government and opposition fail to engage in talks to cement a political transition or even to improve governance in Venezuela, the country’s political relations with the United States will probably suffer. Deteriorating ties with Washington, in turn, could limit Caracas’ access to emergency financial assistance from abroad in the event of default.

Six months after the Venezuelan opposition gained control of the National Assembly, it is becoming increasingly clear that one of its primary goals — a referendum to recall the president — will probably not come to fruition this year. In early May, the opposition coalition submitted signatures collected from a nationwide campaign in a bid to get the referendum process started. But because that process requires the approval of the National Electoral Council, the administration of President Nicolas Maduro can delay it considerably.

And in all likelihood the government will try to stall the vote, if not cancel it outright. Pushing off a recall referendum until after January 2017 would enable the vice president to succeed Maduro, whereas a successful vote in 2016 would trigger new elections. If that happens, opposition candidates will have an opportunity to contest the presidency. From the ruling United Socialist Party of Venezuela’s (PSUV’s) perspective, passing power to a successor within the party’s ranks would be a far safer option in the event of a referendum.

Of course, whether the referendum actually moves forward largely depends on whether dissidents in the PSUV can pressure the government to submit to it. The opposition coalition alone likely lacks the clout to force a vote in 2016. Its members do not agree on the issue, and it does not control many institutions through which to sway the government. Former presidential candidate Henrique Capriles, the leader of Primero Justicia, heads the biggest opposition faction in favor of a referendum, but so far his efforts to pursue one have been fairly easy for the government to deflect. Meanwhile, other opposition groups, including Accion Democratica and Un Nuevo Tiempo, have reportedly expressed a willingness to consider working out a solution with the government. Any negotiation of the kind would likely require these factions to withdraw their support for a 2016 referendum.

The power of PSUV dissidents and possibly some opposition factions will decide whether a referendum is held in 2017, if at all. Capriles’ efforts will not be enough to persuade the National Electoral Council to schedule the vote any sooner. But the potential for social unrest will continue to create uncertainty in Venezuela. If protests become more frequent, intense or widespread, the government’s strategy — and that of its rivals — for reaching a political resolution could change.

Amid shortages, reports of riots over food in Venezuela have become more frequent in recent months. As the country’s economy continues to deteriorate and its people struggle to deal with reduced access to increasingly expensive food, looting at distribution centers and markets could spiral out of control, adding pressure to force President Nicolas Maduro from office.

On May 11, a mob far outnumbering the security forces standing guard forced its way into a distribution warehouse in Maracay, less than 80 kilometers (50 miles) west of Caracas, and carried off food. The fact that the crowd defied armed guards reveals the magnitude of the situation in Venezuela, where the food, water and electricity shortages that have plagued its populace for years have worsened. Guards managed to thwart a similar looting attempt the same morning in Guarenas, about 32 kilometers east of the capital.

Nonetheless, the frequency of looting attempts, which have been ongoing for about a year, is increasing. Without economic relief, the number and size of food riots could mushroom, further aggravating divisions among the ruling elite over how to deal with the country’s economic crisis. Furthermore, looting incidents could get out of control, causing a wave of unrest like the one that hit Caracas in 1989, when the lifting of price controls led to days of widespread rioting. If circumstances in Venezuela continue to worsen, the ruling United Socialist Party of Venezuela’s support for the president, whose term ends in 2019, may further wane. This could give his opponents the momentum they need to push through a referendum to recall him. Though Maduro could continue to delay a referendum through the National Electoral Council, he would likely do so at the risk of exacerbating divisions within the party.

Meanwhile, low oil prices and rampant inflation leave the government with little room to maneuver on the economy. Until deep reforms are undertaken, the situation in Venezuela will remain volatile. And if rioting over food continues to escalate, Maduro could find himself with fewer options in his bid to hold on to power.

Venezuelan opposition coalition Democratic Unity Roundtable (MUD) announced its strategy March 8 for forcing President Nicolas Maduro to resign. The plan calls for demonstrations, possibly a recall referendum, and a constitutional amendment to shorten the president’s term and to hold new elections in December. The first demonstration is scheduled for March 12 in Caracas. Additional protests are expected across the country.

The coalition’s call to protest is its first attempt to break the political deadlock between the government and the legislature. Since the Dec. 6 elections in which MUD won a supermajority of 112 legislators in the National Assembly, the Maduro administration has used its influence over the country’s other political institutions, particularly the supreme court, to keep the lawmaking body in check. The National Assembly has discussed legislation, but it has been limited by Maduro’s refusal to recognize its authority.

The opposition’s rationale for protests is logical, and they will complement a recall referendum and a constitutional amendment. Through the supreme court, Maduro has managed to box the opposition in and to resist legislative attempts to shape his actions or to threaten his continued rule. Similarly, the court and the National Electoral Council could be used to slow a referendum or a constitutional amendment, even if either or both were passed. That leaves street protests as the sole means by which the opposition can pressure the government. If protests grow to include a substantial number of dissatisfied constituents, it could influence whether the armed forces and other political leaders continue backing the president. It is far from certain that the military would turn against Maduro (Minister of Defense Gen. Vladimir Padrino Lopez remains loyal), but there is growing talk within the ruling party of replacing the president.

If the opposition sustains large protests, the president and his closest allies would find it increasing difficult to stave off their own party’s calls to step aside. Doing so would deflect public anger against the government and would allow for politically unpalatable economic measures to be taken. But the president has so far resisted such a move because it would open up his closest supporters to risk, including arrest and extradition on drug trafficking charges.

The support of political leaders, particularly military figures such as Padrino Lopez, will be key to determining whether Maduro can resist the attempts to force him from office. If the opposition fails to garner attendance at its rallies and the supreme court continues to stymie attempts to recall the president, then Maduro stands a chance of at least keeping his post to 2019. However, the risk that disorganized, small protests against inflation and failing public services will coalesce into major unrest will persist. Security forces could contain unrest limited to the country’s opposition. But wider conflict involving diverse segments of society and the government would present a much greater threat to Maduro and his supporters.

A proposed constitutional amendment put forth in the National Assembly to limit presidential terms to four years is apparently targeting the remainder of President Nicolas Maduro’s tenure. Meanwhile, on Jan. 22, the country’s supreme court overruled the legislature’s rejection of Maduro’s economic emergency decree. First introduced Jan. 14, the decree gives the president broad power over national spending and economic planning and oversight of private-sector productivity levels. And, though it is valid only for the next 60 days, the decree can likely be extended through April. Because it is so vague and seems to afford Maduro such broad economic powers, including potentially the power to expropriate private companies, the decree will further complicate Venezuela’s sociopolitical and economic situations.

It is hard to overstate the importance of the government’s emergency economic decree. Venezuela’s economy is reeling — inflation is rampant, the government is rationing electricity and water and the country depends almost entirely on the languishing global oil market for its export revenue. The decree gives Maduro the power to take hold of whatever is left of the country’s dwindling private sector, including the supply chain for Venezuela’s food distribution network, which is dominated by Empresas Polar, a family-owned firm. Should Maduro attempt to redirect Polar’s food network into that of a state-owned supermarket like Mercal, the effects on private enterprise could be devastating. Moreover, any move by the state to expropriate Polar could set off massive street protests, potentially forcing the military to intervene.

Maduro’s economic decree will undoubtedly prolong the political battle between the opposition-controlled National Assembly and the president and his backers in the supreme court. Pro-government magistrates on the court have consistently supported Maduro, even going so far as to take away the opposition’s legislative supermajority by reducing its number of deputies in the National Assembly from 112 to 109.

Maduro and his allies will fight any opposition moves they believe will reduce their hold on power, including legislation they see as drifting away from a state-based economy or offering amnesty to political prisoners. Should the president and his supporters be forced out of power, they want it to be on their own terms. Viewed in this light, Maduro’s reaffirmed economic powers, and the fact that they cannot be challenged for at least the next two months, become all the more important.

Still, according to Stratfor’s legal sources in Venezuela, the opposition could employ a number of strategies to counter Maduro that the supreme court could not override. Opposition lawmakers could call a presidential referendum or try to reduce Maduro’s term in office — neither of which requires supreme court approval. That being said, both courses of action present their own sets of difficulties, and the opposition has not been able to reach a consensus on action. Inside the opposition, some groups are shooting for a referendum — which would likely require installing friendly figures on the country’s National Electoral Council — while a more moderate faction led by National Assembly Speaker Henry Ramos Allup would prefer a term reduction, something moderates within the ruling United Socialist Party of Venezuela would likely support.

Considering its options, the opposition will likely try to reduce Maduro’s term and attempt to hold elections in December 2016, aiming for a new president by April 2017. Given the internal divisions within the chavista elite in Maduro’s government (those loyal to former President Hugo Chavez), this is probably the best choice for opposition lawmakers. It is also one that the armed forces and moderate chavistas seeking to avoid social unrest would probably support.

The Venezuelan government has fallen into institutional crisis at a time when it can ill afford to be anything but unified. On Jan. 11, the Venezuelan supreme court declared that all actions taken by the National Assembly, a body currently controlled by the opposition, would be deemed invalid. The decision came after the legislature flouted a court order by appointing three lawmakers from districts with contested election results.

The court’s decision indicates that Venezuela’s ruling elite, led by President Nicolas Maduro and former National Assembly speaker Diosdado Cabello, has refused to recognize the authority of the opposition-held legislature. The two men, who have been among the most powerful political figures in Venezuela since President Hugo Chavez died in 2013, are spearheading the United Socialist Party of Venezuela’s (PSUV) moves to limit its rival coalition’s influence in the government. Refusing to recognize the National Assembly’s authority is a last-ditch effort to preserve the ruling party’s power, and neither side appears willing to make even minor concessions.

But another crisis looms larger than the worsening political stalemate in Venezuela. An intractable economic crisis, which already turned the bulk of voters against the PSUV during Dec. 6 parliamentary elections, threatens the government. If left unaddressed, the country’s economic deterioration could exacerbate food shortages and raise inflation, eventually spurring widespread social unrest. But Maduro and Cabello cannot undertake the disruptive measures needed to right the economy without inviting anger from voters and risking their own positions in the government. Consequently, the PSUV elite is firmly committed to its “wait-and-see” approach, delaying major economic adjustments (other than simply cutting imports) in the hope of waiting out low oil prices. But the strategy will only delay the inevitable.

In the short term, the PSUV has made the risky decision to confront the opposition to maintain its grip on power. By refusing to recognize new legislation passed by the National Assembly, PSUV leaders have made it unlikely that the opposition would tolerate or yield to the government’s demands. Doing so would risk widening the divisions within the opposition’s ranks, and thus the opposition’s relevancy on the national stage. As the breach between the opposition-led parliament and the PSUV-appointed Supreme Court widens, the ruling party will in turn find it more difficult to take any meaningful action toward fixing the economy.

In the best-case scenario, the threat of political gridlock will grow over the next few months as the Venezuelan government and National Assembly vie for power. But at worst, major demonstrations capable of destabilizing the government could break out sometime in 2016. Street protests are a viable option for some segments of the opposition, though they would undoubtedly prompt a crackdown by security forces loyal to the government. It will be critical to watch whether a consensus forms within the opposition coalition to incite protests as a way of pressuring Caracas. If it fails to materialize, the government’s actions will likely drive a wedge between the opposition’s various factions, rendering the coalition less effective and mitigating one of the many threats facing the ruling PSUV.

A legal case that is currently pending in the Venezuelan Supreme Court could be a catalyst for political gridlock and instability in the country. On Jan. 6, the ruling United Socialist Party of Venezuela (PSUV) requested that the court reverse the swearing in of three opposition legislators from Amazonas state. Previously, a December Supreme Court ruling had barred the three from taking their seats, but the opposition Democratic Unity Roundtable ignored it. The request now under consideration also asks the Supreme Court to void any legislative decisions made by the National Assembly until the body complies with the court’s original order to remove the lawmakers in question.

The latest legal case may prove to be a source of further infighting among Venezuelan politicians in the coming weeks. If the court acquiesces to the PSUV’s request, it will put the opposition in a difficult position: It will have to choose whether to back down and comply or ignore the court once again. On the one hand, obeying the court would limit the opposition’s political power and would probably exacerbate the existing divides within the Democratic Unity Roundtable coalition, threatening the coalition’s tenuous cohesion. On the other, defying the decision would likely create a legal vacuum in which the central government would refuse to recognize the opposition’s legislative verdicts. This would likely lead to political stalemate, restricting the opposition’s ability to leverage its newfound power.

It is clear that the legal options available to the opposition to implement its domestic policy agenda are becoming fewer. It is possible that some segments of the opposition will turn to street demonstrations in an attempt to pressure the government to accept its stance on the contested lawmakers, though this tactic probably will not be popular with the rest of the coalition.

It is also becoming increasingly apparent that Venezuelan President Nicolas Maduro intends to rulewithout the opposition’s input. Still, this does not mean he will be able to withstand public pressure for economic reform. During a Jan. 6 Cabinet reshuffle, Maduro named Luis Salas, a leftist sociologist, Venezuela’s next economic minister. The decision would seem to indicate that the president intends to continue his wait-and-see approach to the country’s economy, at least to some degree. But a report emerged Jan. 8 that suggested Industry and Trade Minister Miguel Perez Abad, a businessman, will have significant influence over Venezuela’s economic policy. This signals at least the possibility of economic reform ahead. That said, the Maduro administration has so far shown an unwillingness to undertake any significant currency devaluation or consumer price increases, which would help put the country’s economy back on track but would carry significant political costs for the government.

Notably, the latest reshuffle left officials loyal to former National Assembly Speaker Diosdado Cabello out of the new Cabinet. Both Gen. Giuseppe Yoffreda and Jose David Cabello (Diosdado’s brother) were removed from their respective posts at the head of the Air and Water Transport Ministry and the Industry and Trade Ministry. Neither man was reassigned to a new position. This could be a sign that Cabello’s influence within the PSUV administration is waning, even though he remains one of Venezuela’s most powerful political leaders.