CARACAS, Venezuela — Six months ago, Venezuelan President Nicolás Maduro faced bloody protests demanding his resignation. The streets were clogged with flaming barricades. By the time the smoke cleared, dozens of protesters and national guardsmen were dead, and Maduro’s government was widely assailed for rights abuses.
Those were the good old days.
Venezuelan oil, the lifeblood of the leftist revolution entrusted to Maduro by the late Hugo Chávez, was worth $97 a barrel then. Now it’s middling around $70, and with every dollar it dips, Venezuela’s export-dependent, popularity-challenged government loses $700 million a year.
With the money pot shrinking, Maduro’s approval rating has slumped to 30 percent, according to recent surveys, down from 55 percent in April 2013. The supermarket scarcities and unchecked crime that fueled the protests earlier this year are as bad as ever.
Loath to adopt austerity measures that would hit his softening support base, Maduro has been borrowing money from Wall Street at usurious rates, with the country’s plunging benchmark bonds hitting a six-year low last week.
All of this has left friends and enemies alike wondering how long the government can go on until something snaps, especially if oil prices slip further. Venezuela’s desperate attempts to get fellow OPEC states to cut production have failed to sway the mighty Saudis. The cliff seems closer than ever.
“It’s as if Maduro is playing one of those zombie video games,” said analyst Luis Vicente Leon, director of the leading polling firm Datanalisis. “As the zombies come at him, he shoots one here, another there, but more and more keep arriving until they’re on top of him.”
Stalking Maduro are Venezuela’s long-festering core problems — collapsing productivity and Chávez-era currency controls that have pushed inflation to 63 percent, one of the world’s highest rates.
New lines of credit from the world’s other big lender, Beijing, aren’t likely, with China growing frustrated with Venezuelan mismanagement, said Francisco Monaldi, a Venezuelan economist who is a visiting professor at Harvard’s Kennedy School of Government.
Maduro can still keep fiscal calamity at bay, analysts say, but he’s shown little appetite for the unpalatable political moves that it will require.
His government could sell off valuable assets, particularly the U.S. gasoline retailer Citgo and its affiliated network of refineries and pipelines. He could also further cut subsidized oil shipments to key allies such as Cuba and Nicaragua.
The most obvious measures for Maduro to take, and those likely to have the most meaningful fiscal impact, would fall hardest on the poor Venezuelans who revered Chávez but have grown skeptical of his understudy.
Maduro has refused to devalue Venezuela’s currency, the bolivar, instead setting up a complex exchange system with three separate rates for U.S. dollars. The base rate is 6.3 to the dollar. The tourist rate is 12. Then there’s a third rate meant for importers and other businesses that trades at 50 bolivars to the dollar.
But on the black market, where most of the money moves, a dollar is now worth 120 bolivars, double its value from earlier this year. When Venezuela’s finance minister said last week that the government had no plans to devalue the bolivar, the currency dropped 20 percent almost overnight.
Not surprisingly, the gaps in Venezuela’s four-tiered exchange system have been filled by all manner of currency swappers, scammers, hoarders and smugglers, creating one of the country’s few growth industries. Wealthier Venezuelans with access to dollars are big winners, while the poor have seen the cost of basic foodstuffs double this year, outpacing the periodic increases to the minimum wage decreed by Maduro.
There’s no painless fix. Adjusting Venezuela’s currency controls to bring the bolivar in line with the black market value of the U.S. dollar could be politically disastrous for Maduro, since it would further slash the wages of Venezuelans who don’t have their savings stockpiled in U.S. bank notes.
A more palatable move may be a long-deferred hike of the world’s lowest gas prices — equivalent to less than a penny per gallon. The giveaway costs the government approximately $7 billion a year, and amounts to a huge subsidy for the wealthier Venezuelans who favor gas-gulping SUVs.
Yet Maduro has shown little inclination to ask his supporters for sacrifices. “With Chávez they were willing to do it because they thought the future would be better,” said Leon, the Datanalisis president. “With Maduro, it’s not clear that’s the case.”
Instead, Maduro is channeling Santa. He announced a new “Happy Holidays” campaign this month, ordering retailers to sell Barbie dolls at huge discounts and set up a military-run appliance sale where shoppers line up for 80 percent markdowns on microwaves, computer tablets and other big-ticket items. Such fire sales have become a magnet for “re-sellers” who can easily flip the goods on the black market.
The government’s fiscal profligacy is compounded by a kind of paralysis at the top levels, where internal battles are said to rage between those urging greater discipline and more radical Chávez followers who want the government and the military to take over more of the economy.
“The top leaders of the government are more like a collective,” said Dimitris Pantoulas, a Caracas-based political analyst who is close to current and former government insiders.“It’s not like before when it was only Chávez.”
At the top with Maduro is National Assembly President Diosdado Cabello, a powerful figure with closer ties to the military. With a Jacobean touch, the dour Cabello and other top government figures this month have taken to the airwaves to denounce anti-Chávez “infiltrators” within the ruling United Socialist party.
“The enemy who most harms us is the enemy within our ranks,” said Francisco Ameliach, a high-ranking socialist party member and state governor. He tweeted a hotline number and a Gmail address for reporting any traitorous activity.Venezuela’s beleaguered opposition hasn’t had much success capitalizing on the divisions in the Chávez ranks, and still struggles with its own fissures. Its opportunity comes next year, with parliamentary elections.