Venezuela’s new National Assembly and the Caribbean

Over thelast few years Venezuela has through its PetroCaribe oil and developmentfacility provided an economic lifeline for most Caribbean Basin economies;extending support in a manner that no other country has been willing toreplicate.

It istherefore scarcely surprising that the outcome of the recent election in thatnation has resulted in varying levels of uncertainty in virtually all 17 PetroCaribemember states.

As iswell known, President Maduro’s ruling Partido Socialista Unido de Venezuela(PSUV) lost control on December 6 of the country’s National Assembly with the oppositioncoalition, Mesa de la Unidad Democrática (MUD)taking 112 of the parliament’s 167 seats.

This slim super-majority potentially offers the country’s opposition theopportunity to undertake far reaching reforms. They could dismissrecently appointed Supreme Court judges, change the country’s 1999 socialistconstitution, restructure institutions such as the election board, removeministers, and even approve a recall election against President Maduro in 2016if they were able to obtain the 4m signatures needed to trigger a referendum.

Theseare of course domestic issues that only indirectly touch the Caribbean; butthey have also resulted in concern about how Venezuela’s newly electedlegislators will respond to the deep-seated production problems of the stateoil company Petróleos de Venezuela (PDVSA), the continuing fall in the globaloil price – down to US$37.79 per barrel and still falling as this is beingwritten – and by extension, the future of the PetroCaribe programme.

Accordingto some Central and South American publications an urgent review of theagreements between Caracas and PetroCaribe beneficiary nations is to beundertaken.

In atelephone interview with La Prensa, the centre-right Nicaraguan newspaper, theSecretary General of MUD, Jesús Torrealba, said that they “will refine andrevise the agreements on oil, given the ailing economic situation facingVenezuela”.

“Faced withsuch criticism as we live with in Venezuela, for us it is clear that we mustseek the redefinition and re-orientation of some agreements that fit thecurrent reality of Venezuela,” Mr Torrealba was quoted as saying.

“Theseexercises in international solidarity literally take away the bread from themouths of Venezuelans to help some brothers abroad. It would be important toverify whether in fact these dollars, that drop of oil that is not directed tohospitals or Venezuelan schools, is reaching those who need it”, the MUD leadertold the publication.

Thatsaid the opposition’s bigger initial concern is more likely to revolve aroundfalling production and inefficiencies at PDVSA and the implication this has forturning around the country’s failing economy.

Althoughestimates vary, the PetroCaribe programme is believed to have cost Venezuelaabout US$2 billion a year in lost income in the period from 2011-2013, althoughthe subsequent more recent fall theprice of oil and a significant reduction in the volume of oil supplied to Cuba havesignificantly lessened the subsidy element of PetroCaribe in recent years.

The greaterlikelihood is therefore that, at most, the new legislature may only seek avariation in the terms of the existing PetroCaribe arrangement as it is likelythat – Cuba apart – many MUD legislators will want to retain the regionaleconomic and political influence that PetroCaribe has delivered should they winthe Presidency in three years time

SomePetroCaribe member nations such as Haiti, and for different reasons Cuba, mightbe disproportionately affected by any precipitate end to the programme, but thelow world oil price, the Caribbean’s diversification into renewables, and the externalsupport now available to create a new regional energy matrix, suggest theregion should, if it wishes, be able to effect a challenging but achievable energytransition out of PetroCaribe

Thatsaid a bigger issue for nations such as those in the Eastern Caribbean would bea loss of the development component or any change in the longer termPetroCaribe related investment and infrastructural support programmes that are underway,or the more recent new programmes that President Maduro has been discussing regionallyand with individual Caribbean Heads of Government.

Far morepotent however, are the political and economic issues within Venezuela that couldindirectly touch the whole region if there is gridlock between the legislativeand executive branches of government and this were to lead to internalinstability.

Followingthe election, MUD’s leadership have focussed on what is practical, establishingworking committees; on requesting information from the directors of the CentralBank of Venezuela (BCV), the National Statistics Institute (INE), the state-runoil company PDVSA, and the Ministry of Finance, in order to establishaccountability, enable the questioning of ministers and to obtain betterunderstanding the state of the economy in order to control budgetimplementation.

It is anapproach which would seem to suggest that, if it can retain coalition unity, MUDmay chose to tread lightly and avoid any early direct confrontation, especiallyin relation to the PSUV’s populist policies.

However,opposition leaders have also indicated a number of domestic issues they want toremedy rapidly when they take control of the National Assembly in January,including the granting of an amnesty for prisoners held for political reasons;an issue that could lead to an early confrontation.

PresidentMaduro has made it clear he would not sign any such change into law. He has also warned the country’s powerful militaryin a speech on December 12 that the country was “facing a large-scale crisis, acounter-revolutionary crisis that is going to generate a power struggle”. “Thisis no time for cohabitation or coexistence with the bourgeoisie”, he said.

Thereare many other potential flashpoints: the Executive branch of Venezuela’sgovernment may not accept that MUD has a super majority in the NationalAssembly; the present view of the Venezuelan military is unclear, as is the effectof the loss of control of the National Assembly may have on existing divisionswithin the PSUV; the MUD coalition may not hold; a variety of external actorsmay seek to play a role; the border dispute with Guyana, which has almost all-partysupport in Venezuela, may escalate; and plunging oil prices could result in newinternal social tensions if the economy deteriorates further.

TheCaribbean should prepare for what may be a long, bitter and at timesideological struggle.

DavidJessop is a consultant to the Caribbean Council and can be contacted at

david.jessop@caribbean-council.org

Previouscolumns can be found at www.caribbean-council.org

December 18th, 2015