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Ricardo Haussman, Jose R. Morales-Arilla/Project Syndicate:
What Should Biden Do About Venezuela?
Former US President Donald Trump's policy of maximum pressure on the Venezuelan dictatorship failed to dislodge the regime or alleviate the humanitarian crisis. If Joe Biden is to succeed, he will need a policy that makes life as burdensome as possible for the elite and as bearable and democratic as possible for ordinary Venezuelans.
CAMBRIDGE – Imagine you are driving down a road and arrive at a junction. You are not sure where to go, so you turn right. After some time, the road becomes unpaved, bumpy, and steep. The first thought that comes to mind is that you should have gone left. But, truth be told, you do not know if that would have led to a dead-end street. This is how many within and outside Venezuela feel about the country today.
After all, former US President Donald Trump's strategy of maximum pressure on the dictatorship, reflected in myriad sanctions imposed on the country, neither restored democracy nor addressed the country's catastrophic economic and humanitarian crisis. According to the International Monetary Fund, Venezuela's GDP in 2020 was over 75% below its 2013 level – a globally unprecedented peacetime collapse (and worse than the impact of most wars). Small wonder that over five million people , some 15% of the population, have left the country since 2015.
With Trump out, President Joe Biden's administration has announced a foreign policy centered around the defense of democracy. How should it deal with Venezuela, given that previous efforts to restore democracy and prosperity have not delivered either?
Venezuela's regime turned away from electoral democracy when it lost the capacity to win elections. In 2010, the opposition won control of local governments in the country's major cities and states, only to see their power and budgets hollowed out, as parallel structures, controlled by the regime's founder, President Hugo Chávez, were created in their stead.
Following Chávez's death in 2013, his successor, Nicolás Maduro, went further. In 2015, after the opposition won a two-thirds majority in the National Assembly, the outgoing assembly used its lame-duck session to pack the Supreme Court, which then stripped the incoming assembly of its powers. In 2016, the court also took away the constitutional right to a recall referendum, and in 2017 it upheld the creation of a parallel assembly.
With the electoral route closed, Venezuelans took to the streets, leading to a violent crackdown (which, according to the United Nations Human Rights Commission and the International Criminal Court, included crimes against humanity). Although this pressure forced the government to accept negotiations on three occasions – led by the Vatican in 2017, the Dominican Republic in 2018, and Norway in 2019 – none brought a return to democracy any closer. Instead, some negotiators were exiled; one, Fernando Albán, died in police custody in October 2018.
Moreover, having lost so badly at the ballot box, the regime decided that it would never again permit competitive elections. The May 2018 presidential election and the December 2020 parliamentary election were so outrageously unfair that the opposition boycotted them, and most world leaders refused to recognize the results. When Maduro's term expired, some 60 countries decided to recognize Juan Guaidó, the President of the National Assembly elected in 2015, as interim president. Now that the term of that National Assembly has also expired and the new one is not recognized, a legitimacy problem has weakened international support for Guaidó, especially in Europe.
In this context, a chorus of analysts has been arguing that the catastrophic performance of the Venezuelan economy is due to international sanctions ( we disagree ): instead of pressure, they argue, what the country needs is negotiations .
This naive view gets the issues wrong. The fundamental problem in Venezuela is that the ruling clique has little to gain from a negotiation: their “best alternative to a negotiated agreement” (BATNA) is better than what they would get from allowing free and fair elections. Promises of future benefits, such as power-sharing rules, never seem as attractive as a bird in the hand.
Experience from previous negotiations shows that international non-recognition (which prevents Maduro from controlling Venezuela's assets abroad) and sanctions are the only sources of leverage on the government. So, the only road to a negotiation is to make the status quo so unpleasant for the ruling clique that its unity crumbles. Only worsening their BATNA will give them a reason to negotiate. That is exactly the strategy followed by the international community that led to the 2015 Iran nuclear deal and the end of South African apartheid. 1
Non-recognition and sanctions are fundamental elements of a strategy to reestablish democracy in Venezuela. The sanctions need to be strengthened by making them more multilateral and more burdensome for the elite, and by ensuring that they spare ordinary Venezuelans, some of whom have been hurt.
This can be fixed. But two facts are important to remember: first, the largest-ever collapse in imports of food and medicine happened in 2016, before the Trump administration's sanctions . Second, the sanctions forced the regime to abandon its efforts to monopolize international trade. The subsequent liberalization of foreign exchange and prices increased the availability of imported food and medicines.Sign up for our weekly newsletter, PS on Sunday
To strengthen society, the international community should help Guaidó's government transfer aid, as they did to frontline health-care workers in September 2020, circumventing Maduro's blockade. The technology also exists for Guaidó's government to provide electronic identity documents to citizens, denying the regime a mechanism for stripping people of their rights.
Finally, these technologies could also help address the legitimacy problem. In December 2020, the outgoing National Assembly organized cyber-elections, where citizens could vote with a smartphone. This same technology could be used to elect the person or body that would be Venezuela's internationally recognized interim president, serving until negotiations to reestablish democracy can succeed. 1
Biden told the G7 recently that: “Democracy doesn't happen by accident. We have to defend it, fight for it, strengthen it, renew it.” In the case of Venezuela, this requires a clear-eyed strategy to afflict the comfortable and comfort the afflicted. The road may be bumpy and steep, but, unlike the alternative route – negotiations without sanctions – it at least leads somewhere.
Ricardo Hausmann, a former minister of planning of Venezuela and former chief economist at the Inter-American Development Bank, is a professor at Harvard's John F. Kennedy School of Government and Director of the Harvard Growth Lab. José Ramon Morales-Arilla is a PhD candidate in public policy at Harvard University. Petroleumworld, do not reflect either for or against the opinion expressed in the comment as an endorsement of Petroleumworld.
Editor's Note: This article was originally published by Project Syndicate, on March 04 2021. All comments posted and published on Petroleumworld, do not reflect either for or against the opinion expressed in the comment as an endorsement of Petroleumworld.
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