Calculating a Cuban-style Transition in Venezuela

Calculating a Cuban-style Transition in Venezuela

By Andrés Cala

The cancer of Venezuela’s Hugo Chávez has relapsed and the popular leader has endorsed Vice President and Foreign Minister Nicolas Maduro as his successor and heir to the socialist revolution, a game-changing confirmation delivered over the weekend by the Comandante himself.

New elections will be triggered if Chávez resigns or dies before 2017. Eventually, most scenarios imply inevitable political and economic reforms that will be welcome by all. The timing and pace though depend on the uncertain variable of how soon Chávez gives up power, and a damaging power struggle, though unlikely, cannot be ruled out.

The priority is stability. In all cases, Venezuelan, regional, and global interested parties are aligned to make sure the post-Chávez transition is orderly. For one, it’s a question of time, and precipitating regime change would backfire. More significantly, any post-Chávez government will have little option but to move to the center slowly to avert social unrest.

Venezuela will eventually choose between socialism and social-democracy, which in practice only involves significant differences in social and political liberties, but not in economic policies. Any resulting regime will have to balance the two most pressings issues: paying for most of Chávez’s public spending program and revitalizing the country’s oil sector.

The differences will be stark, for no other reason that Chávez is irreplaceable. But the long-anticipated transition will undermine the more anti-American and radical left movements in the continent that will align around Brazil’s more moderate model, and in so doing consolidate Latin America’s stability.

But the price of social stability necessarily demands mortgaging Venezuela’s economic future.

The Cuban model, of course

Maduro was a rumored heir to Chávez’s still significant clout inside and outside Venezuela. He is a loyal, unwavering socialist, yet a moderate Chavista, well-respected diplomatically and rhetorically discreet. He appears to be in good footing both with the left and the military, a prerequisite to muster the necessary legitimacy for any peaceful transition in the country.

As could only the case though, the transition will be directed by Chávez, who in all likelihood has been planning it for some time. We also know that Chávez’s regime has the support of most Venezuelans, as confirmed by October elections, despite its obvious economic failings and waning influence as a result of his deteriorating health.

Governments and investors long-eager for signs of a political turnaround in Venezuela will calculate a lethargic and controlled Cuban-style regime change. Chavismo’s lose hold on power though and long term interests in the oil economy will support the transition.

Barring an imminent death, and considering the ideological and political resemblance, the odds are that Venezuela will mirror the gradual and very controlled transition of Cuba, as designed by the Castro brothers. It would also be nearly impossible to lead a radical break with the paternalistic state Chávez has nurtured for 14 years.

The military will not support any unconstitutional transition of power, and the opposition –now unified under the leadership of defeated presidential candidate Henrique Capriles- knows that its best strategy is to plan for very likely snap presidential elections, as the constitution mandates within a 30-day period in case of a presidential resignation or death during the first four years of a six-year term that begins in January.

The priority of Chavismo and of Chávez is to give Maduro enough time to secure a popular mandate. The regime has enough political and economic firepower to wane off the charismatic leadership of its messianic figurehead in support of its hand-picked heir.

But the Chavista coalition of military-right and political left is not sufficiently unified without their leader. Thus, and until elections, Chávez’s socialist revolution will focus on moderating its rhetoric and increasing public spending to consolidate its powerbase domestically, while struggling to offer a more friendly face to global markets and governments.

That translates into toned-down geopolitical radicalism and into soaring public debt to simultaneously bankroll public support for Maduro and capital-intensive government investment to boost oil production, especially in the Orinoco Belt.

While transition takes place, the state oil company PDVSA will deepen its role as a cash cow and that the country’s fiscal deficit will deteriorate as debt underwritten with oil output rises. Geopolitically it also means that Chavismo will naturally retrench to manage the internal transition and play a much more discreet role internationally, perhaps only seeking to be a protagonist in Colombia’s ongoing peace process with left-wing guerrillas.

Chávez will seek to secure some of his revolution’s diplomatic clout to inherit it to Maduro, although regional power Brazil and its left-of-center regime seems best poised to profit from Chávez’s leadership of Latin America’s left. Brazil will certainly play a definitive role as guarantor of Venezuela’s stability, regardless of who replaces Chávez.

Regardless, any post-Chávez government will be forced to implement a very gradual correction to rebalance public spending and investment toward the vital energy sector, which ultimately pays for everything else.

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