Published by Forbes: http://www.forbes.com/sites/afontevecchia/2014/12/16/fire-in-the-hole-the-imminent-implosion-of-venezuelan-chavismo/

This is a guest post by Andrei Serbin Pont(@SerbinPont), international analyst and research coordinator at Latin American think tank CRIES

Ever since Hugo Chavez´s rise to power in 1998, the opposition has announced (like the boy who cried wolf) that the demise of the Chavista regime was around the corner. After 15 years, it is hard to find similar allegations to be truthful or realistic. The institutionalists in the armed forces did not overthrow the government, the opposition did not win the elections, and the economic crises have not roused the pro-Chavez masses against the government they elected. The hypotheses presented by the opposition have proven wrong repeatedly.

Yet, none of this means the danger of governmental collapse in Venezuela is nonexistent. On the contrary, if the disintegration of the Chavista leadership has ever been closer, it is now. Not for any of the previously mentioned reasons, though. This time the threat comes from deep inside PSUV (United Socialist Party of Venezuela). The fractures that pre-date the death of Chavez have grown deeper and wider, pushing rival factions into a bitter internal confrontation that has led to a reorganization of the game board and in the process has even pushed some pieces off the table.

President Maduro, who counts with support from the Cuban government as well as a rather important sector of the PSUV, and commands the Bolivarian Militias (military reserve force composed of civilians with basic training), leads one of those factions. On the opposite corner stands Diosdado Cabello, a former low-ranking army officer who participated in Chavez´s 1992 coup and who is now the President of the National Assembly. He holds close ties with a large portion of the military, including the most loyal and convinced Chavistas, officers who distrust Cuba’s interference in Venezuelan affairs, and military leadership linked to licit and illicit business activities. Lastly, the most radical faction is composed largely by the “colectivos” (armed paramilitary gangs that are often used as political shock troops) and other base organizations, which play an important role in politically organizing low-income neighborhoods along with street mobilizations. In recent months, confrontations between “colectivos” and Maduro´s government have grown, leading to threats, arrests, deaths, and calls by the armed forces to suppress the “colectivos.”

The collapse in oil prices of the past few months, with international prices falling below $60 a barrel for the first time in five years, has accelerated what was already a steep economic crisis affecting all sectors of society. Currently, 80% of all food consumption in Venezuela comes from imported sources while basic goods remain scarce, all industrial sectors have been decimated while the oil refining industry remains on a marked downtrend. Inflation is out of control, topping 63% annually as of September, while money printing and currency debasement remains rampant. Venezuela’s electric system is on the verge of collapse, making blackouts routine.
The government has been trying to liquidate assets, from the attempted sale of Citgo, its U.S.-based refining operations, to discussions with Goldman Sachs over swapping the Dominican Republic’s approximately $4 billion in oil debt for hard currency, taking a 41% haircut. Nine out of every ten dollars that enter the Venezuelan treasury are from oil export revenues, and with a drop in prices of more than $35 per barrel, the oil fuse has been lit and is burning rather quickly. These dire circumstances have escalated the standoff between the aforementioned factions, who are now struggling not only on the political and ideological arena, but for control over assets holding the weak government together. Adding to the economic strains of the Chavista actors is the recent threat of sanctions by the U.S. against officials linked to human rights violations, which would affect a considerable chunk of the governing elite.

Meanwhile Venezuela´s opposition appears absent. After a series of violent protests in February, few are willing to take back the streets. Capriles, who had a close race with Maduro in the last elections, has been perceived by several radical opposition sectors as a convenient political tool of the Chavista regime. His opposition to social/political protests and insistence in waiting for the next elections instead of supporting mass mobilizations to pressure Maduro´s government have earned him many enemies within the opposition. On the other hand, Venezuela´s second largest opposition leader, Leopoldo Lopez, continues in jail without due process. He is being held in a military prison along with other political dissidents, and his family has accused authorities of torture and isolated confinement. Human Rights Watch, the Socialist International and the United Nations High Commissioner for Human Rights (amongst others) have expressed their worries for the conditions and rights of political prisoners in Venezuela. In addition, a few weeks ago, Maria Corina Machado (another prominent opposition leader) has been formally charged with conspiracy to assassinate President Maduro, in a new crackdown on the opposition. As a result of this, and its own internal struggles, the opposition is limited in its capacity to exert any pressure on the government.

The current crisis in Venezuela is quite different from the ones we have seen in the last 15 years, this time the threat to Chavismo´s capability to retain power does not come from the opposition, or the United States, but from its own core. Once Chavez died, his individual leadership was replaced by a monster with many heads, and this power struggle remains to this day. This is why we are not at the verge of a social/political/economic explosion in Venezuela, but nearing an implosion of Chavismo’s own governing structure. The aftermath of such implosion is impossible to predict, except for the fact that it is unlikely that we will see any “winning” sides. Venezuela´s economy has passed the point of no return, low oil prices will make any recovery efforts very difficult, and if any of those efforts succeed, they will most likely be sabotaged by rising debt levels, an increasingly inefficient bureaucratic state, widespread corruption aided by weak institutions, and an overall lack of governance in the country.

Published by Forbes: http://www.forbes.com/sites/afontevecchia/2014/12/16/fire-in-the-hole-the-imminent-implosion-of-venezuelan-chavismo/