Clashes Rock Caracas, Maduro Seen As Vulnerable
The unrest is fueling widespread perceptions that president Nicolas Maduro?s government may be vulnerable to a coup, although no clear protagonists have emerged from within the opposition or the military.
The long-running crisis, made worse after oil prices started tumbling almost two years ago, took a dark turn on 13 May when Maduro granted himself expanded emergency decree powers. In a lengthy diatribe yesterday, he dismissed an opposition campaign to conduct a presidential recall referendum, and predicted the demise of the opposition-controlled national assembly.
"It's only a matter of time until the national assembly disappears because it is out of touch with our national interests," Maduro said. "We have no obligation to hold a recall referendum."
He accused opponents of using the recall campaign to "incite insurrection and violence."
Maduro's stance is hardening as Venezuela's oil-based economy sinks into hyperinflationary mode, food, medicine and fuel become harder to find, and electricity supply grows increasingly sporadic.
The Venezuelan central bank received only a net $40mn in April from state-owned oil company PdV, after subtracting the company's costs including debt obligations. The bank's hard currency cash reserves dropped below $190mn on 13 May. The bank's total international reserves dipped to $12.1bn, their lowest level in close to 17 years. Venezuela derives nearly all of its hard currency revenue from PdV?s oil exports.
PdV's crude production appears to be sliding as well. Upstream officials in PdV's western and eastern divisions forecast a more than 200,000 b/d decline in 2016 as lower oil prices and a resulting cash drought force the suspension of critical upstream investments and well closures. Argus estimates production at around 2.2mn b/d at most, but clear data is difficult to obtain and interpret, partly because of the use of imported diluent and light crude to transport, blend and upgrade extra heavy crude from the Orinoco oil belt.
During today?s protests, heavily armed national guard forces and police used tear gas and clubs to block protesters from reaching the electoral authority CNE to demand a recall ballot before the end of 2016. After 2016, Maduro?s loyal vice president Aristobulo Isturiz would automatically take power if Maduro is removed.
In yesterday?s speech, Maduro claimed Venezuela is the victim of a financial blockade aimed at triggering a sovereign default that would destabilize his government and destroy the oil industry, even though the country regularly honors its financial obligations.
"Every time the country pays, our country risk rises. This is a war to force Venezuela to its knees," he said.
The government says it will continue to honor its international financial obligations, and pledged to cut imports to build cash reserves sufficient to cover looming sovereign and PdV bond payments of over $5bn during second-half 2016.
But Venezuela is coming under increasing pressure from abroad, especially after allied governments in Argentina and more recently Brazil were replaced by presidents who are openly hostile to the Venezuelan regime. Luis Almagro, secretary general of the Organization of American States, called Maduro a "traitor" to his people in a rare personal letter issued today.
Signs of cracks in the regime have been growing for months. A presidential palace official told Argus that yesterday?s diatribe is "a symptom of his desperation" and a "tilt toward tyranny" as the risk of violent social upheaval increases and his government's international isolation grows.
Most of the military high command is seen backing Maduro, but he faces disaffection from general and admiral-rank officers who trace their political roots to the origins of late president Hugo Chavez's military movement over 30 years ago.