PODCASTS

Crisis in Venezuela

May 23, 2017 | 00:00 GMT

An anti-government protestor in Venezuela demonstrates in memory of jailed protestors and those harmed by protests.

An anti-government protestor in Venezuela demonstrates in memory of jailed protestors and those harmed by protests. Venezuela is no stranger to protests movements, though those occurring now have key differences to those of 2014.

(FEDERICO PARRA/AFP/Getty Images)

As the long brewing crisis in Venezuela evolves, Stratfor Latin America Analyst Reggie Thompson joins the podcast to offer some context on exactly how things are changing in Venezuela and what that country’s future looks like.

Then from Venezuela, we’ll turn to China and a conversation between VP of Strategic Analysis Rodger Baker and Senior East Asia Analyst Zhixing Zhang about her latest series on Stratfor Worldview. It’s a four-part series exploring the underlying motivations behind China’s ambitious Belt and Road Initiative and the challenges China will face going ahead.

Transcript

Ben Sheen [00:00:10] Hello, and thank you for joining us for this edition of the Stratfor Podcast. Focused on geopolitics and world affairs from Stratfor.com. I'm your host Ben Sheen. As the long brewing crisis in Venezuela evolves we'll sit down with Stratfor Latin America analyst Reggie Thompson for context in exactly how things are changing in Venezuela and what that country's future looks like. Then, from Venezuela, we'll turn to China and a conversation between VP of Strategic Analysis Rodger Baker and Senior East Asia Analyst, Zhixing Zhang about her latest series on Stratfor Worldview. It's a four-part series exploring the underlying motivations behind China's ambitious Belt and Road Initiative and the challenges that China will face going ahead. Thanks for joining us. Here with me today is Latin America Analyst Reggie Thompson to talk about the ongoing situation in Venezuela. Reggie, thanks for joining us today.

Reggie Thompson [00:01:07] Thank you.

Ben Sheen [00:01:08] Reggie, I'm getting a sense of déjà vu here because I'm pretty sure I've talked to you before about the state of Venezuela, specifically the protests we've seen in the country. The question I have this time is how are these protests that we've seen ongoing for over a month, how are they different from previous protests we've seen in the country?

Reggie Thompson [00:01:25] Well, as you mentioned one of the main factors about these protests that make them different from what has come before is just the fact that they have lasted at their current intensity for more than a month. We've been seeing the opposition coming out onto the streets to challenge the government almost every day and that in itself makes this one of the longer protest waves in Venezuelan history. The intent, obviously, at this stage in the game is to try to pressure, both pressure the government trying to force bigger splits between members of the government that perceive an electoral solution out of this economic crisis and members of the government that want to stick with the President Nicolas Maduro. That's the first priority of the opposition and the second priority of the opposition is to keep this issue, the Venezuelan crisis in the eyes of the foreign public that is the foreign public that is capable of doing things about this such as the United Sates government. They're signaling to them, letting them know that they're still there, and that it's a crisis that the United States, according to them, should become more involved in.

Ben Sheen [00:02:30] And that may seem the craziest thing about this because this crisis has been ongoing for years and I know we look back to the major protests in 2014 but they were realistically only from a comparatively small faction of the opposition, where it seems like this time around, everyone is coming out to actually protest the government. From doctors, nurses, throughout the entire class structure it seems like everyone has finally had enough of the way the country is being run and what they've been suffering through.

Reggie Thompson [00:02:55] Yes, that is the main difference between the protests in 2014 and the ones now. You're seeing a far wider segment of the population coming out to protest, and they're protesting far more frequently it seems that a lot of the protesters have sort of lost their fear of cracked downs by the security forces. They show up to protest one day on a highway in Caracas and then they just come back the very next day and the day after that. You're starting to see this upswell of public anger against the government, mainly because of the economic crisis that got worst in the last two years because the story of the economic crisis in Venezuela for those of our listeners that haven't been following this as closely it's partly due to the price drop in oil prices that was observed in the last two and a half years but it's also due to the more than a decade of systematic mismanagement of the public finances in Venezuela. The government overspent for many years. Followed policies of printing more currency when it needed to cover deficits which spurred inflation and in addition to that created inefficiency in the form of currency control. Which encouraged people, public officials and private citizens to simply siphon of off dollars from the main revenue generator in the country which is PDVSA, the state oil company. And so, you've got these incentives for corruption that essentially sapped the company of a lot of its revenue. So, the combination of physical mismanagement and corruption over the years led to this situation and then the oil price decline was really just the final straw.

Ben Sheen [00:04:28] Now, normally, that would be enough to topple most governments, but somehow Nicolas Maduro's administration has held onto power. How have they really managed to survive what is really irreparable damage to the country? And what we're seeing is really a symptom of that?

Reggie Thompson [00:04:44] This is really down to two factors. The first is that the presidency and its allies are drawing together, simply because they have no better options. If the opposition were to come to power say through a clean and fair election in the country there's no guarantee that they wouldn't start taking down names and trying to imprison a lot of the political elites right now that have either been involved in cracking down on the opposition or have been involved in acts of corruption in the past. For some of them who have been alleged to have been involved in acts of drug trafficking to the United States and elsewhere this really is an existential threat. They might get arrested and sent to prisons in the United States, and they really don't want that to happen. And the other way that the government has managed to really insulate itself against pressure is just through increasing control of everything in the country to the public institutions, the security institutions, and particularly the institutions of the state that generate revenue such as PDVSA. And so with outright control of the public sector the government has been able to not only determine where the money goes, how the money is spent but also it's been able to tighten its grip over food distribution networks. That's an outright warning to a lot of people. If you protest, you may get cut off from these food distribution networks. And so, in the past until recently, they weighed this when deciding whether or not to protest. But you're starting to see a lot of that fear to some degree start to fade away

Reggie Thompson [00:06:15] as the protesters become aware that, "Hey, the situation isn't getting any better. Maybe if we protest, then the government somehow resigns or the President is ousted, things could get better." That's a lot of the mental calculus that you're seeing there.

Ben Sheen [00:06:28] This is certainly starting to manifest not only in the protests of themselves but something we see recently as a general dissatisfaction among the security services. You mentioned the way that Maduro's administration has been able to insinuate themselves into all of these mechanisms of power to maintain their grip, but certainly they cannot allow these protests to go unchecked. Or to become more violent, and a key thing they can use to really clamp down or control these is the security services, the military, law enforcement those entities of state. That runs some risks if they can't rely on those forces to maintain order, that's a problem but also if they do respond in a heavy-handed manner couldn't that just exacerbate the situation further?

Reggie Thompson [00:07:08] The armed forces and the police forces they're the front line of defense for the government against these demonstrations and so far they've proven very effective at dispersing them day after day before they managed to even reach their protest sites in some cases, but it's important to remember that the government perceives increasing dissent from both the armed forces and the police rank and file. Because these are people who while they do get the benefits of a steady wage and some of the potential labor benefits that come with being a police officer or being a soldier, they're still in the same situation as a lot of the population. Their families are suffering a lot of the food shortages a lot of the medicine shortages and the real fear that the government has is that this is going to affect their loyalty that they may not crack down on protests. To try to stop this from happening at least in the military what the government's been doing in recent months is relying on the general directorate of military counterintelligence which is the investigative body within the armed forces to go investigating incidents of dissent and where necessary detaining both retired and current military officers and enlisted personnel. We've been getting reports, obviously, that these arrests have been picking up, there's no particular plot it seems that they're hunting for but a lot of these are dissuasive in nature. It's to send a message to others, "If you dissent this is what's going to happen to you."

Ben Sheen [00:08:36] Gosh, but certainly they do run the risk of alienating the very people they rely on to maintain order. As we talked about before, Venezuela is a really difficult country to make accurate predictions about because it's so volatile in nature and to some extent, fairly unpredictable but when we look at this, it seems there's got to be a breaking point at some stage. How do we see this going? How do we think this is going to play out in the near and midterm?

Reggie Thompson [00:09:00] Really, the main factor that observers of Venezuela need to note in the midterm, that is to say in the near term and in the midterm over the next few months and into the next year or year in a half, is the fact that the President has an electoral problem. He's running for President again in 2018. The elections are going to be held in late 2018 but, honestly, he's not very popular and he stands a chance of losing what would be a free and fair election. Right now, what you've started to see is the President trying to insulate himself trying to force parties to re-register with the national electoral counsel in the hopes that some of them won't meet the registration criteria and will have to drop off. You're starting to see more actions against prominent opposition leaders. Trying to invalidate them from being able to run for office, just to cut down on the amount of rivals that the President might face in an upcoming election that really is the government's strategy. It's a combination of legal maneuvering and outright threats to potential opponents. The problem with that strategy though is that the opposition is trying to keep unrest going on the streets every single day and trying to signal, for lack of a better word to the military establishment that, "Hey, this guy is leading Venezuela down a dark path and our last hope, essentially," and this has been said outright by members of the opposition, "is for "the armed forces to turn on Maduro." Not necessarily in the form of a coup but in the loss of support.

Reggie Thompson [00:10:33] The government is trying to diffuse a lot of these tensions by holding an election whether it's just a president election or holding a president election and a governor election, which have been delayed for about a year now together. But, really, the important thing to watch right now is the level of unrest on the streets. It doesn't seem like the President can really cut down on this or significantly affect it right now. Even if the national guard and the police are out there day-by-day putting down the protests. And the President has been reluctant to call out the military for fear that they're just not loyal to him. The important things to watch at this point are how does the President's strategy evolve? How does the pace of protest evolve? Honestly, at this point, it looks like we're going to be dealing with such demonstrations for months and there's no real good way for Maduro to cut down on the protests. There's the very realistic chance that we're going to see something happen along the lines of either pressure rising on the President from within the party for him to resign, or the President simply deciding "You know what? I'm just going to go straight for this election and let's see what happens."

Ben Sheen [00:11:38] Well, Reggie, I think that's very well put and certainly we'll be tracking this very closely on Stratfor Worldview. Wait and see what develops, and I suspect that in the future as well, we'll be having another one of these conversations to talk about how things have conspired in the coming months. As always, it's a pleasure having you on the podcast. Thanks for joining me today, Reggie.

Reggie Thompson [00:11:55] Thank you, Ben.

Ben Sheen [00:12:00] We'll get to the second part of the podcast in just a moment, but if you're interested in geopolitical analysis and the range of topics we discuss in the podcast be sure to visit us at worldview.stratfor.com. Worldview is our new online platform for objective geopolitical intelligence, analysis and forecasting that reveals the underlying significance and future implications of emerging world events. You can sign up as a registered user to learn more about our work or subscribe for unlimited access to our 20 year archive of geopolitical insight. Now, onto the second half of the podcast. Where Stratfor VP of Strategic Analysis, Rodger Baker sits down with Senior East Asia Analyst Zhixing Zhang to discuss her recent series, Exploring the Underlying Motivations Behind China's Ambitious Belt and Road Initiative. And also the challenges that Beijing will face going ahead.

Rodger Baker [00:12:57] Hello, I'm Rodger Baker, I'm joined here today with our Senior Analyst for East Asia, Zhixing Zhang and we're going to talk a little bit about the Belt and Road initiative by China. We've recently published a four-part series on the Belt and Road and Zhixing, I'm wondering if you could first explain what this is because there seems to be a lot of misunderstanding internationally as to what Belt and Road is is this a project, is this a specific set of activities that the Chinese are intending to carry out or investments?

Zhixing Zhang [00:13:28] First, I would say that the Belt and Road itself is more of an initiative and a vision instead of a project. It's nothing concrete. There are some massive connectivity project that fall into the banner of Belt and Road but in itself it's a still developing strategy a still developing vision that corresponded with China's involving global vision and also corresponding with the local developed conditions as well.

Rodger Baker [00:14:04] We've seen previous Chinese leaders push Western development or the iron silk road, the Go West programs things of that sort, but we haven't seen a lot of extreme progress on that. Is there anything different in this initiative and why does the Belt and Road seem to be much grander in its vision?

Zhixing Zhang [00:14:23] First the Belt and Road is different from the previous initiative. It ties into different element, into the grand initiative. One is that it intersects with trade with financial cooperation, with diplomatic relations and that comes hand-in-hand with the grand connectivity plan in the Eurasia land mass. Like you said, Rodger, developing the West is not a new initiative, and we see that in several periods the Chinese leadership try to develop the interior region through Go West initiative, through the railway development but this are more nascent form and more like sporadical project-based initiative. There's a fundamental economic and security demand to develop the Western region to begin with. It's a dynastic strategy to defend this heartland from overland threat from the West and North and that, actually, dates back to second century BC when the Han dynasty first initiated military campaign in the West. That being said, the fundamental logic is there. It's certainly not an exception to the People's of the Republic of China, but those early initiatives are very nescient. When China becomes more economically and diplomatically more capable that the country is trying to put together this different, separated elements together to form a coherent policy.

Rodger Baker [00:16:26] When we look at the Belt and Read initiative there are concerns arising in some of the countries around the region that in some ways this looks like an imperial moment for China. That China is trying to expand its sphere of influence, that China is trying to become the dominant power in the region, and to assert that power. Perhaps as a counter to the uni-polar United States or as a way of China to make up for its lost time when it lost out during European Imperialism. How is China dealing with that and how much of this initiative is about the expansion of Chinese power and influence?

Zhixing Zhang [00:17:07] Indeed, we have seen that there are kind of suspicions rising towards China about Belt and Road initiative and there, indeed, some resistance and challenges coming from both regions of powers and from individual countries. Russia and India, for instance, they are looking pretty nervously at China's Belt and Road in their own regional backyard. But I would say, first, that Belt and Road is an initiative that's as much fit for domestic imperatives as it is for projecting influence elsewhere. China is in the period, it faces a fundamental economic transformation, it tries to transform its economic model from two decades, having a reliance on investment on export, low on export, toward a model that more reliant on domestic consumptions and in that end, we also see that China is in a broader social balance to develop its Western regions and it is weird that One Belt, One Road initiative first on. But secondarily, I would say that China's leadership tried to shape its One Belt, One Road initiative in a more cooperative manner, and has tried to frame it in a more non-exclusive manner. It contains different elements, it draws regional powers and to different countries to participate in this grand initiative, and to reduce some of the regional suspicions and concerns. It also put effort to mitigate those suspicions. For instance, to be able to draw India who is fiercely resist to China's One Belt One Road initiative, China is proposing that to India. The South Asia section of One Belt, One Road

Zhixing Zhang [00:19:15] can be renamed as less emphasized on the certain issue between India and Pakistan. And, for instance, on Central Asia as well China is trying to draw cooperation with Russia in a way that it was cautious on its security presence in those certain countries.

Rodger Baker [00:19:37] A final thing to ask about here and I know there's a lot more that we're going to be pursuing on One Belt, One Road, but given the many challenges that China faces in pursuing this whether it's economic security, political resistance, social issues how do the Chinese measure success along the way?

Zhixing Zhang [00:20:00] I would say that China's definition of success is very different. First, the initiative is not project-based. It's a grand vision based on perhaps decades long process to achieve, and in that, certain resistance certain backtracks could come, but the basic imperative to develop the Western region and to move forward One Belt, One Road is there, and it is the driving element for China to continue to move that process. There's a fundamental driver for China to correct its economic imbalance. To correct some of the problems in this society, in the political system, but Chinese leadership always knows that it is their must at the same time is their enemy. There are grand initiative, grand strategies to accomplish, but those grand strategies cannot accomplish in one term or even in a decade or two, so to measure those success we probably don't want to think of the way like US building interstate highways or big project, but the success of the One Belt, One Road initiative should be measured by how well the state leaders move to address those fundamental issues in China.

Rodger Baker [00:21:35] Great, thank you, Zhixing. This is definitely something that we're going to continue to monitor both from China's abilities to manage these complex issues inside of the country and from the way this has the potential to be reshaping the region around them.

Zhixing Zhang [00:21:48] Thank you.

Ben Sheen [00:22:00] That concludes this episode of the Stratfor Podcast. If you'd like to learn more about the developing crisis in Venezuela or explore our series on China's Belt and Road initiative, visit us at worldview.stratfor.com we'll also include some related links in the show notes. If you have a question or a comment about the podcast or even an idea for a future episode, let us know. You can call us at 1-512-744-4300, extension 3917 or reach us by email at, podcast@stratfor.com and don't forget to leave us a review. We really appreciate your feedback and your review also helps others discover the podcast. It just takes a few moments, you can leave a review on iTunes, or wherever you subscribe to the podcast. And for more geopolitical intelligence, analysis and forecasting that brings global events into valuable perspective, follow us on Twitter @Stratfor thanks for listening.