By Robert Venlencia
Pundits, journalists, and Latin American experts predicted the end of the Bolivarian Revolution, from the death of Hugo Chávez in 2013 to the very moment his successor, President Nicolás Maduro, took power in a narrow electoral victory the same year. Recent events demonstrate that Venezuela’s isolation in Latin American politics is more tangible than ever before, calling into question the effectiveness of its “revolution.”
One threat to the revolution’s stability is Venezuela overreliance on oil production. A country’s economy is in a precarious state when it heavily depends on nonrenewable goods, particularly as international prices plummet. Under Chávez’s wing, Caracas wielded unprecedented influence over other Latin American countries thanks to oil wealth. Venezuela’s barrel even hit a three-digit price in international markets. However, Venezuelan oil power has dwindled dramatically since fall 2014, and more recently, the price of oil closed at $44.64 per barrel.
In 2005, then-president Hugo Chávez created Petrocaribe, an alliance between Venezuela and other Caribbean countries. Under this arrangement, member states can purchase Venezuelan oil in exchange for preferential payment in food and other goods. In 2013, Petrocaribe extended its ties with the Bolivarian Alliance for the Americas (ALBA), allowing oil purchases with 5 to 50 percent market value paid upfront and a grace period of one to two years. The remainder could be paid through a 17-25 year financing agreement with 1 percent interest if oil prices are above $40 per barrel. The precipitous oil price crash, however, puts the entire coalition at risk.
Solidarity among members of the oil alliance is running thin, and to make matters worse, Venezuela is putting pressure on Petrocaribe countries to pay off their debt. A few weeks ago, the Dominican Republic paid $1 billion to PDVSA after negotiating a 52 percent discount on a decade old $4 billion debt of oil imports. Jamaica is following the same path.
Experts believe the policy is the result of Venezuela needing the cash at least as much as Petrocaribe members need the oil. Using the opening allowed by Venezuelan hardship, the United States is exercising more influence over the region in venues like the American-organized Caribbean Energy Summit, first held in January 2015.
Venezuela’s economic constraints even prompted President Maduro to visit Russia, China, Portugal, and oil-producing countries like Iran, Saudi Arabia, Qatar, and Algeria last month. He aimed to convince OPEC countries to raise oil prices by reducing supply. While in China and Russia, President Maduro sought economic treaties to get more revenue.
Although Maduro and state TV channels like teleSUR touted his trip as “successful and beneficial,” many believe that he failed to attain the respite Venezuela’s economy sorely needs. After all, President Maduro advertised Venezuela as an example of “building socialism” after his trip from China and Russia–two countries that are steering away from such a model and emerging as juggernauts of capitalism.
Here, the Bolivarian Revolution begins to encounter problems as other leftist governments are seeking better fortunes. Unlike Venezuela, some of these countries do not engage in large public expenditures and can rely on international reserves. One example is Bolivia, now under President Evo Morales’ third term, where employment and wages rose in 2014 and whose economy will grow by 5.3 percent in 2015, according to the World Bank.
Turning economic and geopolitical tables are also causing others to grow closer to capitalist interests. Though the oil price drop will impact Ecuador, a historical ally of Caracas, its economy will not be hit as hard as Venezuela’s, according to the International Monetary Fund and the World Bank. Also, the country invested $3.8 million in a 2015 Super Bowl advertisement to attract U.S. tourists.
Of course, the normalization of bilateral relations after 51 years of diplomatic tension, a new chapter in U.S.-Cuba relations raises further questions about Venezuela’s role in so-called 21st century socialism. Few believe that Cuban President Raul Castro gave President Maduro advance notice of the reversal, and in return, Maduro maintains a stiff stance against the U.S. with respect to its Cuban policy.
Faced with overdependence on domestic oil supplies, disastrous economic policies, food and hygienic staple shortage, a record-low debt rating, 64-percent inflation, cheap gas that fails to generate PDVSA revenue, President Maduro only stated that “God will provide.” More than just providential intervention, these problems require a serious effort from Caracas to change longstanding economic policies that are eroding its regional influence.
This may encourage Latin American countries to foster an honest dialogue on socioeconomic change via regional organizations, such as the Community of Latin American and Caribbean States (CELAC) or the Union of South American Nations (UNASUR). Otherwise, Venezuelans will continue to lose faith in a revolution founded on fluctuating oil prices while international allies continue to jump ship.
Robert Valencia is a New York-based political analyst and is a contributing writer for Global Voices Online.
[Photos courtesy of Wikimedia Commons]