Venezuela - Protests lose momentum

June 10th 2014

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FROM THE ECONOMIST INTELLIGENCE UNIT A court ruled in early June that opposition leader Leopoldo López of the Voluntad Popular (Popular Will) party should be committed for trial, having been held in preventive custody since February 18th. He had handed himself over to the authorities following major protests in Caracas, the capital, in which three people had been killed. As one of the leaders of the protests, Mr López (also the former mayor of Chacao municipality in Caracas), was viewed by the authorities as responsible for the clashes, and has now been formally charged with inciting violence. The significance of the ruling was demonstrated by the fact that the judge, Adriana López (no relation), took three days to reach her decision, which was announced at 3am local time. Mr López will now be held in custody ahead of his trial, which could result in a sentence of up to ten years’ imprisonment. Opposition leaders immediately denounced the judicial ruling, claiming that it was politically influenced, and called for Mr López’s release. Members of his political party organised protests in Caracas and some major cities, which were attended by other opposition groupings. These protests were peaceful and relatively small in number, with around a few thousand people attending in Caracas. Faltering protests The ruling marks another stage in the four-month series of protests against the government of President Nicolás Maduro, with the opposition now losing momentum. Social unrest was originally sparked by dissatisfaction with the administration’s economic mismanagement, which has led to slowing GDP growth, supply shortages and price controls, energy and water rationing in some areas, and surging inflation, currently running at around 60%. The protests, which frequently turned violent, took place mainly in urban areas across the country, and called for Mr Maduro to resign. These are, however, beginning to fizzle out as protesters become weary of attending rallies that do not appear to have any impact on government policy nor spark a broader wave of popular unrest that might lead to regime change, with large swathes of the population remaining unengaged by the protests. The fact that the demonstrations that followed the López ruling were smaller in size reflects this impatience; rallies immediately following his arrest in February drew much larger crowds. The timing of the ruling is, therefore, an astute move by the government, which realised that it would not spark major protests now, as it might have done had it been announced several months earlier. Deadlocked The dialogue process between the Maduro administration and the opposition leadership appears to have faltered. The talks began in April and were mediated by representatives from the Union de Naciones de Suramericanas (Union of South American Nations) and a Vatican envoy. However, repeated rounds of discussions resulted in little substantive dialogue, with both sides using the talks as a means of airing grievances and stating their entrenched positions. As a result, there has been no political solution to the protests. The main opposition umbrella group, the Mesa de la Unidad Democrática (Democratic Unity Roundtable, MUD), suspended its participation in the dialogue in May. The López ruling means that the MUD is now highly unlikely to rejoin the talks, as one of its key demands was the release of so-called political prisoners, including Mr López. For the MUD to rejoin talks when its demands have been publicly ignored would be politically embarrassing and highlights how little it can expect to achieve through dialogue. This is a further example of the government’s astute timing; by allowing the López ruling to be made now it both prevents the dialogue from continuing and also ensures that the MUD will bear the blame for pulling out of the talks. As a result, the authorities will present themselves as the party most open to reasonable compromise. Meanwhile, the National Assembly leader, Diosdado Cabello, stated in early June that the dialogue was continuing in the absence of the MUD. However, this is overstating the facts, as the MUD is the main opposition vehicle and without its presence at the table, any talks will be token. Possibility of peace? With the protests now fizzling out, security in Venezuela looks set to improve slightly. Although some demonstrations will continue, they are unlikely to draw the levels of attendance seen in February and March, reducing the likelihood for violent clashes between the protesters and the security forces. In addition, the government is trying to ameliorate the economic factors behind the protests in February, aiming to separate those who are dissatisfied with the government’s economic performance from those who are politically opposed to it. Although the introduction of a new exchange rate (SICAD 2) has relieved some currency pressures, it will lead to a further spike in inflation, which will hurt particularly the poorer sections of society, among which the government maintains its core support base. This will further fuel criminal activity and related violence, with Caracas already having one of the highest murder rates in the world, at 79 murders per 100,000 in 2013. While the reduced protests may contribute to improved security in central parts of Venezuela’s cities, the crime rate in general will continue to rise.

Source: Risk Briefing