Nicolas Maduro’s Excellent Adventure
With his country's oil-based economy reeling, Venezuelan President Maduro travels the world looking for help.
It’s not news that collapsing oil prices are putting the squeeze on the Venezuelan economy, with recent bond yields showing a 97 percent market certainty of a default within five years. The toll on the lives of the Venezuelan people is also growing, which poses a particular problem for President Nicolas Maduro: His approval ratings have just reached a new low of 22 percent. The solution he came up with is rather original. He decided to go on a world tour. Last week the Venezuelan president unexpectedly hopped on a plane, sombrero in hand, to seek aid from Venezuela’s international friends -- specifically, cash-transfer loans with which to restock dangerously depleted national reserves. With some luck, he might also win a commitment from his OPEC partners to save the crashing oil market.
It’s not news that collapsing oil prices are putting the squeeze on the Venezuelan economy, with recent bond yields showing a 97 percent market certainty of a default within five years. The toll on the lives of the Venezuelan people is also growing, which poses a particular problem for President Nicolas Maduro: His approval ratings have just reached a new low of 22 percent. The solution he came up with is rather original. He decided to go on a world tour. Last week the Venezuelan president unexpectedly hopped on a plane, sombrero in hand, to seek aid from Venezuela’s international friends — specifically, cash-transfer loans with which to restock dangerously depleted national reserves. With some luck, he might also win a commitment from his OPEC partners to save the crashing oil market.
Maduro’s journey began inauspiciously when mechanical problems with his official aircraft required the presidential party to switch to a Cuban loaner. When he finally showed up in Moscow, Maduro was greeted not by President Putin or Foreign Minister Lavrov, but by a deputy foreign minister. This resulted in a bit of teasing in what’s left of the Venezuelan free press: Would the great Chávez have tolerated a welcome by a midlevel bureaucrat?
Indeed, Maduro’s abrupt departure didn’t play well among some of his constituencies back home. Detractors have accused him of “going on vacation” and admonished him for bringing a gaggle of ministers, as well as several members of his extended family, along for the ride. They did not fail to note the seven-figure cost of the trip, particularly given the depth of Venezuela’s crisis.
Some critics have even challenged the trip’s legality. Venezuela’s constitution requires the sitting president to seek official permission from the National Assembly before traveling abroad, and some worried that Maduro hadn’t gone to the trouble. This was duly denied by legislator Fernando Soto Rojas of the ruling United Socialist Party: “Permission was definitely given before he left. I don’t remember when exactly, maybe two or three days before. It wasn’t improvised.” For further details, Soto suggested that the interviewer “go ask the president,” while warning that some information would not be released to safeguard national security. The country, after all, was in a “state of war.” This refers to Maduro’s frequent claim that an “economic war” is being waged against the Bolivarian Republic by an unholy alliance of local opposition leaders, CIA provocateurs, and McDonald’s franchises.
To date, Maduro’s adventure has taken him from Moscow to Beijing, Tehran, Riyadh, Algiers, and back to Moscow. He is rumored to be moving on to Mexico next, provided he can secure an official invitation and some face time with his presidential counterpart Enrique Peña Nieto. Then again, as a result of this wartime secrecy, it’s anyone’s guess where Maduro might go next or when Venezuelans might expect him back. While he is due to give a speech at the National Assembly on January 20th, critics point out that he’s already brushed off various start-of-the-year constitutional responsibilities because of his trip.
Equally unclear is what exactly Maduro has accomplished. His dispatches from abroad have been consistently cheerful, vague on detail, and not always aligned with the statements released by his gracious hosts. When he praised the Saudis for agreeing to “coordinate efforts and work together to stabilize the oil market and recuperate market share and prices,” for example, the kingdom’s official press noted merely that the Venezuelan president had been “reassured” of the king’s health and that discussions on “developments on the international arena” had taken place. This did not, of course, prevent Venezuela’s pro-government media from hailing Maduro’s trip as a resounding success.
So has Nicolas Maduro saved the revolution? It’s hard to know. On the one hand, he has announced a nebulous $20 billion Chinese “investment” — certainly a considerable sum. The Venezuelans remain close-lipped about the particulars, however, and the Chinese all but silent. Whether this deal represents a suitable lifeline depends on how much of it, if any, is liquid and readily available. Should the funds be restricted to oil exploration or some other targeted project, or else constrained by slow timelines and onerous contingencies, they will be of little use in helping the regime pay off pending import arrears and looming bond debts.
That said, China has good reason not to abandon the Venezuelan regime to its fate. Having lent almost $50 billion to the Bolivarian Revolution in recent years has done little to endear the Chinese to the Venezuelan opposition, and any regime change in Caracas would represent a serious obstacle to China’s growing influence in Latin America. Even so, the contrast with the previous day’s announcement of a $6 billion Chinese emergency loan to Ecuador — with specifics supplied by both parties — does not bode well for Maduro’s Chinese achievement.
Looking considerably cheerier than while discussing Chinese investments, Maduro announced this week that he had secured “several billion dollars” in emergency loans from Qatari banks — “sufficient oxygen to cover the fall in crude prices,” as he called it. Once again, Qatar has yet to confirm the deal, and the amount and conditions remain unknown.
So on he goes. After a brief stop in Algeria, it was announced that Maduro and his company would be returning to Moscow, this time to meet with Putin himself. Predictably, the agenda for the talks remains unknown. Given its current economic woes, Russia seems unlikely to be in a giving mood, but there may be other pressing matters to discuss. Maduro might be seeking some fashion advice on scarves (see photo), or perhaps a chance to bond with someone who understands the hazards of running a petro-state. At any rate, the Venezuelan president seems in no hurry to head back to Caracas to deal with food riots, long lines, and protests that have been intensifying during his absence.
Photo courtesy of AVN
Daniel Lansberg-Rodríguez teaches on Latin America at Northwestern's Kellogg School of Management and is a weekly columnist for the Venezuelan daily newspaper El Nacional. His Twitter handle is @Dlansberg.
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