December 10, 2002

Three scenarios

For years, it’s been the proverbial “nuclear option” for the opponents of successive Venezuelan governments. Protests and strikes might embarrass or pressure a government, but ever since 1936 Venezuelans have known that the ultimate tool against a petrostate is to cut off its lifeline: the oil industry. The notion of a massive oil strike has a kind of iconic status in Venezuelan political life as the final, most radical course of action possible. For over 65 years, it remained just an idea. No one had ever been able to really turn it into a reality. Until now.

PDVSA has shut down as comprehensibly as it is possible for PDVSA to shut down. The company is no longer selling either crude oil or refined products, its tankers are at a standstill, its refineries are either at a complete stop or running at a tiny fraction of capacity – just enough to keep the machinery in working order and produce enough natural gas to keep the nation’s stoves and power-plants burning, and enough chlorine to keep the nation’s water drinkable. Gasoline is becoming an increasingly rare commodity. The fiscal hit will be massive – at least $25 million per day in lost government revenue.

In short, PDVSA’s dissident managers have crossed the Rubicon; they’ve gone well beyond the point of no return. They are fully aware that their careers are on the line: if this strike fails, they’ll all be fired, and they’ll likely watch their country morph into a Cuban style regime. So, not unlike the government, the dissident oil managers have fallen prey to the logic of unending escalation. At any given juncture, pressing forward looks more appealing to them than backing off. The consecuences of these parallel strategies could be, literally, explosive. The fate of the nation hangs in the balance.

The government’s response, meanwhile, is guaranteed to exacerbate the conflict. Led personally by the president, the government has launched a campaign of perpetually intensifying vilification and intimidation against its opponents, a drive whose only effect has been to embolden its critics and add to the crisis. At times, it seems as though the government is maliciously seeking to escalate the crisis beyond all control, as part of a plan to achieve God-only-knows what.

It’s true that the private media has hardly been impartial throughout the crisis, often acting as an conglomeration of opposition propaganda organs. But the government’s attempts to intimidate the private TV networks by sending hundreds of followers to bang pots outside their studios (in Caracas) or actively vandalize the premises (in the rest of the country) has left it looking precisely like the intolerant, authoritarian regime it is. And the chavista attempts to subdue the striking oil workers and merchant marine sailors through military force and intimidation has left them looking a fool: not only have these attempts been remarkable operational failures, but they’ve also turned into spectacular public relations debacles, showing the regime’s ultimate impotence in the face of an organized society determined to disobey its authority.

At times, it seems like the government is stuck in a pit of quicksand: the more fiercely it struggles to lift itself out, the quicker it sinks. As everyone knows, there is only one way to make it out of the quicksand alive, and that’s to avoid panic, quit making moves that make the situation worse, and reach out to those who might be able to help. Will the government ever get it, or will it keep antagonizing and insulting those who might imaginably throw it a lifeline?

The question on everyone’s lips is “where does the crisis go from here?” VenEconomy cannot, obviously, predict the future, but it can help you think about the future in a structured way, through scenario-based forecasting. At this point, there seem to be three broad routes the crisis could unfold.

1-Negotiated agreement: At some point in the next few days, faced with a patently unmanageable crisis, the government could be forced back to the negotiating table. Having run out of options after its attempts to return PDVSA to operation through military intimidation fail completely, Chávez might accept a tactical retreat like he did on February 4th, or April 11th. Perhaps pushed by a stern statement from upper-echelon chavistas or by the military high command, the President could finally order his negotiators back to the table with unambiguous instructions to reach a compromise agreement. The nation would then head to some sort of electoral arrangement, with the opposition accepting Chávez as a candidate in an election he would be almost certain to lose. This is the option favored by the catholic church, Kofi Annan, Jimmy Carter, César Gaviria, and every moderate in Venezuela, and it’s patently the least destructive, most sensible and democratic way out of the impasse. That, in itself, makes it unlikely to be accepted by Chávez.

2-The strike fizzles: At the moment, the momentum seems to be on the side of the opposition, but that could change. Through a mixture of threats and lavish strike-breaking bonus payments, the government might still be able to lure back enough PDVSA workers to operate the industry. As time wears on, the opposition could tire of street protests, coming to see the nightly cacerolazos as a waste of time and energy. It would take tremendous political skill, and, especially, a lot of restraint, for the government to pull it off. But it’s not entirely impossible. The opposition would find itself in a terribly awkward position, urging people to spend Christmas eve banging on pots and pans even while the government manages to restore gasoline supplies and oil shipments, taking much of the wind out of the strikers’ sails. PDVSA’s dissident managers would find themselves marginalized, and the government in a stronger position than ever before.

3-Train wreck: The current stalemate drags on indefinitely into the future. In this scenario PDVSA’s managers stand their ground, but so does the government. Though the situation on the ground becomes worse and worse, neither side will give in – like a game of Chicken taken to its logical extreme. The government continues to refuse a negotiated solution, but increasing gasoline shortages cause greater and greater problems throughout the economy and society, eventually, perhaps, even endangering electricity and domestic gas supplies. With radicalism increasing on either side, this is the truly explosive scenario. It entails the increasing likelihood of some sort of violent outcome. Faced with a real national emergency, the government would be constitutionally justified in declaring a state of exception, which the opposition would be certain to defy. With increasing numbers of people on the streets, the potential for violence would multiply, as would the chances of some sort of military intervention, from one side or the other. The scenario could even lead to a total breakdown in law-and-order, a much feared “social explosion” along the lines of Feb. 27th, 1989.

In short, the much over-used cliché is now an understatement: Venezuela is at a decisive crossroads. The decisions of the next few hours and days will determine the nation’s fortunes for years to come. And while the country is fortunate to enjoy an increasingly cohesive and highly conscious opposition movement, it’s cursed with a government that seems not to know how to de-escalate, whose one-size-fits-all response to any and every juncture is to press ahead, no matter how dangerous an escalation might be, how much closer to the edge it might take the country.