Share

Venezuela risks becoming the Syria of Latin America

Venezuela, in its fifth year of economic crisis and now in starvation, is increasingly in chaos: only amministy and free elections, as proposed by opposition leader Guaidò, can avoid an escalation of clashes that would lead to a real civil war – The position of the Italian government in the face of the disaster of the dictator Maduro is inexplicable

Venezuela risks becoming the Syria of Latin America

The crisis in Venezuela raises fears of war scenarios. On the one hand we note the movements of Brazilian and Colombian troops to defend the borders and to respond to Maduro's provocations, on the other the Venezuelan dictator with his military maneuvers arouses growing concerns about a possible escalation of a civil conflict in Venezuela. After the self-proclamation of Guaidò, the head of the National Assembly, and the appeal to the armed forces and diplomatic corps to take sides against Maduro, a turning point can finally be glimpsed for a country on its last legs and in full economic collapse.

And despite the tightening of US sanctions implemented in the summer of 2017, following the Lima Declaration of August 8, with the aim of punishing the anti-democratic actions perpetrated against the media and the opposition in an attempt to maintain power and further change the Constitution in its favour, it was already clear from the local elections of 2017 and until the anticipation of the presidential elections last May that the Venezuelan presidential crisis would lead to a mass movement due to the persistent criticisms of fraud and irregularities on a minimum turnout and constantly threatened.

The only hope for the head of Parliament is to convince the judiciary and the army that the promised amnesty is the way to avoid civil war and that new elections monitored by international observers can be held to guarantee a future to the Venezuelans. Guaidò assumed office by invoking the Constitution, which in effect offers the President of Parliament the right to assume the presidency of the country in the event of an evident illegitimacy that Guaidò justifies with the evident irregularity of the outcome of the last elections. In fact, one cannot fail to consider the violent repression of the opposition. In the inauguration of January 10, the friendly countries Russia, China and Turkey did not attend the ceremony, worried by the evident instability of the country and also by their own "non-performing" credits.

Yes, because the pillar on which Venezuelan power has leaned over the last ten years is Chinese financial support with over 60 billion US dollars in exchange for oil, strategic stakes such as the one in Sinovensa, as well as the opportunity to apply the new digital social control systems thanks to the Chinese company ZTE, already fined by the US for one billion US dollars and with anti-espionage sanctions for cellular networks.

The Venezuelans, after having deserted the polls and having entered the fifth year of economic crisis, are astonished and afflicted by the shortage of primary goods: food, medicines, water and now also electricity and by an inflation that is no longer even possible name but which the IMF fixes at 10 million per cent! An inflation that destroys the already low wages, undermining the survival of families. The distribution of food at controlled prices in disadvantaged neighborhoods does not appease spirits where Chavismo has always been the second religion but where it now seems clear to everyone that the incapacity managing reforms and the country's economy has characterized an inept and irresponsible President who has sold off energy resources, losing the sense of economic sustainability of Venezuela.

After the Fed's statement last week with a de facto zeroing of the prospects of further interest rate hikes, emerging markets breathed a sigh of relief after having suffered from the US interest rate hike, now put in the freezer by Powell, and look ahead after a month of January that sees them lead the ranking of the best market performances since the beginning of the year and reach levels not seen since 2015, exceeding 7% on the MSCI Emerging Markets index.

And it is the emerging currencies – in particular the Russian ruble (+8%), the Mexican peso (+10%), the Brazilian real (+10%), and the Turkish lira (+25%) – that are driving a new wave of investments and flows which are mainly concentrated on government securities in local currency and bonds in hard currency also through ETFs. Among the elements to keep under observation obviously the next episodes of the US-China trade war in view of the March deadline as well as the Venezuelan question for the Latam sector.

And, while China remains faithful to its policy of non-interference in foreign policy matters, the Italian position on the Venezuelan "coup" is aligned with the Turkish one and in opposition to the
most of the other European countries and appears inexplicable for those who have followed the economic decline of Venezuela in the last two years, which has been favored by the exacerbation of Maduro's policies and by a definitive failure of the Bolivarian revolution that twenty years ago Chavez imposed on the country and which by now seems to be "out of time" due to the history and reality of the economic and financial disaster it caused to one of the countries with the greatest oil resources in the world.

On the same topic, read also "Mattarella is pressing the government".

comments