Venezuela Feels the Squeeze from Washington

https://worldview.stratfor.com/article/2018-annual-forecast/americas

Elsewhere in the region, a former Mercosur member — Venezuela — will continue its rapid decline. The country's economic decay will accelerate over the next year as the government defaults on foreign debt payments, high inflation spirals into hyperinflation and shortages of food and medical supplies worsen. At the same time, oil production, a crucial source of revenue to sustain Venezuela's diminishing food imports, will steadily fall. The economic crisis will persist for years.

Though the Trump administration will have bigger priorities on its agenda in 2018, such as NAFTA negotiations, the United States nonetheless will intervene to try to shift Venezuela away from one-party rule. Washington and its allies in Latin America will pressure the Venezuelan government to hold competitive elections and to recognize the opposition-controlled legislature. Caracas, in turn, will consider negotiating with the U.S. government and the domestic opposition.

But the Venezuelan administration will join the talks only to stave off more sanctions from Washington; it's not interested in holding elections it could lose in 2018, at least not without a U.S. assurance of amnesty for its leaders. The Venezuelan leadership's drive for self-preservation will make any attempt at reconciliation between the government and the opposition difficult. Furthermore, free elections in which the ruling United Socialist Party of Venezuela could lose power would go against the interests of one of Venezuela's major stakeholders, the Cuban government. And even if other countries, such as Mexico, try to reduce Cuba's energy dependence on Venezuela, the beneficiaries of the political and military patronage networks embedded in Venezuela's state institutions will try to block attempts to institute free elections for fear of jeopardizing their privileges.

As the year unfolds and Venezuela's economy unravels, the risk of political unrest, whether in the form of protests or an attempted coup by members of the security forces, will increase. Renewed dissent alone will not pose an existential threat to the Venezuelan government unless large numbers of police or military units turn against the state. To keep the military on its side, President Nicolas Maduro's administration will allow the armed forces greater control of state oil and gas company Petroleos de Venezuela. A new wave of demonstrations, moreover, would struggle to gain momentum because more and more Venezuelans are opting to leave the country in search of a better life rather than staying and protesting. If factions of the military staged a coup, however, they would jeopardize the current government and may even prevail with enough support.