(AP photo)
Venezuela is collapsing. President Nicolas Maduro's dash-for-cash to Beijing last week was a humiliating failure. Half-mile food lines wind through the streets of Caracas and other cities. Maduro's Cuban handlers are abandoning a ship they helped sink, while Venezuelan military officers are pondering the challenge of how to suppress angry, desperate protesters to buy time for an unpopular, incompetent regime.
Maduro is wrestling with popular unrest, food shortages, a real inflation rate of 90 percent, blackouts, crumbling infrastructure, and other domestic challenges. Ruinous policies ushered in by the late Hugo Chavez intentionally strangled the private sector -- part of the Cuban formula to make Venezuelans too dependent on the state to resist its will.
The 40 percent drop in global oil prices has hit Venezuela hard, because Caracas relies on petrodollars to provide 96 percent of its export earnings and 45 percent of Venezuelan government revenues. The productivity of Venezuela's state-run oil company, Petroleos de Venezuela, which has been plundered by cronies installed by Chavez, has fallen by 25 percent since his election in 1998. This strips the option of increasing production to compensate for lower prices.
To avert unrest at home, Maduro must pay for social programs, military pay hikes, food, gasoline, and other essential imports -- all while servicing Venezuela's foreign debt. Amid efforts to raise cash, preferential oil deals for Cuba, the Caribbean, and Central America have been curbed or eliminated. Some of the oil Venezuela owes China as payment for loans has been diverted to cash customers. Meanwhile, offers are being cultivated for the assets of U.S.-based distributor Citgo.
According to sources in Caracas, despite these and other steps, the unrelenting drop in oil prices has pushed the Maduro regime to the brink of bankruptcy. This is what drove Maduro to Beijing last week to appeal for an urgent loan of $16 billion. Chinese leader Xi Jinping, whose government has loaned Venezuela more than $50 billion in the last decade and understands its economic woes, was unsympathetic. Rather than cash, the Chinese offered to invest in the state-owned mining conglomerate, Corporacion Venezolana de Guayana, and several other assets. Word spread quickly in Caracas that Maduro left Beijing humiliated and empty-handed.
How far will the opposition go?
Despite government control of the media, prolific social media messages revealed vast supermarkets with empty shelves, shockingly long food lines, and volatile crowds. University students, whose nationwide demonstrations last spring were met by wanton attacks by regime thugs, have begun to speak of renewing their struggle. This time, the impending economic collapse may also stir unrest among the poorest Venezuelans, who will be especially impacted by the loss of government programs.
At the first of the year, the courageous political leader Maria Corina Machado issued a bold communique, noting the public clamor for Maduro to resign and give way to a peaceful and constitutional transition, and to the holding of free, democratic presidential elections. In 2013, Machado was beaten on the floor of the National Assembly; last year, she was stripped of her congressional seat and threatened with prosecution on trumped-up conspiracy charges. Among Venezuela's exhausted public, Machado and jailed leader Leopoldo Lopez have eclipsed a cautious opposition establishment that favors accommodation over confrontation.
