The Options For Maduro Andres Oppenheimer The disastrous government of President Nicolas Maduro is more serious than many believe problems, not by student protests that have resulted in over 16 deaths, but the annual inflation rate of 56 percent-the highest in the world - that may soon render the country ungovernable. The vast majority of economists agree that no country has maintained stable for several years an inflation that level. History shows that when countries reach these levels of inflation, or take drastic austerity packages to control inflation, or fall into hyperinflation, economic and political chaos. In other words, it would be very difficult to achieve Maduro stay in power until the end of his term in 2019, without taking drastic measures to stop the inflationary spiral, ending food shortages and prevent lawlessness. Here are the options you have: 1) A paquetazo austerity measures backed by the International Monetary Fund (IMF). Like Greece did recently, as did several Latin American countries before, Maduro may ask the IMF to rescue Venezuela with emergency loans conditional on austerity measures. That would require, among other things, a huge public spending cuts, reverse nationalization, price controls lifted and returned to central bank independence. Of course, all these measures would be diametrically opposed to everything Maduro and his predecessor, Hugo Chavez, have been preaching for the past 15 years. And to implement these measures fit Maduro need to form a coalition government to prevent the current street protests will become even more massive. 2) A paquetazo self-imposed austerity measures, without IMF involvement. As recently made his pact with Mexico Mexico, in which all the major political parties agreed economic reforms, Maduro could sign a deal with the opposition to launch a national plan of salvation. But more likely is that the opposition agrees not to take responsibility for the economic disaster Mature, unless there is a coalition government to restore the separation of powers, and call early elections. 3) Dollarization economy. As Panama, Ecuador and more recently Zimbabwe Maduro could stop the inflationary spiral replaces the Venezuelan currency by a basket of currencies, which in practice means adopting the U.S. dollar. That would help restore confidence in the economy. The problem is that in addition to ridicule their own anti-imperialist discourse, dollarization would involve huge spending cuts. That, like the above, it would be very difficult to do without a coalition government or a political agreement with the opposition. 4) China bailout. As Cuba did with the former Soviet Union, Maduro could ask China to rescue Venezuela in exchange for taking control of the country and turn it into a satellite state. The problem is that the Chinese are very cautious and are already concerned about the more than $ 20,000 billion Venezuela owes them. Last year, Venezuela asked China loan for $ 10,000 million, with better conditions, but only got half that amount, and harsh conditions. Now, with increased political uncertainty last year, would be even less likely to accept China rescue Venezuela says Evan Ellis, a professor of the Center for Hemispheric Defense Studies in Washington DC, and one of the largest U.S. experts on the relationship between China and Latin America. When I asked Ellis if China could not be tempted to take more risk in exchange for being able to control an oil country like Venezuela, said its unlikely. That would require a level of supervision and control by China that would anger the United States, he said. In all the strategic and economic opportunities that Chinese leverage in Latin America, always take into account the reaction of the United States, Ellis said. China does not want to turn the United States, which is its largest trading partner, an enemy. My opinion: It is difficult to choose which of these options mature, but it is clear that doing nothing is not a viable option for him. You can not sit and wait for a new rise in world oil prices, because no serious economist is predicting that. A mature you will not be another option to take a paquetazo austerity measures, which may not deploy alone in a country deeply divided without causing more and more social-great-protests. If there is a Chinese rescue, all roads point to need a political pact with opposition leaders today to daily insults.
Posted on: Thu, 06 Mar 2014 11:31:34 +0000
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