Democracy Lab

Venezuela’s Glass Revolution

In 2013, Venezuela's Bolivarian Revolution survived the death of Hugo Chávez. Now his successor, President Nicolás Maduro, confronts his toughest challenge yet: an economy on the brink. The latest in our series of Lab Reports on Venezuela.

In early December, Venezuelans went to the polls to elect mayors and local council members. After a disputed presidential election and months of economic hardship, many observers were predicting that the opposition would win the popular vote. Instead, the government's forces won, solidifying President Nicolás Maduro's hold on power.

Yet if Maduro's grip is solid, why is Moody's downgrading Venezuela's bonds? Why is Venezuela's bond spread the highest among emerging markets? The answer is simple: The Maduro regime, like glass, might appear strong, but it's also brittle, increasingly vulnerable to the sharp shocks that are likely to come from a complicated political situation and a rapidly weakening economy.

On election day on December 8, as I rode a motorcycle taxi through the winding and bullet-scarred streets of Petare, one of Caracas' poorest slums, I asked my driver, a local resident, what he thought of President Maduro. "Nobody likes him," he said. "They loved Chávez, but they think this guy is a fake."

Everywhere I asked during my tour, I got more or less the same answer. The comments from residents were an obviously biased sample of conventional wisdom from local opposition activists, but they also reflected reality: the opposition's incumbent mayor won re-election by eight points.

It would be a mistake to conclude -- as many analysts did in the days prior to the election -- that discontent is the overall sentiment in Venezuela. In a neighboring municipality, one with demographics markedly similar to Petare, the chavista candidate romped to a twenty-point victory.

The truth about Venezuela is that it remains a country deeply divided along many lines. It is a nation of stark contrasts, where urban, middle-class voters have apparently decided to abandon the Revolution for good, but where many poorer and rural voters hold steadfast loyalty to chavismo -- for now. The nation is divided roughly in half, but the chavista half appears to be slightly larger, ensuring a solid yet potentially vulnerable hold on all levers of power.

When Hugo Chávez died last March after fourteen years in power, the crowds that turned up at his funeral were like nothing Venezuela had ever seen. Hundreds of thousands of people paraded in front of his casket or joined the funeral parade. After such a massive, unscripted show of emotion, people naturally expected Maduro, Chávez's appointed heir, to coast to an overwhelming victory.

But in a few short weeks, something surprising happened. Maduro proved to be a hapless performer on the campaign trail -- awkward in tone, frequently off-message, and vacillating between grief for the fallen president and enthusiasm for his own candidacy. In spite of this, he managed to eke out a victory over his main opponent, opposition leader Henrique Capriles, but only by a measly 1.2 percentage points.

According to the official version of events, at least. Capriles, who had lost a national election to the ailing Chávez a year earlier, quickly demanded a recount. He has alleged numerous irregularities, accusing the Chávez camp of "stealing" the election, and has so far refused to recognize Maduro as president.

Things did not go better for Maduro in the months that followed. As the economy began slowing down and scarcity began to spread, opinion polls pointed to large numbers of Venezuelans saying the country was headed in the wrong direction.

In the meantime, businessmen with close ties to the government began buying up TV and radio stations. This meant the opposition had trouble getting their message out, something that opinion polls were also capturing: Maduro's popularity was hurting, but the opposition wasn't gaining from it. "In the last weeks of the campaign," an opposition political operator who spoke on condition of anonymity told me, "dozens of our ads were rejected by TV stations for no apparent reason."

Then, in the last few weeks before the election, came Daka. Daka is the Venezuelan version of Best Buy, a large chain of stores specializing in appliances and consumer electronics. With a month to go before the mayoral elections, Maduro, in a burst of populism that would have made the late Chávez proud, ordered significant cuts in the prices of all appliances, then invited Venezuelans to throng stores such as Daka and leave "nothing on the shelves."

The move seems to have been the game changer the government needed. The government won the popular vote, and while it lost most of the large cities, it retained control in many medium and smaller cities. As one local pollster put it, "populism ... is popular."

Maduro has outfoxed the opposition. No elections are scheduled for the next two years. Does this mean that his grip on power is firm? It depends very much  on what happens to the economy.

The vulnerability of Venezuela's economy is not an accident. Instead, it is an essential characteristic of Hugo Chávez's petro-state economic model. Distilled to its essence, this model took a dramatic surge in commodity prices and created a system of subsidies, price controls, and other distortions that is simply too expensive to maintain. In the process, oil production has suffered, and the government has run out of money. It is even considering mortgaging its last remaining gold reserves.

The Venezuelan government gives away gasoline for practically nothing. It has set an artificially cheap price for foreign currency which, combined with a ruthless attack on private property, has meant the death knell for scores of private companies. The government has also decided it wants to control the prices of everything that is produced by, sold in, or imported into the country -- everything from labor to industrial parts, from toilet paper to women's underwear. The end result is ever-spreading scarcity, combined with a plethora of black markets.

This web of subsidies and price distortions can be sustained as long as you have the money for it; the USSR, after all, kept it going for several decades. With deep enough pockets, you can subsidize pretty much everything you want, and you can take over many industries by simply importing your way out of trouble. The problem for the Venezuelan government is that, despite high oil prices, it has run out of money.

Venezuela ran a budget deficit of 11 percent of GDP in 2012, according to Moody's. (Official government statistics are unreliable). It's quite possible that the 2013 budget deficit could hit 17 percent of GDP. China, long a bankroller of the Venezuelan Revolution, is beginning to cut back on its funding, insisting any future loans be managed by their own bureaucrats.

The government's cash crunch explains why there are lines to buy basic staples: there are fewer cheap dollars to give out, and the government is also being forced to start selling them at a higher price. The crunch has forced the government to print bolívares, the local currency, at an unprecedented pace. GDP growth has stalled, and the UN's Economic Commission for Latin America and the Caribbean is forecasting a paltry 1 percent growth for next year. Inflation has risen sharply and is set to end this year at more than 50 percent. The government has even delayed publishing inflation numbers after Maduro complained about how they are calculated.

The paradox of chavismo is that it preaches communism and consumption at the same time. The problem with such an approach, of course, is that it requires a lot of funding. If oil prices were to surge, Venezuela could continue on this path. But if oil prices stay put or fall, tough decisions will be unavoidable -- leaving the system's constituents extremely unhappy.

Will people revolt if subsidies are cut? The likely answer is that no, they won't ... yet. The government controls almost all of the media, and voters are not yet linking their economic situation with the government's own policies. When TV and radio are constantly sending the message that the economic crisis is caused by others ("the Empire," "oligarchs," "the right wing," "the bourgeoisie," "the opposition"), you can buy some time before folks come at you with pitchforks. Then again, Venezuelans have taken to the streets before when faced with cuts in their subsidies. In 1989, in an event known as the "Caracazo," Venezuelans responded to fuel subsidy cuts with rioting and violence, essentially issuing a death sentence to the system that preceded Chávez. While it's impossible to predict when such a surge in discontent might repeat itself, there's certainly no reason to rule it out.

Then there's the role of the armed forces. Simón Bolívar once allegedly quipped that "Quito is a convent, Bogotá is a university, and Caracas ... is a military barrack." The quote highlights the importance of the military in Venezuelan society. The institution has played a pivotal role in Venezuelan history, and its influence on the outcome of any major political upheaval will be crucial.

Venezuela experienced military coup attempts in the 1960s, in the 1980s, twice in the 1990s, and in 2002. The common thread linking these is that they occurred in periods of relative crisis, be it political (the guerrilla wars of the 1960s or the instability of 2002) or economic (the dismantling of the welfare state of the late 1980s). Ever since 2002, things have been quiet in the armed forces, thanks in large part to Chávez's masterful military intuition. But if Venezuela goes into a full-mode economic crisis, how will the military act?

In order to assess this question, one has to ask who the military are, and what they are currently doing. In spite of Chávez's insistence that the military was "socialist and chavista," military sources in Caracas who spoke on condition of anonymity insist there are three groups within the military.

First are the "nationalists," those who are doing business in various government schemes and lining their pockets in the meantime. These are the officers that handle the ports, the import of food, much of the black market, and are even the main smugglers of gasoline across the border. The nationalists are corrupt, but they resent the Cuban influence inside the military -- reports say that Cuban intelligence have infiltrated the armed forces, with permission from the presidency. The main leader in this group is, allegedly, the president of the National Assembly and second in command in the Revolution, Lt. Col. Diosdado Cabello.

The second is the group of officers with links to the drug trade, some of whom have been targeted by the US government. How involved in drug smuggling are the Venezuelan armed forces? It is almost impossible to say, but the United Nations has stated that Venezuela has emerged as a major trafficking point in the last few years. Recently, The New York Times published a story on increased flight activity through Venezuelan territory, presumably linked to the drug trade.

Just last month an Air France flight from Caracas to Paris was discovered to be carrying 1.3 metric tons of cocaine in its luggage compartment, the largest single drug seizure in French history. It is hard to view these events as happening independently, particularly since the military handles all aspects of security in and around the airport where the Air France flight originated.

The third group within the military is the so-called "institutional" wing, professional officers who view the other two groups with contempt and who would like to see the armed forces restricted to a non-partisan, institutional role. It is impossible to judge how large this group is, since it (obviously) operates in the shadows. But the military analysts I consulted with insist it exists, and its size is not negligible.

It is difficult to overstate the involvement of the armed forces in all aspects of Venezuela's life. The Maduro administration continues to stack the top echelons of government with military figures. The president has also made it a point to regularly visit military garrisons, offering members of the armed forces all sorts of goodies, from a special Armed Forces Bank to a military TV channel. As his public acts in garrisons increase in frequency, it is not far-fetched to conclude that Maduro is nervously watching his military flank.

A severe economic downturn would hurt the military's pockets. A budget crunch could force the government to cut back on the lucrative arms deals enabled by the oil boom. An end to subsidies may put an end to the burgeoning black market. And there is now talk in Caracas about ending the nation's unaffordable gasoline subsidy, which the military thrives on.

How the military will respond to all this remains a mystery. Maduro may be able to navigate an economic downturn as long as the generals remain well-disposed, leaving him with some room to maneuver. Perhaps the loyalty of the armed forces to the chavista project is deeper than most suspect.

Or perhaps the economic crisis is the trigger that a segment of the armed forces could use as justification to act. When the armed forces have been so politicized and allowed to become corrupt, there is little institutional restraint to prevent a coup attempt. Judging by historical precedent, however, it seems as though an economic crisis would not, on its own, trigger them to act. An additional ingredient -- perhaps a deeper political crisis, or even an act of political violence -- would be necessary.

Regardless, it would be a tragedy were the Venezuelan story to take such a turn.

What, then, should we expect from Venezuela in 2014? With a relatively secure government, and with absolute control of the media and the institutions, it would seem as though Maduro's position is solid. As I have argued, this hides deep risks.

The key variable to watch is the price of oil. With oil selling at $100 a barrel, the Venezuelan government is barely making ends meet, yet it can continue to muddle along at this rate. Yes, inflation and the subsequent loss of purchasing power will continue unabated, but it could be years before Venezuelans begin blaming the government for it. If the price of oil surges, the government will find its economic model is affordable once again.

However, if the price of oil were to dip below, say, $80 a barrel for a prolonged period, Venezuelans will find their purchasing power severely diminished, forcing the government to change its model. Whether it can do so and avoid corresponding political turmoil remains to be seen. While other authoritarian governments (such as Zimbabwe and Cuba) have navigated deep economic crises, the Venezuelan opposition seems better positioned to reap the benefits of public discontent than its counterparts in those two countries.

As mentioned before, the bond markets now consider Venezuela to be the riskiest of all emerging markets, with premiums that surpass Greece or Argentina. A revolution where the key players hold all the cards but is still in desperate need of foreign financing, where the economy and the viability of the political system depend on the volatile price of a single commodity, is not a safe bet. The markets know this, and that is why, in spite of Maduro's grip on power, they don't solid. They know that, if oil prices take a prolonged dip, all bets are off on Venezuela's stability. In short, Venezuela's glass revolution is more vulnerable than it appears.


Democracy Lab

Cleaning House in Kenya's Police Force

Why security sector reform in Kenya has been much more successful than you might think. The latest in our series of Lab Reports on Kenya.

Kenya's generally well-regarded military has faced stinging criticism in the aftermath of the tragic Sept. 21 Westgate mall attack in Nairobi, with allegations of rivalries and "friendly fire" between army and police units and looting by soldiers. Kenya's police, which have a decidedly less than stellar reputation, became the focus of similar censure in October when David Kimaiyo, Inspector General of the police, was condemned for an "assault on the freedom of expression" after he summoned several journalists over their coverage of Westgate. After a public uproar, the requests were subsequently cancelled. Additionally, recent reports on elite police units have documented abuses. 

While these developments certainly raise a number of important questions and reveal persisting challenges, the prevailing narrative of police ineptitude arguably leaves out the most important part of the story. Kenya has actually made substantial -- if incomplete and fragile -- progress on police reform over the past five years.

There's a reason why security sector reform efforts in Kenya have focused on the police. Kenya's military has a well-established reputation for professionalism and has generally stayed out of politics (with the possible exception of a coup attempt in 1982). As a result, Kenya's soldiers have little involvement in political violence. By contrast, in the lead-up to Kenya's March 2013 elections, many observers derided the pace and extent of the then coalition government's efforts to reform the heavily politicized police force. (In the photo above, members Kenya's police force take cover during the September attack.)

The police reform agenda featured prominently in both Kenya's new constitution, which passed in 2010, and the 2008 powers-sharing agreement that put an end to the ethnically-driven 2007-2008 post-election violence, which was triggered by a close presidential election and allegations of fraud and ultimately left over 1,100 dead and 600,000 displaced. While criticism of the slow pace and implementation of police reforms since 2008 is warranted, during the March 2013 election the Kenyan police acted in an apolitical and generally professional manner, helping to contain tensions after the tight poll -- which, despite widespread concern of renewed bloodshed, was not followed by large-scale violence.

It's important to understand the broader historical context. Police systems in sub-Saharan Africa have long been used by elites to wield political authority, from the colonial period through the contemporary multi-party era. Independence leaders inherited and largely maintained centralized colonial policing structures, as the police proved to be useful tools for suppressing political competition and consolidating control. In the two decades since the "third wave" of democracy brought political liberalization to much of the continent in the early 1990s, the language of African policing shifted in many countries towards accountability and democratically oriented reform programs. In practice, however, the police generally remain political instruments and continue to play an often deleterious role in governance and political violence, from harassment of the opposition in Zimbabwe to widespread extrajudicial killings in Nigeria.

Until recently, the history of policing in Kenya was no exception. Successive Kenyan presidents -- from Jomo Kenyatta to Daniel arap Moi to Mwai Kibaki -- maintained firm executive control over Kenya's two police branches (the Kenyan Police Force and the Administration Police), and used the force to exercise political control. In 1964, Kenyatta jettisoned police autonomy a year after independence, retained the paramilitary structure of the colonial police, and employed the police to suppress political dissent. The use of the police for political purposes deepened in the 1980s under the increasingly autocratic Moi, as units were deployed to attack and torture political opponents. Moi ignored calls for police reform after the move to multi-party politics in 1991, using the police to arm ethnic militias and suppress opposition voter turnout in the violent and flawed 1992 and 1997 elections.

In an environment of violent crime and endemic corruption, Kibaki came to power in 2002 on a campaign of renewal, launching a police reform program in 2003 that aimed to professionalize the decaying, corrupt force and experiment with community policing. The rhetorical move toward democratic policing achieved little, however, as Kibaki continued the Kenyan tradition of using the police for regime security. That became vividly apparent as a result of police involvement in the 2007-2008 post-election violence, where the police were implicated in 36 percent of the officially recorded 1,113 fatalities and the wounding of over 500 more. The short-term triggers of the post-election violence were an exceedingly close election, reports of vote rigging, and Kibaki's decision to hastily declare victory. But the underlying roots of the violence can be traced to several longer-term trends in Kenya's history, including the state's loss over the monopoly of violence, the fragmentation of elites, and ethnically-based, high stakes "winner takes all" politics. To end the crisis, in February 2008, Kibaki and his challenger, Raila Odinga, established the coalition government that expired after the 2013 elections. As part of the power-sharing agreement, the coalition pledged to overhaul the troubled police force. To what extent was the so-called "unity" government able to deliver on its reform promise?

As my recent research highlights, two main factors helped achieve substantial, albeit sluggish and incomplete, police reforms in Kenya under coalition government: first, a low degree of political influence in the police; and second, strong police reform provisions in the text of the power-sharing agreement. A unique combination of factors led the police to become deeply politicized, as noted above, but police leaders never amassed enough of a power base to reciprocally influence the political sphere, a symbiotic relationship that is often seen in other cases such as Zimbabwe. These two factors allowed local, regional, and international actors to leverage the power-sharing text and push reforms forward, while, at the same time, recalcitrant police leaders were unable to sufficiently block reforms.

Thus, in spite of a halting pace and constant pushback from anti-reform elements, several significant legislative and constitutional police reforms took place during the tenure of the coalition government from 2008 to 2013. Kenya's new constitution, promulgated in August 2010, contained major changes to security and police governance, including provisions to diminish political manipulation and increase accountability of the police. The new constitution also merged the two police forces into one National Police Service, which was intended to help streamline the often overlapping and conflicting mandates of the two branches (the Administration Police was a colonial relic, created to help local chiefs with policing and administrative issues). In August 2011, three key police reform laws were passed: the National Police Service Bill, the National Police Service Commission Bill, and the Independent Policing Oversight Authority Bill. Passage of such reforms has set in motion the long process of reshaping police governance in Kenya.

Implementation of these institutional reforms has lagged due to a number of factors, but mostly due to a lack of political will from elites and recalcitrance from some within the police leadership. Here's what a member of the Kenyan government's Police Reforms Implementation Committee, Odour Ong'wen, told me in an interview in 2011: "The first major obstacle we are seeing as a committee is the resistance from the very top [of the police hierarchy].... A staggering majority are resisting." However, due to a lack of political influence, these efforts to resist change have largely been fruitless.

Kimaiyo, the first Inspector General of the reformulated National Police Service, who was a director in the Ministry of Internal Security when I interviewed him in 2011, acknowledged the difficulties in operationalizing institutional reforms: "The recommendations are there on paper," he told me. "Implementation is a problem." In spite of these obstacles and the real potential for a rollback under a new administration, it appears this institutional legal framework helped depoliticize the force ahead of the 2013 elections.

Notwithstanding fears about preparedness, during the ultimate test of the fledgling reforms -- the March 2013 national elections -- police conduct was, overall, commendable, which clearly stands in stark contrast to the 2007-2008 election. The police force deployed officers to areas that saw outbreaks of violence in 2007-2008, and was quick to send reinforcements to areas that did suffer from violence in the days before the March poll. In a move that could have implications for the quality of Kenya's democracy, Kimaiyo even instituted a ban on public demonstrations during the election period. In a recent post-mortem on the election, the International Crisis Group (ICG) concluded that police behavior during the March elections was "greatly improved" from the previous election, characterizing their performance as a "measured response."

Of course, there's still considerable justification for harsher verdicts. The ICG report itself highlighted several instances of questionable use of live ammunition and excessive use of force during the election period, episodes which are under investigation by the Independent Policing Oversight Authority. Additionally, a report released last month by the Open Society Justice Initiative and the Kenyan NGO Muslims for Human Rights is particularly critical of Kenya's Anti-Terrorism Police Unit, which they allege is responsible for a laundry list of abuses, including torture, arbitrary detentions, and disappearances.   

These worrying incidents -- combined with police conduct during Westgate and the subsequent crackdown on journalists, additional charges of major abuses of Somali and other refugees, persistently high levels of corruption, fundamental questions about effectiveness, chronic budget shortages, and continuing impunity for previous political violence -- highlight the many remaining challenges in turning  reforms into a reality.

Nonetheless, a new legal framework and improved police conduct during the March elections suggest real movement on reforms, particularly in depoliticizing the force. That said, recent efforts to amend two police reform bills to transfer some powers back to the police commissioner, which are currently being debated in parliament, suggest that the possibility of a reversal remains high under the new government of Uhuru Kenyatta.

Pressure from civil society and international actors played a large role in pushing the police reform agenda forward under the coalition government in Kenya. In order to consolidate on past gains and avoid backsliding, it is incumbent on both domestic and international actors to continue to monitor and push the Kenyatta administration to fully implement and translate police reforms from paper to practice.