LVL: Three-Handed Economist

Is Venezuela headed for gridlock, cohabitation or violence? In DC this week, Luis Vicente León of Datanalisis laid out his scenarios.

Photo: Ben Raderstorf, the Inter-American Dialogue.

“Give me a one-handed economist! All my economists say, ‘On the one hand, on the other…'”

-Harry S. Truman

What political scenarios could arise as chavismo and the MUD try to adapt to an unfamiliar new “cohabitation” next year?  Perhaps the MUD’s attempts at economic and political reform will be once again thwarted by chavista dirty tricks, causing a stalemate between the two parties until the next gubernatorial elections. Or maybe the conflict between the two parties will escalate into a clash between the legislative and the executive, leading to violence and disorder. Or maybe, as Dorothy K. suggested, the stage for a high stakes negotiation has already been set.

Those are the three scenarios Luis Vicente León laid out speaking at an Inter-American Dialogue event in Washington on Tuesday. Harry Truman, it’s fair to surmise, would not have been amused. 

He opened his presentation saying “it’s absolutely impossible to foresee things in Venezuela for more than 3 months”,  a somber reminder of the volatility that surrounds politics in our country. More importantly, the comment is telling of León’s hesitance to place a bet on what Chavismo will do next.

I still found his overall framework useful as a way of organizing our thoughts as we head into…whatever it is that’s around the corner.

Scenario #1: Temporary Stalemate

In LVL’s first scenario, the government blocks the opposition’s attempts at legislation, through a series of TSJ rulings or otherwise. Though the MUD tries to get around these restrictions, it is unable to enact the reforms it has thus far proposed. By mid-2016, a tired and weary MUD ends up channelling all of its energy into governors’ elections.

According to the Venezuelan constitution, the National Assembly needs the input of the Citizen’s Branch of the government in order to pre-select justices for the TSJ. One can imagine a scenario in which with the National Assembly’s qualified majority attempts to add or remove more justices, but is unable to coordinate the pre-selection process with the Chavista-controlled Citizen’s Branch. Given that the current Comptroller General and the Public Defender will, in all likelihood, be aligned with Chavismo until 2021, the opposition will need to overcome this obstacle in order to reform the courts.

A similar scenario could also occur if a recall referendum is called on Maduro. An uncooperative CNE or TSJ could potentially delay the recall process until January, 2017, nullifying the call for a new election. Instead, VP Jorge Arreaza would be calling the shots as Presidente de la República.


Scenario #2: Negotiations

The best possible #post6d scenario for the country, according to León, is for the MUD and the PSUV to get serious about negotiating. I know what you might be thinking: Chavismo? Negotiating? No way. Yet, as León noted the other night, there have been larger conflicts in history that were settled through political negotiations.

It’s important to remember that despite Maduro’s increasingly authoritarian rhetoric, despite all of the dirty political tricks implemented in the past 17 years, and despite the communicational hegemony established by Godgiven & Co., the PSUV is still, to this day, an organized political party. Political parties, like individual actors, have incentives that shape their behavior.

Never before has Chavismo faced such influential and united opposition. This is the first time since 1998 that Chavismo doesn’t control all five branches of the state. Before 6D, there was no need for PSUV to negotiate in order gain or maintain political influence.

Pero el país cambió.

In this case, the political cost of partisan deadlock is accentuated by the grave economic conditions which most Venezuelans are living through at the moment. For these negotiations to occur, the cost of further alienating pragmatic Chavistas would have to outweigh that of negotiating with escualidos.

Scenario #3: Conflict

While political incentives could lead to Chavismo’s survival and the PSUV’s reform, they could ultimately lead to more conflict as well. Maduro has allowed radical Chavistas to shape his violent rhetoric. Why would he stop now? The third scenario is based on this premise.

In this alternate timeline, the MUD-controlled National Assembly is once again constrained by Chavista institutional hegemony, and, given the castration of a government branch established in the constitution,  a protest movement could be able to question Maduro’s legitimacy with more efficacy than #LaSalida. Similarly, if the MUD decides to call for a recall referendum without sufficient public support, it will find itself facing a cornered, desperate PSUV beast, sin bozal.

LVL’s view is that a conflict scenario would likely benefit Chavismo more than the opposition in the short term. Maduro’s control over the military and informal militias gives him the upper hand when it comes to brute force. The international community, which has been on the opposition’s side recently, provides a strong counterbalance to violent Chavista threats. But diplomats take a lot longer to make up their minds than colectivos y motorizados.

So which one is it?

All three scenarios are plausible. And that’s the problem. They’re so general they don’t really yield any concrete predictions. What’s the point of going to the doctor if you end up diagnosed with cancer OR mumps OR the flu? Is this the diagnosis that Venezuelans have been waiting in cola to hear?

Look, I get it, as a pollster LVL must think like a scientist. Part of this means being conscious of the limitations of your field of inquiry. However, the closest thing to a prediction that León gave us in this presentation was advocating that the private sector pressure the opposition into enacting economic reform. The MUD will only be willing to share the political cost of macroeconomic reform with Chavismo if it has the push and investment of the private sector behind it, it makes sense.

But how is the private sector not going to pressure the opposition for economic reform when Venezuela is going through the worst economic period in its history?  

The central dilemma in LVL’s framework is that of figuring out how to provide the right incentives for negotiations to occur between the MUD and the PSUV. As usual, the actions of the opposition will be easier to predict than those of Chavismo.

The MUD knows what to do: maintain party unity at all costs and attempt to negotiate, or at least legislate, with Chavismo. If either fails, then we may see conflict and demonstrations arise from the party.

If we want to forecast anything, we should be watching the PSUV.

It will be the PSUV’s internal dynamics that will determine the outcome, as its radical sectors lobby for absolutist measures and its moderates call for party reform or defect to other parties. Negotiating may be the only scenario in which the opposition comes out on top; by doing so it can mitigate the risk of violent conflict and enact the necessary reforms to ensure the economy doesn’t go to shit in 2016. If it succeeds in courting certain sectors of Chavismo, it might even have a real shot at a recall referendum.

That’s not to say that the MUD should stop trying to mobilize the streets. The opposition must strike a balance between making the negotiations palatable for the PSUV and demonstrating that it is too strong to continue to be oppressed by la bota. A government with a weaker perception of itself is going to be, for better or worse, a lot less confianzudo

If the opposition succeeds and strikes a bargain, it may tip the scales in favor of unity and peace.

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  1. A lot of things are going to be defined when the new deputies are instated on January. Specifically, if and how the PSUV is going to try to stop it and whatever they succeed (I personaly don’t believe that they will).

    Besides that, the first few things on the list were already written by the MUD. The next battlefield is probably going to be the Supreme Court, by getting rid of the “judges express” that the PSUV is cramming in there by violating the Constitution. And José Guerra is putting forward the agenda of bringing transparency to the economy and the public institutions, which together with sane economic measures is the only way that the highest inflation in the world is going to start falling.

  2. LVL es de las víboras más grandes en el espectro de opinión ahora mismo. Un encantador de serpientes total.

    Recuerdo cuando se ofreció a si mismo para liderar negociaciones entre el gobierno y la oposición. LVL es una de las cosas que tenemos que eliminar en este país. Ese encuestador engañoso, ese proceso de hacer política a través de encuestas, son muchas cosas a decir verdad…

  3. OT: One thing I recently heard was that it wasnt Maduro deciding that the military should leave their govt jobs and returning to their barracks but rather the military telling Maduro they no longer wanted to appear as part of the administration and preferrring to return to their military jobs. !! How does this tally with the Civil military alliance Maduro proposed for when they lost the election ……..!! Was it true that the oppo won the elections in Conejo Blanco ……can anybody comfirm this?? A relative who participated as witness in an electoral table was surprised that it was the military in charge who pushed for the table to be closed shortly after 6 pm, he ordered some people still queueing to show their little finger and found that they bore the marks of having voted so he ordered the people at the table to wind up things and have the tables closed.

    We tend to think that because certain high profile military man shout at some official occasion their approval of the regime that means that they are all rabid Chavistas , for some its a career move , for others self protection , for others showing loyalty to some higher ranking military they are personally allied to and for yet other a means of ensuring they continue with their corrupt business, but ideology is not for most of them a relevant factor .!! There is also a lot of hatred by clean military for corrupt military , saw a filmed interview of an army officer at the frontier (disguised voice and fuzzy image) speaking with hatred of NG on the other side engaging in corruption …….one thing is clear they wont move unless they feel that the mayority of the people oppose the regime and there is some splashy provocation which pushes them over to an open stance of opposition to the regime……

  4. For me, January 5th is a sort of event horizon. In spite of the Regime’s rhetoric, we simply do not know what they will do, nor do we know how the Opposition and the public will respond to each of the various scenarios. The situation is very volatile. Small events can trigger much larger ones. I think LVL is going out on limb in just trying to narrow it down to three vague scenarios.

    The only prediction I will try to make is to say that it would be a mistake for anyone to think that public is going to have very much patience. They want a clear path forward, and they are not going to tolerate a stalemate for very long.

  5. I don’t think PSUV will negotiate anything. So, I’d say: Pass a string of popular laws, using the new TV channel to get the information out. Give Maduro six months to fix the economy. If he doesn’t, remove him by Constitutional Convention or recall election.

    It’s important not to squander this victory by hemming and hawing about “gubernatorial elections”. We know how Chavismo deals with those.

    The job isn’t winning elections any more, it’s winning power.

    • I’m with Jeffry and Roy.

      Jeffry: “The situation is very volatile. Small events can trigger much larger ones.”

      Roy: “I don’t think PSUV will negotiate anything”

      and LVL: “it’s absolutely impossible to foresee things in Venezuela for more than 3 months”

      So come January there are going to be HUGE issues and showdowns of the magnitude of 2002:
      1)-Freedom for political prisioners
      2)-People are literally hungry hence they will be very impatient. Something has to be done and whatever it is, it will hurt.

      I take Chavismo at their word. They will fight and not adapt and for that they will implode.

    • The role of a statistician is to process, interpret and find trends in the raw data that he/she has access to and provide insight and advice about the implicit risks of deciding upon the results provided. Is in this role where he/she has the expertise. His/her role is NOT making the final decision. Any serious statistician’s answer will always be in term of scenarios, and in some cases attach a probability statement to them. It is upon someone else to make the final decision. Where LVL is missing the mark in my opinion is trying to sell himself as a “leader” trying to sway the public opinion, but without dropping the statistician’s hat. You CAN’T wear both without being cornered by people saying what most of the posters here are asking, i.e. …yadda, yadda…but OK, TELL ME EXACTLY WHAT TO DO!!

    • Exactly!, and well even as a pollster, her methodology numbers, etc…are just plain horrible. I like the 11 point of madure increasing in the polls of likeness, before the election! But either he is a political analysis or an statistics man? the problem is he wants to do both, and he fail miserably at both

      • Yes, but if you try to be professional and keep a low profile you don’t get fancy fly tickets to Washington for free, and returning back to Venezuela with more cash in your pocket than what you simply need “pa’ los frescos”.

        I don’t deny LVL professionalism and credibility as a pollster but he is purportedly moving to the spotlight as an “authority” in Venezuelan Politics. His work as a pollster doesn’t give him enough credentials, or at least not at that level of protagonism.

        Be aware though, that there are people in the government that are way less qualified than LVL and still receive some screen time:

  6. “VP Jorge Arreaza would be calling the shots as Presidente de la República.”

    Don’t count on it. Once we’re into that kind of scenario the Vice-presidency will be worth a good deal more than the “bucket of warm piss” a former occupant of the US equivalent once described it as.

    There will be a line around the block…

  7. “…and enact the necessary reforms to ensure the economy doesn’t go to shit in 2016.”

    Sadly, the economy is going to shit no matter what they do

    • Sadly, I agree. The damage Chavistas have caused will take more than a decade to repair. The only hope is hope itself: if hope of improvement returns in two or three years, the country will feel better about itself despite its problems.

    • Unfortunately, for the short term, we need to lower the bar from preventing the economy from going to s__t to preventing mass starvation. This is going to require some temporary compromises on principles.

  8. Historically, Latin American countries have had three power bases: the church, the landowners, and the military. Today, I’d suggest that perhaps the term “industry” better represents, or mergers with, the power base “landowners.” Industry cares about political environments, but the primary motivation is maintaining the logic and functionality of free markets Those are practical concerns, not ideologically political ones. Those concerns put supplies on the shelves, and if governments would stop “messing” with them so much, they’d work even more efficiently than they already do. Maduro’s war against industrialists is “counter-productive” to be diplomatic about it.

    There’s also the factor that Latin America is prone to petty bribery. That’s one of the things that adds color to living in Venezuela. The multa pagada on the spot, the early aguinaldo or plain regalito to get some paper work on the top of the stack, or un sobrino who knows someone. OK, small cost of living adjustments there. But it becomes a barrier to economic and political progress when the petty bribe idea becomes big bribes and payoffs, skimming, and corruption to the tune of millions. That is a drain on the economy – a drain of supplies on shelves. Refusing to participate in that, and stopping it, would allow much more rational governmental / political decisions. (Developed nations toss you in jail for any form of bribery – a hard line, but a correct one, imo.)

    The 112 seats may be more than just 112 seats in the AN, guys. There are a lot of people very fed up with the way things have been going.

    When oil was over $80 a barrel, dollars must have been flowing in. I have no idea who pays what to whom in Venezuela, but maybe some smart accountant can give an estimate of how much in the way of basic necessities could have been bought with that oil money. My guess is you could literally flood the streets three feet deep – and a major humanitarian concern would be the search for missing children under three feet tall who went chasing chocolate and got lost amongst the rolls of toilet paper and diapers and cooking oil, chickens, eggs, shampoo, soaps, and all. And logically, the bolivar should have appreciated with a positive trade balance. There seems to be a lot of money missing there, and I hope honesty will prevail. If politics and an excuse for government flow the way the money flows, nothing changes.

    Political upheaval is never about “the rich”. It is about gross government inefficiency, theft, irrationality, and blockages to the supply chain. In short, it is about irresponsibility and betrayal of trust.

  9. Pollsters that hedge their bets/predictions tend to frustrate people. I would actually distrust a pollster who doesn’t. Before 6D people where making fun of LVL because he was hedging in every comment, saying things like “A MUD 2/3 majority is unlikely, but not impossible”. That type of comments simply reflect the unavoidable uncertainty in making predictions using polls. If you hear a pollster saying that with all certainty this or that will happen, then ignore him. Predictions must reflect uncertainty.

    That’s my opinion on LVL, the pollster. But there’s another LVL: the political commentator. That second LVL is a quite annoying Captain Obvious, as Edgar said before. Also, if he’s going to offer scenarios, LVL should comment on the probability/likelihood of each one.

    Nonetheless, I think he’s right in offering scenarios, and hedge a little. I don’t see how anyone can, in all seriousness, make precise predictions about what will happen in 2016 in Venezuela. I agree with LVL that making predictions on Venezuela politics for more than 3 months is very difficult, maybe impossible. For the last two years we’ve seen competent people make predictions that were wide off the mark. BofA / Francisco Rodriguez was saying in 2014 that an exchange rate unification was a sure thing. Didn’t happen. Garcia Banchs erred in his “Year of political change” prediction for 2014, and then failed again in 2015 with his “Explosion of the exchange controls” prediction. There are more examples.

    Any serious attempt at predictions for 2016 has to include more than one scenario. There’s just too much uncertainty, and too many variables outside the control of PSUV and MUD that can completely change the outcomes (Just to name two: the price of oil, and future USA indictments). Also, as Martin wrote, “It will be the PSUV’s internal dynamics that will determine the outcome”. I don’t think a good analysis of PSUV’s dynamics could yield one and only one predicted outcome. Simply put, 6D could have started several processes inside PSUV, and not even people inside PSUV can anticipate what’s going to happen.

  10. Before one can trot out predictions it might first be necessary to take a “searching and fearless inventory” of what the hell is going on with the energy, banking, healthcare, and all the other sectors which have basically being stumbling along without a professional executive branch for going on 17 years. I’m talking about forensic accounting to determine how much foreign companies are owed, exactly, before business as normal can resume. As is, my impression from relatives working is the aforementioned sectors is there is basically no accurate accounting or evaluations per any of the nation’s principal institutions and resources. Returing to the medical metaphor, a diagnosis can only be made after a series of tests and examinations are carried out to generate some goddam data that is not cooked or simply has not been collected. No one can plot a course without some idea per the lay of the land.

  11. I think it’s a really stupid mistake to try the recall election route instead of National Assembly. The only good thing about the recall is that it’s faster, but the chavista government still have too much power and will delay as much as possible so there it goes the only advantage.

  12. Nobody has taller of previous LVL predictions and how his batting average is… In 2014 I assisted to one of his conferences and as far as I remember none of his scenarios materialized…

  13. “Hmmm. The dark side clouds everything. Impossible to see, the future is.”

    The three scenarios are not mutually exclusive. They are all highly probable and may even happen simultaneously. While one area is in conflict (TSJ) another is managed through negotiations (economy) and others remain in stalemate. More likely shifting from one to the other as the power struggle develops: conflict -> stalemate -> negotiation -> conflict -> negotiation. Eventually a new overall stable situation may develop:
    – a sudden government collapse
    – a slow government unfolding
    – a violent conflict
    – a re-stregnthend government.

    Like LVL said impossible to foresee.

    Personally I do not think a Presidential Recall or National Assembly are clear possibilities for the opposition.

    A 12% vote difference is not an insurmountble difference.
    The recall requirement of obtaining more votes than Maduro got is a difficult and risky obstacle.

    Replacing a congress where the opposition has a 4:2 majority with a 3:2 majority is a step back in terms of power and such assembly can drag its feet indefinetly if its mired by delay tactics and conflicts with the other powers (yes, the NA is not magic, it will have the same conflicts as the congress).

    The risks in those two options are very high and like they say in dominó: “mano ganada no se tranca” which roughly translates to: you do not force a winning match.
    The game that comes is chess, a long and dragged out one, fraught with perils (of which looking for shortcuts is a big one).

  14. Just a thought. Has anyone thought about abandoning the conflict paradigm and approach the matter as if there were room for both PVSA and MUD to each reach their goals either independently or cooperatively.

    First of all Chavismo must abandon its ideological axiom that all the world’s ills are exclusively due to due to capitalism, and MUD must find some merit in socialism as a tool to address the hardships of the poor and applaud Cavismo as a champion of the poor and blame the corruption for the economic demise and political polarization of the society.

  15. The National Assembly should tell everyone in Venezuela to not pay taxes. Do not give this corrupt regime another Bolivar.
    The people that work the oil industry need to go on strike.
    That will be the end of any money coming into the country.
    When the police and soldiers don’t get paid, they loyalty may waiver.
    Crime can’t get any worse. Food is already short.
    Force Maduro’s hand. Paralyze the country. Park every vehicle that you own in the middle of the road.
    The military won’t be able to freely move against the people.
    Get international attention until someone (the US) comes to help.


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