It has become a lot harder for Venezuela to dig itself out of the giant economic, political and social hole it’s in by the government of the country.
In order to create a new legislative body that supersedes others, including the opposition-led National Assembly, Venezuela held a highly contentious vote on Sunday. The National Constituent Assembly (ANC) is almost certain to solidify dictator Nicolas Maduro’s power — at least for the moment as it will have the power to rewrite the constitution.
“I think Maduro actually emerges weaker from this process,” said Risa Grais-Targow, director, Latin America, at Eurasia Group. “It’s going to escalate international isolationism and it could prolong protests on the streets.”
Just over 8 million or 41.53 percent was the voter turnout, the Venezuelan government claimed.
But with most people boycotting what they viewed as a rigged election, only between 2 million and 3 million people voted in total, say independent monitors and members of the opposition.
For undermining democracy generally and for overseeing an economic collapse during his four years in office, Maduro is widely unpopular.
In running street battles for months, protesters have taken to the streets and clashed with government forces. On Sunday, there were more than 10 deaths that were reported. And since April this year, there have bene reports of death of more than 100 people.
“We were looking at the vote yesterday as a tipping point, and I think looking back at it, we will see it as such,” said Jason Marczak, director of the Atlantic Council’s Latin America Economic Growth Initiative. “The vote was a complete sham. There were no mechanisms in place to prevent people from voting multiple times, and a lot of people that voted were forced to vote.”
The international community condemned the contest. Among the countries that said they will not recognize the vote were Argentina, Colombia, Canada and the United States.
After the Treasury Department officially sanctioned Maduro himself, the U.S. took things a step further on Monday. Larry McDonald, head of the U.S. macro strategies at ACG Analytics, said that those sanctions in turn increase the likelihood of the U.S. targeting Venezuela’s oil sector.
“The option receiving the most attention at the moment would deprive [state-run oil company] PDVSA of U.S. exports of petroleum-blending products,” McDonald said in a note Monday. “From [a] historical view, former Panamanian strongman Manuel Noriega’s U.S. indictment on drug trafficking charges preceded a more assertive policy by the George H.W. Bush Administration in 1989.”
Oil accounts for 95 percent of Venezuela’s exports and the country’s economy is almost entirely dependent on its oil industry. but it has been made less and less profitable and productive due to a lack of investment in the sector.
Things were made worse by the crash in oil prices that started in late 2014. Venezuela’s inflation rate is expected to rise by a crippling 720 percent this year by the International Monetary Fund currently.
Dany Bahar, a fellow at the Brookings Institution said that adverse consequences on regular Venezuelans would be the result from the sanctioning of the country’s most important economic component.
“The sanctions are a very delicate topic because they are a double-edged sword,” Bahar said. If the U.S. places sanctions on Venezuela’s oil business, “then a lot of people will suffer.”
Such measures could exacerbate an already dire humanitarian crisis as it would further restrict the flow of capital into the country, Bahar noted. Massive shortage of food, medicine and other basic goods is being experienced in Venezuela.
“At the same time,” Bahar said, imposing stronger sanctions “could make it harder for the Maduro regime to continue buying the loyalty of people.”
(Adapted from CNBC)