Venezuela faces political and economic instability as Nicols Maduros deeply

unpopular government seeks to quell widespread unrest. Oil prices have

dropped dramatically since June 2014, exacerbating recession and increasing
inflation in the oil-dependent economy. Economic decline has placed great
strain on the Maduro regime: over two-thirds of Venezuelan votersbelieve that
Maduro
should
not
complete
his
six-year
term.
Anti-Maduro demonstrations, which first broke out in February 2014, have been
met with a severe government crackdown on the political opposition. Security
forces responded to protests with widespread violence: a May 2014 Human
Rights Watch report documents the abuse of over 150 victims. Efforts to
suppress opposition activists ahead of congressional elections, scheduled for
2015,
could
lead
to
further
political
turbulence.
In December 2014, the United States passed legislation to impose sanctions on
Venezuelan officials involved in violence against protesters. Civil unrest and
heightened authoritarianism in Venezuela could threaten important U.S.
economic and regional interests. Venezuela is one of the largest foreign oil
suppliers to the United States and global oil markets would likely react
negatively to the deterioration of U.S.-Venezuelan bilateral trade. The United
States also has a strong interest in promoting democratic governance as the
basis for a more stable and prosperous region.
Global Conflict Tracker- Council on Foreign Relations.
http://www.cfr.org/global/global-conflict-tracker/p32137#!/?marker=29
Venezuela Overview

A country rich in natural resources, with the largest

oil reserves in Latin America and the Caribbean and
among the worlds largest Venezuela has immense
potential.
Nicolas Maduro was elected as president of
Venezuela in April 2013, following the death of
President Hugo Chavez a month earlier.

On the economic front, Venezuela has benefited from

the historically high international oil prices of the
past decade, which have enabled increased
government spending on ambitious programs.
Additionally, the government nationalized several private companies in sectors
such as hydrocarbons, mining and metallurgy, cement, banking and
telecommunications.
Venezuela has achieved high growth rates (5.6% in 2012). However, GDP
growth slowed to 1.4% in 2013 according to unofficial figures and a
significant decline is forecast, even resulting in negative growth in 2014 and
2015.
Among the most important programs that oil resources have helped to finance
are the broad-based social programs called Misiones. Economic growth and the
redistribution of resources associated with these missions have led to an
important decline in moderate poverty, from 50% in 1998 to approximately
30% in 2012. Likewise, inequality has decreased, reducing the Gini Index from
0.49 in 1998 to 0.39 in 2012, which is among the lowest in the region.
Nevertheless, Venezuelas development continues to face important
challenges, especially at a time when a contraction was recorded in
international oil prices. Its economy is highly vulnerable to fluctuations in oil
prices since it represents over 96% of the countrys exports and generates
nearly half of fiscal income. Despite these high prices, Venezuela has
experienced fiscal deficits accompanied by an increase in public debt (26% of
GDP in 2012, for the central government). Likewise, international reserves have
fallen, representing less than five months of imports.
In addition, a strongly expansive monetary policy aligned with fiscal objectives
drove up inflation to 56.3% in Venezuela at the end of 2013, the highest rate
on the continent.

QUICK FACTS:

Name: Bolivarian Republic of Venezuela.

Population: 29.9 million (estimated, 2012).

Capital: Caracas.

Other important cities: Maracaibo, Valencia, Maracay, Barquisimeto,

Mrida, San Cristbal and Barcelona-Puerto La Cruz.

Area: 916,445 km.

Currency: Bolvar.

Per capita GDP: US$ 12.756 (2012)

Exports: Oil.

Language: Spanish.

Religion: Catholic majority.

Life expectancy: 74 years (2011).

The World Bank: Venezuela Overview

http://www.worldbank.org/en/country/venezuela/overview

Venezuela accepts outside mediators for negotiations

The government of President Maduro agrees to external support for a dialogue
with the opposition to end weeks of unrest
March 28, 2014 1:06PM ET
Following weeks of violent protests, Venezuela's President Nicols Maduro
agreed on Thursday to enter talks with the countrys opposition with the help of
an external mediator.
The deal, brokered by a group of South American foreign ministers, is aimed at
ending the impasse between Maduros government and his political opponents,
some of whom have been jailed for allegedly inciting violence.
Venezuelan Foreign Minister Elas Jaua on Friday praised his foreign
counterparts for their efforts to seek a peaceful solution to protests, which have
been fueled by soaring crime rates and a shortage of basic household goods,
and which have claimed 34 lives since early February.

"We are conscious that our homeland's destiny should be marked by peace,"
Jaua told local media. "Words can be taken back, but what cannot be revoked is
a bullet to the head."
After a two-day visit to Venezuela, ministers from the Union of South American
Nations (UNASUR) said Thursday that Maduro had agreed to have a "good-faith
witness to facilitate dialogue."
It was unclear who the "witness" would be.
In Bogot, Colombian President Juan Manuel Santos said foreign ministers from
three countries would give "the final touches" to the agreement "so that
dialogue can begin."
Santos said the Venezuelan government agreed to the talks after ministers
visiting Caracas met with the opposition, students, religious and human rights
groups, and Maduro himself.
Maduro has attacked the opposition as "fascists" and claimed that they want to
topple his government with help from the CIA.
Two opposition mayors have been arrested and sent to prison, while an
opposition leader, Leopoldo Lpez, is in jail awaiting trial. Scores of other
protesters are also behind bars.
Maduro elected to office one year ago by a wafer-thin margin called for
talks soon after the protests began, but the main Venezuelan opposition group
and student protesters have refused as long as they have jailed supporters.
A moderate opposition group said Wednesday it was ready to talk to Maduro, in
a rare potential step forward following weeks of unrest.
"We are ready for a transparent, balanced and fair dialogue, a public one with a
national or international good-faith facilitator... that can mediate if needed,"
Ramon Aveledo told broadcaster Globovision.
Aveledo, of the Democratic Unity group, which seeks reform without ousting
the elected socialist regime, spoke after meeting with the UNASUR ministers.
Hours before the announcement, the U.S. State Department issued its
strongest comment yet on the troubles in Venezuela, saying it would consider
imposing sanctions if Maduro didn't reconcile with his opponents.
The State Department's top official for Latin America said sanctions could
become an "important tool" to pressure Maduro.
"If there is no movement, no possibility of dialogue, if there's no democratic
space for the opposition, obviously we have to think about this, and we are

thinking about this," Assistant Secretary of State Roberta S. Jacobson told

reporters in Washington.
She added that the U.S. would work with its partners in the region to impose
any such measures.
Maduro's administration responded that
interference in Venezuela's internal matters.

it

categorically

rejected

U.S.

Also on Thursday, a spokesman for the International Monetary Fund warned

Venezuela that it must restore balance to its economy and offered technical
assistance to tame inflation that hit 57 percent in February.
Al Jazeera and wire services
http://america.aljazeera.com/articles/2014/3/28/venezuelaacceptsoutsidemediatorsfornegotiations.html

Venezuela moves to ease currency curbs

Under the new system, the central bank matches dollar buyers and sellers who
make bids through authorized channels
March 25, 2014 12:53AM ET
President Nicolas Maduro's cash-strapped government unveiled a new currency
market Monday that allows Venezuelans to buy and sell dollars legally for the
first time since 2010.
The move has been called a giant devaluation by the opposition, with two-time
presidential candidate Henrique Capriles taking to Twitter to denounce the
"black Monday" overhaul that he said will further erode the savings of poor
Venezuelans already suffering from 57 percent inflation. The nation's mounting
economic woes are among the main drivers of protests that began last month
seeking to force Maduro to resign.
Maduro's socialist government has been increasingly safeguarding its shrinking
supply of oil dollars, leading it to fall behind on payments to foreign suppliers
and exacerbating shortages of imported goods in an oil-dependent economy
where manufacturing is thin.
With decade-old currency controls in place, Venezuela's bolivar currency this
year nose-dived on the black market to one-12th of its official value.
Venezuelans turn to the black market when they cannot purchase hard
currency from the government at the official rate of 6.3 bolivars per dollar.

Economists said the new "Sicad 2" exchange system could alleviate some of
the pent-up demand for dollars, and indeed the bolivar has rallied on the black
market since details of the policy change emerged in recent weeks, according
to Dolar Today, a website that tracks illegal trading in the currency.
Under the new system, the central bank matches dollar buyers and sellers who
make bids through authorized banks and brokerages. While Oil Minister Rafael
Ramirez said there is no limit on the amount or rate at which dollars can be
acquired, satisfying demand will hinge on enough dollars coming to market
from the state-run oil company, PDVSA, which is the source of 90 percent of
Venezuela's export earnings.
The central bank is expected to publish daily the reference rate used in
accepted transactions. On Monday, traders consulted by The Associated Press
said the accepted rate fluctuated around 55 bolivars per dollar.
Former President Hugo Chavez in 2010 shut down a currency system that had
allowed Venezuelans to obtain dollars legally by swapping government or
PDVSA bonds in bolivars for ones issued abroad in dollars.
It is too early to tell if Maduros move will calm the demonstrations his
government that began five weeks ago, less than a year after Maduro
succeeded Chavez.
A pregnant woman shot in the head and a National Guard soldier fired on as he
tried to clear a roadway are the latest fatalities in violence tied to antigovernment protests in Venezuela, authorities said Monday.
And Diosado Cabello, who heads the Venezuelan congress, said opposition
lawmaker Maria Corina Machado had violated the constitution by addressing
the Organization of American States last week at the invitation of Panama,
which ceded its seat at the Washington-based group so she could provide
regional diplomats with a firsthand account of the unrest.
"She's no longer a deputy," Cabello told reporters, saying that her acceptance
of Panamas offer was unconstitutional. "We're giving instructions that this
woman not be allowed back into parliament for this session."
Maduro referred to Machado as "ex-congresswoman" on Saturday, a few days
after arresting two opposition mayors for allegedly conspiring with the U.S. to
topple his 11-month-old administration.
Machado was in Lima, Peru, on Monday attending a conference organized by
the International Foundation for Liberty.
She told reporters that Cabello's actions "give us more strength and more
reasons to continue the fight." She said she intends to return to Venezuela as

soon as possible. The lawmaker, who says the president and his allies preside
over a dictatorship, said she would not give up without a fight.
Wire services
http://america.aljazeera.com/articles/2014/3/25/venezuela-movestoeasecurrencycurbs.html