The Private Sector and the Future of Venezuela

Venezuela's President Maduro talks to supporters during a meeting at Plaza Bolivar in Caracas

By Aurelio Concheso

December’s local election results are in for Venezuela, and the opposition can rightly claim that it not only retained major urban areas such as Greater Caracas, Maracaibo and Merida, but regained others it had lost such as Valencia, Barquisimeto, and San Cristobal. In addition they made inroads in “Chavista cities” such as Chavez´s own home town of Barinas and Diosdado Cabello’s home town of Maturin. Moreover, despite how the Electoral College blatantly manipulated the way results were broadcast, in the overall national vote tally the opposition candidates beat out the government’s by 51 to 49 percent.

On the minus side for the opposition, former presidential candidate Henrique Capriles tried to bill the contest as a referendum on President Maduro, but this didn´t pan out either from the perspective of voter turnout (only about 58.5 percent vs. over 80 percent in the April presidential election) or the difference in total vote.

What we are left with moving forward is a political environment that continues to be polarized. During the two months previous to the election, the government made private business the culprit for inflation and scarcities of goods, while simultaneously taking steps that practically insure higher inflation, perhaps hyperinflation in 2014.

As part of that tactic, our top business leader Jorge Roig, head of Fedecámaras, the peak business association in Venezuela, was earmarked for savage attacks as an “enemy of the people” and the entire commercial sector was stigmatized as price gouging, speculative, and corrupt.

The big question is if after these results the government will feel secure enough to open meaningful talks with the private sector, perhaps even the opposition, seeking support for measures that must be taken in a very short term. These include devaluation of the currency, loosening of exchange controls, and support for investment, particularly in the oil sector. The private sector has reached out to the government in this respect, as witnessed by its recent press release regarding economic reform.

Should this be the case, the economy will start to stabilize. However, if the more radical elements in the government continue to control the agenda and are successful in taking further steps towards eliminating private property and continuing the country’s path toward a communist economy then the potential for economic chaos and political/social confrontation will be very high. This is especially true after Sunday’s election results proved that there are limits to how far “Chavismo” can push the roughly 50 percent of citizens that oppose its economic agenda.

Aurelio Concheso is the former president of the Center for the Dissemination of Economic Information (CEDICE) and currently serves as president of the Fedecámaras Labor and Legislative Relations Committee and president of Aspen Consulting, a financial advisory and funding company.

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