32 The Americas The EconomistJuly 13th 2019
21problemsthatMrUrzúadid.InMarchMr
LópezObradorpubliclyoverruledhimafter
hesaidthatthegovernmentwoulddelay
constructionoftherefineryandusethe
moneytohelpPemex.Atestwillcomein
Septemberwhenhepresentsnextyear’s
budget,whichwillhavetobalanceMrLó-
pezObrador’sspendingprioritieswiththe
needtomaintainpublicservicesandhold
downthedeficitata timeoffragilegrowth.
Thepresidentgavenosignthathewilltake
MrUrzúa’scriticismstoheart.Ina riposte
tohisletterMrLópezObradorsaid:“Some-
times people don’t understand that we
cannotcontinuewiththesamestrategies.”
ButinappointingMrHerrera,thepresi-
denthasshownthatheunderstandsthe
dangersofalienatingmoderatesinhisco-
alition.Ifthenewfinanceministerfeels
forcedtoquit,themoodamonginvestors
willshiftfromalarmtopanic,causingthe
pesotofallandinflationandinterestrates
torise.A rancorousresignationhasshown
MrLópezObradorhowharditistorecon-
cile his development dreams witheco-
nomicreality. 7A
lmost sixmonths since Juan Guaidó
began his attempt to remove Venezue-
la’s leftist dictatorship, the strain is show-
ing. The 35-year-old’s jet-black hair is pep-
pered with grey. His eyes seem weary. He
has dropped his snappy slogan, “vamos
bien” (“we are doing well”). Now his demor-
alised supporters utter it sarcastically.
But the need to end the rule of Nicolás
Maduro is as strong as ever. His misman-
agement, plus sanctions imposed in Janu-
ary on Venezuela’s oil industry by the Un-
ited States, will cause the economy to
shrink by more than 25% this year. In dollar
terms, the drop in output since Mr Maduro
became president in 2013 will be around
70%. Francisco Rodríguez, an economist in
New York who has advised the moderate
opposition, warns of famine.
On July 5th the unHigh Commissioner
for Human Rights published evidence that
security forces loyal to the government,
such as the faes,had murdered at least
6,800 people from January 2018 to May- It documented cases of torture, in-
cluding the use of electric shocks and wa-
terboarding. The report, written by Mi-
chelle Bachelet, a left-wing former
president of Chile who had once been sym-
pathetic to Venezuela’s government, de-
scribed health care as “dire” and noted “vi-
olations of the right” to food and other
necessities. The regime called the report
“biased”. Days before it was published, Ra-
fael Acosta, a reserve naval captain accused
of plotting to overthrow Mr Maduro, ap-
peared in court in Caracas, bruised and un-
able to say anything but “help me” to his
lawyer. He died hours later.
Mr Guaidó, the head of the opposition-
controlled legislature, had hoped to lead a
velvet revolution. He assumed the interim
presidency of Venezuela on January 23rd,
on the grounds that Mr Maduro had rigged
his re-election last year. The United States,
all the big democracies in Latin America
and most members of the European Union
recognised Mr Guaidó as acting president.
He and his supporters expected American
oil sanctions to end the weakened regime.
The army would switch sides, forcing its
leaders into exile, where they would be
consoled by a portion of the money they
stole. A return to democracy would ensue.
That plan has suffered one reversal after
another. In February Mr Guaidó promised
to bring in hundreds of tonnes of humani-
tarian aid, which had been stockpiled on
Venezuela’s borders, “come what may”.Barely any got through. Last month it was
distributed to Venezuelan migrants in Co-
lombia. On April 30th the interim presi-
dent appeared on a motorway in Caracas at
dawn flanked by a few dozen rebel national
guardsmen and by Venezuela’s best-
known political prisoner, Leopoldo López,
who had escaped house arrest that morn-
ing. The regime’s “final phase” was ap-
proaching, Mr Guaidó declared. But there
was no military uprising. “I honestly think
Maduro has won this,” says Yamila Pérez,
an architect who took part in anti-govern-
ment marches this year.
Although Mr Maduro claims to “sleep
like a child” (currently in the Fuerte Tiuna
barracks in Caracas), he has cause for in-
somnia. The April uprising revealed splits
in the regime. Cristopher Figuera, the chief
of the intelligence service who defected,
has said in recent interviews that the de-
fence minister, Vladimir Padrino López,
and the supreme court’s chief judge, Mai-
kel Moreno, had plotted to oust Mr Maduro
but lost their nerve. Both scoff at the claim.
On July 7th Mr Maduro said that General Pa-
drino López would stay in his job, perhaps
wanting to keep his enemies close.
The state-owned oil giant pdvsa, the
main foreign-exchange earner, is trying to
shift exports from the United States to Asia
(see Business section). Corruption, mis-
management by executives chosen for
their loyalty to the regime and now sanc-
tions have caused output to plunge. Al-
though Venezuela has the world’s largest
proven oil reserves, much of the country is
suffering from shortages of petrol.
Remittances have replaced part of the
lost oil money. Some 4m people, 12% of the
population, have left Venezuela since the
economic crisis became acute in 2014. Net
remittances have risen from $200m in 2016
to $2bn in 2018. Another source of cash is
gold, much of it mined by wildcatters with
scant concern for the environmental dam-
age they cause. These sidelines do not pro-CARACAS
The urgency of regime change is
clearer than everVenezuelaA bloody stalemate
Progress, with reservationsSource: National AssemblyCentralbank
increasesreserve
requirementsVenezuela, consumer prices
% increase on a year earlier2018 20190500,0001,000,0001,500,0002,000,0002,500,000The friendly face of the FAES