Bloomberg: Desperate Venezuela gets a frightening new comandante

Bloomberg View Editorial Board

President Nicolas Maduro’s decision last week to put Venezuela’s armed forces in charge of food and other basic goods won’t ease the average Venezuelan’s growing hunger pangs. But it’s a frightening expansion of military control and raises the question of whether the government of the country with the world’s largest oil reserves has fallen to a coup.

Sound like hyperbole? Consider Maduro’s diktat announcing the change, in which he says that all ministries, ministers and institutions of the state “are henceforth at the command and the absolute subordination” of him and Defense Minister Vladimir Padrino Lopez. Regardless of whether this agreement is forced or by mutual consent, Maduro must be shown that there are consequences to his heedless rule.

For one, Venezuela’s abuses disqualify it from heading Mercosur, the region’s trade group – or even belonging to it. Venezuela’s neighbors, as well as outside parties such as the European Union and the Vatican, must step up the scrutiny and pressure.

The U.S., meanwhile, can beef up its forensic accounting and quietly make clear to Venezuela’s military how quickly and easily targeted sanctions for corruption and human-rights abuses can be expanded. Government takeovers of foreign company assets should be vigorously contested, adding to the expensive list of claims against Venezuela. These measures should also be accompanied by offers of immediate humanitarian assistance for the long-suffering Venezuelan people.

In the last year, crippling shortages of food and medicine have only gotten worse. Incidences of looting increased tenfold from May 2015 to May 2016. Maduro wants to crack down on the bachaqueros – those who make a living by reselling subsidized goods on the black market – and increase the production of food and daily necessities. But putting the military and neighborhood loyalists in charge of food deliveries also raises a more chilling prospect: that only Maduro’s supporters will eat.

Moreover, the military cannot conjure up supply where there is none. In order to save hard currency, Venezuela plans to halve its imports, which supply most of its food. And domestic and foreign companies faced with shortages, price controls and harassment are closing their doors or leaving the country entirely.

Yet those with access to dollars at the government’s preferential exchange rate – roughly 1/100 of the black market rate – are doing mostly fine. Maduro’s willingness to tolerate a 1,000 percent inflation rate shows his contempt for the middle class. He seems intent on following in the bootsteps of the Castros’ Cuba, where the military owns well over half the economy.

Stopping this power grab will require an end to the toxic impasse between Maduro’s government and the legislature controlled by the opposition: the freeing of political prisoners, reforms to Venezuela’s judiciary and electoral mechanisms, and tolerance for free expression and dissent. These fundamental issues should dictate any “dialogue” between the two sides, and they are central to forging a political consensus on how to tackle Venezuela’s huge economic challenges.

It’s not necessarily an impossible task. From peace in Colombia to new governments in Argentina, Brazil and Peru, the arc of history in the Americas is bending in a brighter direction. It would be a shame if Venezuela were the exception.

© 2016, Bloomberg View

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