LATIN AMERICA

VENEZUELA - Government
Stability
Short-term trajectory: Long-term trajectory: 10 JULY 2019 12:22 EDT
NEGATIVE NEGATIVE
Risa Grais-Targow
Director, Latin America
Venezuela, Central America, Caribbean
Negotiated pact that yields new elections remains unlikely +1 202.903.0022
grais-targow@eurasiagroup.net

● Although both the opposition and government have incentives to resume

Laura Duarte
Norway-mediated talks in Barbados this week, the opposition has little Researcher, Latin America
leverage to force early and competitive elections, its main demand. +1 202.552.5394
duarte@eurasiagroup.net
● A fresh vote would represent an existential threat to President Nicolas
Maduro; even if he makes concessions to keep the dialogue open, he is
unlikely to follow through unless he sees a way to manipulate the process or
renege on it in the future.

● Consequently, a negotiated pact resulting in new elections is still unlikely in

the near term, with the president likely remaining in power for the foreseeable
future.

Delegations representing both the opposition and the government traveled to

Barbados this week to resume talks mediated by Norway. This follows two initial
encounters in Oslo that took place in May and comes amid intense international
pressure on both sides to seek a negotiated resolution to the ongoing crisis (please
see Eurasia Group Note - VENEZUELA – Barriers to a negotiated resolution remain
very high – 28 June).

Both sides have incentives to engage in the talks. Opposition leader Juan Guaido is
under pressure from regional and European allies to look for a mediated resolution as
he struggles to force change via other avenues. Protests have diminished in volume
in the wake of the failed 30 April uprising, and US sanctions have had limited success
in forcing regime insiders to abandon Maduro and switch sides. For the government,
the talks represent an opportunity to alleviate some international pressure and seek
sanctions relief, which is its main problem today given the severe impact that they
are having on oil output and thus cashflow.

But there are meaningful impediments to a political breakthrough. First, the opposition
has limited leverage over Maduro. The government’s main goal is to negotiate
sanctions relief, which is something that the opposition itself cannot deliver on
and instead depends on the US. This is further complicated by the fact that the
Trump administration seems to be somewhat divided over its Venezuela strategy and
has generally remained on the sidelines of the Norway mediation process. While
State Department Special Envoy Elliot Abrams has shown an inclination towards
compromise that is more supportive of talks, National Security Advisor John Bolton
and Senator Marco Rubio, who remains influential on policy towards the region,
continue to advocate for a strategy of isolation against the Maduro regime.
In addition, the government is highly unlikely to agree to competitive elections with the types of guarantees that the opposition
will require. This includes new electoral authorities (or at least a more balanced CNE), credible international observers, and no
limitations on which opposition candidates can run. The opposition continues to demand that Maduro leave power prior to the
vote, but it would probably be willing to begrudgingly accept him staying on if there were in fact early, competitive elections
with the appropriate conditions.

However, the government has very limited incentives to allow for such an option, given the fact that it would lose any reasonably
competitive vote, and Maduro, along with his inner circle, face a highly uncertain future outside of power. Press reports suggest
that Maduro has already indicated to the Norwegians a willingness to hold early elections, but even if the government makes
some concessions to keep talks alive – or secure some sanctions relief – it is unlikely to follow-through on commitments unless
it feels like it can manipulate the process to ensure a victory.

One such option would be to compete in a new election with a different candidate than Maduro. Local chatter suggests that the most
likely alternative is 37-year old Miranda Governor Hector Rodriguez, who is close to Maduro but is also a fresh face within chavismo
that could portray himself as relatively more moderate. While Rodriguez is a figure with future electoral potential, this strategy would
nevertheless be highly risky for the government. He is not particularly well known at a national level, and any successor candidate
– however young and charismatic -- would struggle to win a national election today given Maduro’s minimal approval ratings and
Guaido’s relatively high levels of popular support (around 10% and 56.5% respectively according to local pollster Datanalisis).

All of this suggests that a brokered resolution that sees competitive new elections remains highly unlikely to materialize in the near
term, and that any potential deal would be dubious in terms of follow-through. The one exception is if Maduro is under intense
pressure internally, principally from the armed forces. But while there is clear discontent within the security apparatus, minimal
participation in the 30 April uprising suggests that the status quo is preferable to uncertainty under an opposition-led government.
Moreover, the recent ratification of Defense Minister Vladimir Padrino Lopez in his post suggests that he and other members of
the high command remain committed to Maduro’s survival, at least for the time being.

Consequently, Maduro will likely able to retain power for the foreseeable future despite deepening cash-flow constraints and
operational challenges.

Explanation of Political Trajectories (ie, “Trajectories”)

Eurasia Group's (EG) Political Trajectories are indicators of the net impact of political factors on the macro business environment in a country over specific timeframes. For each country, two Trajectories
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