Political Developments:
On 28 July Venezuelans voted in a presidential election which was widely expected to be in favour of the opposition candidate Edmundo Gonzalez, a former diplomat. He was standing in for the leading opposition figure Ms. Maria Corrina Machado, herself banned months earlier from contesting by President Nicolas Maduro, who had realized this was a battle he could not win fairly. The election itself was an outcome of an agreement between the opposition backed by the US, and the Maduro regime in October 2023 in Barbados. The understanding was that if free and fair elections were held, the US would lift onerous sanctions on Venezuela, levied over the years, and perhaps provide a face-saving exit for the Maduro regime. The US in fact lifted several sanctions in October, some of which were re-imposed in February, after Maduro banned Machado from standing for election, and the rest were re-imposed in April, when Maduro was deemed to have flouted the agreement.
Maduro kept up a brazen campaign despite obvious signs of his unpopularity. Soon after voting ended, the government appointed National Electoral Council (CNE), headed by a former advisor of Maduro, announced that with over 80 percent votes counted, Maduro had won with 51 percent of votes against 44 percent of his opponent (eventually announcing the tally as 50.2 percent v/s 44.2 percent). The opposition was up in arms, claiming that they had evidence, in the counterfoils of the physical votes cast in several centres, that Gonzalez had won by a wide margin. Violent protests broke out in Caracas as opponents demanded a recount. Maduro remained obstinate and defiant. Despite being the country with the largest hydrocarbon reserves in the world, Venezuela’s economy has contracted 80 percent during his presidency. Almost 8 million Venezuelans have left the country to survive. When Maduro’s mentor, former President Hugo Chavez, passed away in 2013, extreme poverty stood at 11 percent. This year it stands at 53 percent according to the UN, with household poverty at 82 percent.
There was incredulity not just in western capitals, but also in most Latin American countries, except for Cuba, Nicaragua, Honduras and Bolivia. Russia and China welcomed the result and congratulated Maduro on his victory. The Carter Centre, known to be unbiased to the Venezuelan government, having earlier certified the fairness of Venezuelan elections, declared that the elections did not meet international standards of electoral transparency and integrity and that it could not verify or corroborate the announced results. Chile, Ecuador, El Salvador, Guatemala, Uruguay, Costa Rica and Panama also refused to acknowledge Maduro’s ‘victory’. The Permanent Council of the Organisation of American States (which Venezuela recently left) introduced a resolution demanding the “immediate” publication of the electoral minutes on the results. It failed by one vote, mainly due to lack of support from Mexico, Colombia and Brazil. The presidents of these three countries issued a joint statement on 1 August declaring “Controversies over the electoral process must be resolved through institutional means. The fundamental principle of popular sovereignty must be respected through the impartial verification of the results….We call on the Venezuelan electoral authorities to move forward expeditiously and publicly disclose the data broken down by polling station.” President Lula of Brazil and US President Biden agreed in a joint communique that the election results were crucial for the region. Though the US did not accept the results, it did not recognize Gonzalez as the elected president, conscious of its blunder in having backed the former Venezuelan opposition leader Juan Guaido for years in vain. Lula sent his former Foreign Minister and top foreign policy adviser Celso Amorim, to Caracas. Argentina, along with Peru, the US and the EU, recognized Gonzalez as legitimately elected. Argentina gave asylum to some representatives of the opposition in its embassy in Caracas. Venezuela expelled diplomats in Caracas from Argentina, Peru and five other countries – Chile, Costa Rica, Panama, the Dominican Republic and Uruguay. The diplomatic impasse led to Brazil taking over the administration of the Argentine and Peruvian embassies in Caracas.
In mid-August, Presidents Lula and Petro (Colombia) proposed that new elections be held if the impasse was not resolved. The idea was rejected by Maduro, leading Lula to describe the Maduro regime as “very unpleasant, with an authoritarian tendency….” stopping short of labelling it a “dictatorship.” Maduro warned Petro not to interfere in Venezuela’s internal affairs, a thinly veiled threat that he could make matters difficult for Colombia over their porous border that allowed movement of guerillas and traffickers. Mexico distanced itself from the Brazilian-Colombian proposal, claiming it would await the decision of the Venezuelan Supreme Court. The proposal was also rejected by opposition leader Machado, claiming that Maduro would not recognise the results of any re-election either, unless he won it.
Maduro meanwhile referred the matter to the Supreme Court (TSJ), another puppet institution that has been doing his bidding. Three weeks after the results were declared, the TSJ decreed that the election results were correct and there could be no appeal against its decision. All 10 candidates in the election appeared at the TSJ hearings, except Gonzalez. Chile’s left-wing President Gabriel Boric used scathing language: “today the TSJ of Venezuela finishes consolidating the fraud…. There is no doubt that we are facing a dictatorship that falsifies elections, represses those who think differently, and is indifferent to the largest exile in the world only comparable to that of Syria as a result of a war.” In reaction Presidents Lula and Petro issued a joint declaration on 24 August, calling for publication of the original and verifiable voting data and “to avoid a recurrence of violence and repression”. As a sop to Maduro, they also denounced the “unilateral (US) sanctions” as pressure against international law.
On 30 August, the Supreme Court of Brazil, (TSF) banned X (formerly Twitter) from the territory of the country, including also access to the service by VPN or any other means. The Chief Justice of the Court, Alexandre de Moraes, a crusader against the former right-wing government of President Jair Bolsonaro, had ordered the company to shut down certain accounts which were publishing right-wing posts, something X refused to do. X owner, Elon Musk referred to Moraes as an “unelected pseudo-judge” and accused him of destroying democracy and the right to free speech and closed down operations in the country. Brazil’s President Lula weighed in to say that it was not admissible that Musk went about disrespecting Brazil’s institutions just because he was wealthy. Moraes also ordered seizure of the accounts of Starlink in Brazil, also owned by Musk, to pay the fines levied for non-compliance. A five-member TSJ bench endorsed the decree passed by Moraes, sealing the fate of X in Brazil for now.
Economic Developments:
In August the Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), José Manuel Salazar-Xirinachs, issued the annual Economic Survey of Latin America and the Caribbean 2024. The scenario is “a low economic growth trap,” with overall growth of 1.8 percent in 2024 and 2.3 percent in 2025. The document also noted that over the last decade, Latin American countries have shown low economic growth, with an average rate of 0.9% between 2015 and 2024. The study depicts South America growing by 1.5 percent; Central America and Mexico by 2.2 percent; and the Caribbean (excluding Guyana) by 2.6 percent this year. By 2025, the region as a whole is expected to grow by 2.3 percent, a rebound attributed to projections of improvement in South America’s performance of 2.4 percent.
Particularly interesting was the ranking of countries in terms of growth projection: Dominican Republic (5.2%), Venezuela (5%), Costa Rica (4%), Paraguay (3.8%), Honduras (3.8%), Nicaragua (3.7%), Uruguay (3.6%), El Salvador (3.5%), Guatemala (3.4%), Panama (2.7%), Peru (2.6%), Chile (2.6%), the Caribbean (excluding Guyana) and Brazil (2.3% each), Mexico (1.9%), Ecuador (1.8%), Bolivia (1.7%), Colombia (1.3%) and Cuba (0.5%), Haiti (-3%), and Argentina (-3.6%). Venezuela is seen almost at the top, while Argentina is at the bottom, a sign that President Javier Milei’s ‘shock treatment’ is still to turn things around. Guyana’s double-digit growth (because of the recent hydrocarbons bonanza) is a given, but the relatively small size of its economy does not impact the overall scenario significantly.
Focus India LAC:
In July Reliance Industries Ltd. (RIL), India’s largest private refiner of crude, got permission from the US Government to resume imports of crude oil from Venezuela, halted due to sanctions on the government of President Nicolas Maduro. The US sanctions, lifted last year after an agreement between the two countries to allow free and fair elections in July, were reimposed in April when Maduro took steps to ban key opponents. Sanctions were then reinstated in April, and oil companies including India’s RIL and ONGC (Videsh) Ltd (OVL) applied for permits from the US Treasury Department to keep doing business there. OVL, the overseas arm of the oil giant, is owed over $500 million in dividends by Venezuela, which has been pocketing the gains from fields in which OVL had invested. OVL now seeks operational control of these fields – San Cristobal and Carabobo-I – which reports indicate the Venezuelan state oil company PdVSA has agreed to in principle. This will enable OVL to recoup its investment free of US sanctions, on the model being allowed by the US government to Chevron.
Separately three state oil companies – Indian Oil, Hindustan Petroleum and Bharat Petroleum – are negotiating long-term crude supply contracts with Brazil’s Petrobras. With Russian crude supplies uncertain over sanctions, and growing demand, Brazil is a good prospect, especially with recent offshore discoveries pushing its production to over 3.4 million barrels per day, and an ambitious focus on enhancing production with an investment of $ 100 billion. Imports of crude have declined this decade, after a slowdown of the crude for diesel swaps negotiated by Reliance Industries Ltd. In 2023-24 Brazil’s oil exports to India were valued at $1.46 billion, a small fraction of India’s total oil import bill of $139.85 billion, and down from $2.65 billion in 2012-13.
August saw intense diplomatic exchanges between India and Latin America and the Caribbean. Minister of State for External Affairs Pabitra Margherita made a 5-nation visit to the Dominican Republic, Guatemala, El Salvador, Panama and Trinidad & Tobago. India’s economic interests in all these countries is growing, and the visit served to substantiate India’s commitment to the Global South. The Foreign Minister of Brazil, Mauro Vieira visited Delhi 26-28 August, followed immediately by the Foreign Minister of Chile, Alberto van Klaveren. Both countries are important trading partners of India. Brazil will host the G20 summit 18-19 November, which PM Modi will reportedly attend. Chile is pushing for a comprehensive commercial and economic agreement, amplifying its already extensive preferential tariff agreement with India that covers about 3000 tariff lines.
The previous issues of Latin America & Caribbean Review are available here: LINK
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(The views expressed are personal)
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