Adrift in Caracas

I’m in Venezuela this week visiting friends and family, so I’m not going to be posting much. However, I did want to convey the very strong sense that the nation is rudderless.

Everything is as expected. The economy is dysfunctional, there is chaos everywhere, and politics is eaten for breakfast, lunch, merienda, and dinner. But there is something else this time around: a sharp feeling, an ominous sense in the air, that we don’t know where we are going.

Take yesterday’s news. The country is mired in a profound fiscal hole, and measures have to be taken. A modest devaluation is not going to solve the problem on its own. In true chavista fashion, the goverment is likely going to tax its way out of the hole, via an inflationary tax or other taxes such as raising the Value-Added Tax (VAT) or bringing back the Bank Debit Tax. This is more likely now that the government has decided to give oil companies a big fat tax cut in the middle of a budget crisis.

Yesterday, rumors swirled about a rise in VAT. Everybody assumes it’s coming, but chavistas are adamantly denying it – a sure sign that it’s in the pipes. Wheels are in motion, and yet … nobody knows. Nobody knows who calls the shots. Nobody knows when the guillotine will fall. Nobody knows whose tea leaves we have to read.

Before, it was easy – whatever Chávez said, that was the law. But Maduro is a joke, that much is clear. And as much as some believe the Cubans are calling the shots, they really can’t manage their own country, much less a larger, more complicated one. It strains belief to think that Raúl Castro is poring over the day-to-day details of the Venezuelan economy.

So, the nation plods along, with a ghost of a President, and no clear indication of where we are going. We may have elections in a month, in six months, or never. Tax rates may rise, or maybe not. Businessmen don’t know what the exchange rate will be in six months, and they don’t know who they will have to negotiate their prices with. Friends who have conducted focus groups say the first word out of middle-class Venezuelans’ mouths is “zozobra” … anxiety.

But the real problem with being adrift is that it opens the door for extremists both left and right. The problems in Venezuela are so deep, so intractable, either extreme could make a convincing case that, without military mano dura, the nation will be lost. A significant portion of people might fall prey to these kinds of movements. Hugo Chávez’s self-aggrandizing warning that only he could ensure stability in Venezuela … may prove true.

These are sad, scary times.