Teneo logo

June 3, 2020

VENEZUELA: A health agreement that is mostly about fuel and social control

BY Nicholas Watson

Share on twitter
Share on whatsapp
Share on facebook
Share on linkedin
Share on email
Share on reddit

Listen to our reports with a personalized podcasts through your Amazon Alexa or Apple devices audio translated into several languages

( 3 mins)

It has emerged that the regime and opposition reached an agreement on 1 June to allow the Pan American Health Organization (PAHO) to receive and administer funds currently under opposition control for the fight against Covid-19. The agreement, which was signed by Health Minister Carlos Alvarado and the head of the opposition’s Covid-19 taskforce, Julio Castro, promises a “coordinated” approach; in the first instance, funds will be used for the purchase of protective equipment for medical personnel and to boost diagnostic capacities. Below we examine the significance and implications of the agreement.

Covid concerns

The regime’s acceptance of opposition funding is likely in part to reflect genuine concern about a possible surge in Covid-19 cases in the coming weeks. Official health statistics lack any credibility, and while the regime has so far managed to snuff out critical reports from health personnel and local media, it would be difficult to suppress all information in the event of a significant case surge. Moreover, health infrastructure is in such an abject statethat it would not take a significant spike in cases to overrun the entire system.

Fuel price change

The timing of the announcement is almost certainly not fortuitous, coinciding as it does with the politically delicate rollout of a new fuel pricing regime from 1 June. The new system involves a dual pricing arrangement in which an initial fuel quota will continue to be heavily subsidized before a significantly higher price kicks in. The regime has long held back from tinkering with fuel subsidies, fearing an angry public reaction. So far – and even amid a chaotic start to the new rules – the reaction from motorists has been muted. However, President Nicolas Maduro may well have greenlighted the health agreement to sidetrack the opposition and prevent opposition leader Juan Guaido from channeling frustration on the streets to revive his campaign for regime change.

That Maduro has finally bitten the bullet on fuel prices reflects the fact that with fuel now largely supplied by Iranian imports and the regime’s cashflow under extreme pressure, it is simply no longer sustainable to continue with the longstanding subsidy. To be sure, this exposes regime weakness, and the fuel price change is a gamble. On the other hand, the Covid-19 situation represents an opportunity for Maduro. Fear over public gatherings could help deter any fuel protests; the regime’s on-off quarantine measures create the perfect cover to suppress protests on health grounds; the new system will help bind military factions to the regime through new corruption/arbitrage opportunities; and fingerprint checks to access preferential fuel rates can be used to reinforce state surveillance over the population.

The latter factor is particularly important ahead of legislative elections that should take place by December 2020. The regime wants to cement a transactional exchange with voters – essentially, food and fuel for votes. Within this system, a tamed, compliant opposition will be tolerated, which is why – and despite this week’s tactical health agreement – the regime will continue to crack down on the Guaido-led opposition; the Popular Will (VP) party is currently in the regime’s sights after Attorney-General Tarek William Saab requested the Supreme Court (TSJ) designate the party as a terrorist organization.

More by

LATAM: Pandemic status and outlook

( 6 mins) Covid-19 caseloads have been dropping across Latin America and the Caribbean in recent weeks. During October, South America has accounted for under 6% of new global daily cases versus 35-40% in June. The improving picture

Read More »

LATAM PULSE

( 5 mins) This week, Chile marks two years since the outbreak of protests just as the constituent assembly born out of that unrest starts to debate the content of a new constitution. In Peru, a new stage

Read More »

LATAM PULSE

( 4 mins) This week, Chile‘s President Sebastian Pinera faces a bumpy ride as he seeks to defend himself from allegations arising from the “Pandora Papers” leak; at the same time, another presidential debate takes place later today.

Read More »

LATAM PULSE

( 5 mins) This week, Mexico‘s electricity sector counter-reforms are in the legislature, where they could muffle recent speculation about the battle to eventually succeed President Andres Manuel Lopez Obrador (AMLO). Political tensions in Peru are rising. In

Read More »

PERU: Contradictions and confusion

( 3 mins) Prime Minister Guido Bellido’s threat to nationalize the consortium that operates the Camisea natural gas field unless it agrees to pay higher taxes is unsettling – though not for what might seem the most obvious

Read More »

LATAM PULSE

( 5 mins) This week, Peru‘s government is in another muddle of its own making – this time over a threat to nationalize natural gas resources – while Congress will keep the Pedro Castillo administration on the backfoot.

Read More »