What 2014 left for Venezuela

It is kind of late to look at 2014 overall. I did resume the year for Venezuela but one should try to use the holidays to let the dust settle some and see what did really matter. Thus my very unbiased, very objective feelings (oxymoron intended) on what from 2014 will direct 2015.

In Venezuela there is a pithy answer; the drop in oil prices has set the stage for a catastrophic 2015. Having left the country bereft of a self sustainable private sector, a country depending on 95% from oil for its livelihood, the regime is at a loss about what to do. The more so that they were incapable of seeing what was in store, something that already 2013 oracles announced. Combine this with a regime that is unable to stop stealing from the public coffers and there is your perfect storm reaching the shores.

Oil prices are not going to recover anytime soon, even if a volcano erupts from under Saudi Arabia oil terminals. Libya may produce more oil in 2015. Iraq may keep its production. Russia will hold to its European market.  But that is not all. The perspective of a Syriza victory in Greece and a good showing of PODEMOS is Spain (I do not think they will win but they can block a stable government after the elections) are enough to stop European recovery. Never mind that Italy and France seem unable to take the necessary measures to revamp their economies.

If Europe fails to recover, if the US has troubles (after all the drop in oil prices is a minus at first before becoming a bonus as oil companies lose earnings) then China and India may not grow as much. Less incentives yet for oil price increases. Never mind that Saudi Arabia may want to downgrade its competition to irrelevant status by driving oil prices further down for a few months. They can afford it.

What scares me the most is that there is absolutely no hint that inside the regime they understand that it is quite possible the Venezuela's oil will not go above 50 USD a barrel for at least a year. And my guess is 2 years.

The other tail wind that 2014 left is the falling apart of the left, from the extreme in Cuba to the naive one in Brazil. If I agree that the embargo on Cuba had run its course, more because of the unwillingness by actors to truly apply it rather than it being a mistaken approach, I think that Cuba will remain a vicious dictatorship through 2015, and, for that matter, as long as Fidel is alive. It does not matter what the West will do, the more so that this one cares way more about business than the rights of Yoani Sanchez.

Still, that Raul has decided to talk to the US to prepare his own retirement into a hoped for peaceful sunset (for him) has created an ideological problem in Latin America that will probably break apart leftist coalitions who were united strictly along anti US positions. Venezuela's chavismo is the first candidate on that list. But the effect can be quite sensible in Brasil (with a weak Dilma) and Argentina where Cristina may even face personal legal trouble. The current Chile coalition could also be affected, pushing mercifully Bachelet more to the right, along the lines of her first term. All in all this is a good development for LatAm though the benefits will only begin to be seen once Fidel finally croaks, so strong the religious myths is.

But there is something that gives me a little bit of optimism. In addition of the Castros expected end, we need to add the revulsion against outright terrorism like ISIS in Syria and Iraq. I suspect that in the future budding terrorist states will be contained earlier. I am sure that from Brussels to Washington people are worrying that a narco state in crisis like Venezuela may resort to official terrorism at home and abroad to justify its existence, the more so that Cuba may not support it as much, that the FARC in Colombia may be reaching their own end of the road, that Russia has no cash to support the Venezuelan regime and that China is getting tired of throwing good money after bad. I am not saying whatsoever that the Marines are landing soon, nor I am advocating such. What I know is that pariah states do live in part at the sufferance of others. Zimbabwe mess was in part due to South Africa acquiescence, Cuba was for many years a convenient scarecrow for the US, Qaddafi was a reminder that dictatorships like Mubarak or Ben Ali were a much lesser evil, Burma was the potential Indian Ocean harbor for China.

In a fragile global world, trouble makers like Venezuela will be less and less acceptable. The regime's option are shrinking fast and even an open repressive dictatorship may not be an option anymore.