Venezuela's Next Government

 

Summary:

• Venezuelans are being oppressed by the autocrat Nicolas Maduro. His policies have caused hyperinflation, the Venezuelan currency to depreciate by 90% since the beginning of 2016, an acute scarcity of both food and medicine, and a shocking rise in maternal deaths and infant mortality.
• Venezuelans are rising up in protest. Protests have occurred continuously for 3 months and are becoming more intense. Maduro’s armed forces, with the help of paramilitary groups and Bolivian and Cuban soldiers, are now firing metal balls and tear gas canisters directly at protesters. To date they have killed approximately 80 protesters, many of them under the age of 18. In addition they are systematically destroying private property where protests are occurring.
• Essentially Maduro has co opted Venezuelan oil reserves to pay off his security forces. Maduro is also surviving by paying usurious interest rates to obtain money from sources including China, Russia, Goldman Sachs, Nomura and the hedge fund Fintech Advisory. Estimates vary widely on the remaining value of other assets available to Maduro.
• Handicapping exactly when Maduro will fall is therefore quite difficult. Although Venezuelans used to have a democracy, the history of government transitions around the world from "personal" governments since 1949 sadly suggests their next government may well be headed by the military or another dictator. Venezuelan protesters have shown great bravery and I sincerely hope they will be successful in forming a new democratic government. 

When Will Maduro Fall?

Maduro's regime should fail because it cannot provide the basic functions of government: a sound monetary system, the rule of law, economic growth, and adequate food and healthcare. But predicting the exact date Maduro falls is difficult. Analysts have looked at Venezuela’s financial condition, attempted to assess when the military might change political allegiance, and wondered about the growing global attention to Maduro’s oppression. Financial markets now price in a 60% likelihood that Venezuela will default in the next 12 months.

Political change is most likely to occur if the Venezuelan military elite decides to abandon Maduro because they have weapons, but the military's role in drug trafficking and killing protesters means it is hard to find a General with "clean hands" required for popular support. A lesson taken from students' successful overthrow of Serbia's dictator suggests Venezuelans should look for ways to recruit members of the police and military to their side.

A different analytical approach was taken by Jay Ulfelder in his interesting blog piece written in 2013.  He looked at political regime change data following hyperinflations to estimate how long Maduro might last. Figure 1, reproduced from his blog, shows the likelihood an autocrat is ousted as a function of the duration of hyperinflation. At the time Ulfelder did his study, Venezuela was not yet in hyperinflation. Based on the Hanke-Krus criteria of 50% monthly inflation lasting at least 30 days, Venezuela officially entered into hyperinflation in November, 2016. Thus Venezuela has only been in hyperinflation for 7 months and Maduro’s probability of being ousted is still lower than 10% according to this data.

Figure 1: Probability Autocrat Ousted As Function Of Hyperinflation Duration Per Ulfelder

Venezuela’s Next Government

Another way to try and gain insight into Venezuela’s future is to examine data on past coups and political transformations. Comprehensive data on this topic from 1950 onwards is freely available within the REIGN dataset from OEF research.[1]

Figure 2 shows the incidence of coups after 1949. Coup attempts have become less common since 2000. It is not clear whether this is because governments have become better at controlling citizens, or because of a greater reluctance to use violence on the part of those looking to overthrow governments.

Figure 2: The Number Of Coups Since 1949

Table 1 summarizes a leader’s tenure prior to a coup attempt. Interestingly unsuccessful coups happen sooner than successful ones. The median prior leader tenure before a successful coup is 3 years, with an average of 5.4 years. Maduro has been in power for 3.8 years.

Table 1: Leader Tenure Prior To Coups - REIGN database

The REIGN database classifies the current Venezuelan government as a “personal” government , meaning power “...is highly concentrated in the hands of a non-monarch dictator.” The dataset includes 45 cases where a “personal” government was successfully overthrown by a coup. Table 2 shows the distribution of successor government types following those coups.

Table 2: Government Type Following Successful Coup Overthrowing A “Personal” Government

The data shows about a 50% chance that a new government following the overthrow of a “personal” government will be another “personal” or “party-personal” government. There is also a 50% probability the new government will be some form of military government. Notable there are no cases where the new government was fully democratic (“presidential” or “parliamentary” per the REIGN database).

Of course, Venezuela’s transition to a new government could occur without a coup via new elections if Maduro agreed to hold them (or they were held after he fled the country). Table 3 looks at all 79 regime changes from a “personal” government (including coups and peaceful transitions).

Table 3: All Regime Transitions From “Personal” Government Type

Including peaceful transitions, fully democratic governments have followed “personal” government's only about 14% of the time. In some ways Tables 2 and 3 are not surprising: “personal” governments (and coups) are inherently unstable and lead to difficult transitions.

Venezuela’s government prior to Maduro was a democratic one. Does this improve the odds that it can return to democracy? When I looked at all “personal” government cases where the preceding regime was democratic, I found the odds improved only slightly from 14% to 21% that Venezuela’s next government will be fully democratic. This is based on a very small subsample of 14 cases, however.

Mining historical data in this way provides only hints of insight. The data is limited, imprecise, and easily overshadowed by the peculiarities of a specific situation.[2] Most importantly, the future is not constrained by the past.

My fervent hope is that Venezuelans suffering will end soon. There have been successful revolts against dictators in the past in countries including Serbia, Ghana, and the Philippines. Venezuelans have show great courage and strength in their protests and I also sincerely wish them success in forming a new democratic government in which their voices are heard.

[1] Bell, Curtis. 2016. The Rulers, Elections, and Irregular Governance Dataset (REIGN). Broomfield, CO: OEF Research. Available at oefresearch.org. The data includes some information prior to 1950, but in many cases regime information is missing. Thus I restricted my analysis to data post-1949.
[2] Notably I did not attempt to condition the historical regime change data based on the presence of natural resources like oil.

Transparent and reproducible: All Figures except Figure 1 from Ulfelder can be generated by using the free, publicly-available R program and the R code (with free data links) available in “uprisings.r" on github. Ulfelder’s data and code are linked to his blog piece.