An Excerpt from “The Collapse of Venezuela” by Francisco Rodríguez

Between 2012 and 2020, Venezuela suffered the largest economic contraction ever documented outside of wartime. This collapse was caused not just by the failure of an economic model but also the deeper failure of its political system to manage the conflicts inherent to a polarized society. The Collapse of Venezuela argues that when the stakes of power are high, politicians have an incentive to adopt political strategies that directly harm the economy.

In previous chapters, I have argued that Venezuela’s 1999 Constitution is a key determinant of the high-stakes structure of political competition. It gives the executive branch the power to subordinate the complete structure of the state to it through the convening of a Constitutional Convention with the authority to dissolve other branches of government. The constitutional framework also puts inordinate amounts of power in parliamentary supermajorities, which can be as powerful as the very strong presidency. Its provisions for staggered elections together with the recall referenda generate a setting of electoral hyper competitiveness in which governments have little opportunity to implement policy reforms that can produce results of value for the electorate before their mandate can be taken away in an election.

A first set of constitutional reforms could aim at reducing both the power of the government and parliamentary supermajorities to interfere with the functioning of the judiciary and accountability branch. The power of the constitutional convention to dissolve existing branches of government should be eliminated. At the same time, a constitutional reform could introduce explicit rules requiring supermajorities for major legal reforms, thus allowing sufficiently large political minorities to block legislative changes that fundamentally affect the structure of payoffs. A reformed constitutional text could also explicitly delineate the decision-making process to be followed when required supermajorities are not achieved.

Many of these reforms would be aimed at reversing interpretations of the constitutional text made by the Constitutional Court over the past decades that have reduced supermajority requirements. For example, in 2004 the Constitutional Court ruled that a supermajority was not required for reforming so-called “organic” (i.e., constitutional framework) laws. This allowed a simple majority of the National Assembly to approve a Supreme Court law enabling the appointment of new justices through a simple majority (Human Rights Watch 2004).

Other reforms could tackle the redesign of the electoral system to ensure a greater representation of political minorities and create a high bar for any political group to obtain a powerful supermajority (Abdul et al. 2020). Venezuela’s system for apportioning legislative seats is extremely problematic, as it allows the winning party to easily capture an oversized share of seats with only a slim plurality of popular support. Reintroducing a bicameral legislature with a Senate in which all states count with equal representation could also reduce the stakes of power by protecting political movements that perform better electorally in more rural areas. The Senate could also be assigned specific prerogatives such as appointing the prosecutor general and initiating impeachment procedures (Aveledo 2019).

The power of Venezuela’s executive branch, of course, is not just political. As a petrostate, Venezuela’s government handles an enormous amount of resources that allow it, under normal conditions, to become the predominant actor in the nation’s economy—a reality that has political consequences. By creating massive off-budget funds such as the National Development Fund and the Chinese Fund, the Chávez administration ensured that the government would be able to spend these resources with next to no institutional oversight. Reforms could limit the ability of the government to route spending through these off-budget funds and restrain its capacity to generate additional funds through predatory extraction of natural resources (Rosales 2019; Ebus 2022). The legislative branch should be granted the authority to confirm appointees to the central bank and PDVSA board and should maintain oversight over any discretionary mechanisms for the allocation of foreign exchange.

Negotiations focused on such an institutional redesign would of course not occur in a political vacuum. The outcome of such negotiations would have to be acceptable to the current government, which by virtue of holding power today also has the most to lose from abandoning the status quo. The simplest way to lower the stakes of power from upcoming presidential and/or parliamentary elections is to ensure that there is no doubt as to the permanence in office of the current heads of the other branches of government—which, in Venezuela, include not just the judiciary but also the electoral authority and accountability branches. Explicit transitory constitutional provisions could ensure that the current heads of these branches remain in office for the duration of their terms and suspend the authority of the National Assembly to initiate procedures to remove the heads of these branches of government.

Some of these reforms could, in principle, be implemented through legal instead of constitutional reforms. Given the ample power of simple majorities to reform existing laws in the judiciary’s current interpretation of the 1999 Constitution, however, any legal reforms implemented now could easily be reversed in the future; therefore a constitutional reform would likely be required to unequivocally affirm supermajority requirements. However, an additional benefit of a constitutional reform process is that it requires approval by popular vote in a referendum. The holding of a referendum on a constitutional reform born out of the negotiation process could go a long way towards forging a national consensus and endowing the new institutions with significant national and international legitimacy.

(excerpted from chapter 12)

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