A Basket Case.
Stubbornly complex.
1. John Authers:
The revived Monroe Doctrine has felled Nicolas Maduro of Venezuela. It’s an extraordinary development by almost any yardstick — an audacious US military attack to kidnap the president of a sovereign power, bringing one of the world’s nastier and more incompetent dictatorships to an end. And it’s almost exactly the opposite of what Americans thought they were voting for when they elected an avowed non-interventionist.
And yet by financial yardsticks, it’s possible that Operation Absolute Resolve will barely matter at all, at least in the short term. Forced regime change in Venezuela would have been regarded as a black swan a year ago, but now qualifies as a “shock but not a surprise” (to quote Tina Fordham of Fordham Global Foresight). At least in the short term, the Orinoco will continue to flow and markets will be little affected.
The main reason markets should be able to take this in stride is, sadly, that Venezuela doesn’t matter much at present, even though it boasts huge reserves of oil. Neil Shearing of Capital Economics sets this out succinctly:
Venezuela’s global economic importance has diminished significantly over the past 50 years. In the 1970s, it accounted for roughly 1% of global GDP and produced around 3.5 million barrels of oil per day (mbpd), or 8% of global supply. Today, it represents barely 0.1% of world GDP and produces about 1 mbpd, or just 1% of the global total, making it only the 18th-largest oil producer worldwide.
Due to worsening mismanagement, the Chavez and Maduro regimes turned steady decline into an all-out crisis that led to hyperinflation and a 70% fall in real gross domestic product. Venezuelan migrants swamped neighboring countries and the US. The tragic bottom line is that even the most alarming scenarios for Venezuela over the next few months would have a minimal impact on the global economy. It was a basket case; nobody expected any growth from it anyway. (Source: bloomberg.com)
2. The Trump administration’s bold operation to capture strongman Nicolás Maduro from his home in Venezuela was a startling tactical success. But as the smoke clears in Caracas a day after President Donald Trump said triumphantly that the United States would now “run” Venezuela, the reality of how Washington will administer that country in the weeks and months ahead appears uncertain and stubbornly complex. Maduro’s allies in Caracas are still in power, some defiantly haranguing about U.S. “imperialism.” The democratically elected opposition leaders are effectively exiled, bluntly sidelined by the Trump administration. And Washington continues to hint at more military action, not only against Venezuela but other perceived enemies in the region such as Cuba and Colombia. (Source: washingtonpost.com)
3. The Wall Street Journal:
Venezuela’s new leader is a socialist true believer who helped Nicolás Maduro maintain his grip on power for more than a decade as the country’s economy crumbled.
Now, President Trump is counting on leftist Delcy Rodríguez—Maduro’s vice president who became the country’s de facto leader on Saturday—to work with the U.S. as it, in Trump’s words, begins to run Venezuela.
